Costs to fulfill a contract—To account for the costs of fulfilling a contract with a customer, a reporting organization applies the requirements of other standards (for example, Topic 330, Inventory; Subtopic 350-40, Intangibles— Goodwill and Other—Internal- Use Software; Topic 360, Property, Plant, and Equipment; and Subtopic 985-20, Software—Costs of Software to Be Sold, Leased, or Marketed), if applicable. Effective Date. The Impact of ASU 2016-01 ASU 2016-01 is effective for public business entities for fiscal years beginning after December 15, 2017. A nonpublic entity may elect early application, but no earlier than the effective date for public entities. Why Do We Need to Improve How Revenue Is Recognized in Financial Reporting? For nonpublic companies and organizations, the new guidance will be required for annual reporting periods beginning after December 15, 2017, and interim and annual reporting periods after those reporting periods. The transaction price can be a fixed amount of customer consideration, but it may sometimes include variable consideration or consideration in a form other than cash. On June 10, 2020, the FASB voted to propose a deferral of one year for the effective date of ASU-2018 for all SEC filers to January 1, 2023, with an option to early adopt. RAs are advised that NIH rescinded some of the flexibilities outlined in NOT-OD-086. coronavirus 2 (SARS-CoV-2) (Coronavirus disease [COVID-19]), amplified probe technique, making use of high throughput technologies as described by CMS-2020-01-R. U0004: 2019-nCoV Coronavirus, SARS-CoV-2/2019-nCoV (COVID-19), any technique, multiple types or subtypes (includes all targets), non-CDC, making use of high throughput technologies as Key impacts. What happened? All companies in the scope of ASU 2018-12 on long-duration contracts. Improves comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets The amount of revenue recognized is the amount allocated to the satisfied performance obligation. Additional information regarding this proposal and other measures the FASB is taking regarding COVID-19 may be found in these resources: Journal of Accountancy and FASB Statement. In 2013, the FASB and the IASB announced the formation of a joint transition resource group to be established after the final guidance has been issued. ASU 2019-09. Otherwise, a reporting organization recognizes an asset from the costs to fulfill a contract if those costs meet all of the following criteria: Disclosures – The new guidance also includes a cohesive set of disclosure requirements that will provide users of financial statements with comprehensive information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a reporting organization’s contracts with customers. Revenue is one of the most important measures used by investors in assessing a company's performance and prospects. As a practical expedient, a reporting organization may expense these costs when incurred if the amortization period is one year or less. The guidance in the ASU would be “effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016.” Early application is permitted. On April 21, 2020, the FASB issued for public comment a proposed ASU 5 that would revise the effective dates of both the revenue and leasing standards. Nonpublic business entities are still allowed to adopt ASU 2014-09 for periods beginning after December 15, 2018. For calendar-year end companies that are eligible for the deferral, the effective date is January 1, 2023. As noted by the FASB staff in their agenda meeting notes: The FASB's joint project with the IASB improves and converges their respective standards in this area. The new guidance establishes the following core principle: Recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. A public organization is an organization that is any one of the following: What Will the Board Do to Address Issues That May Arise during Transition to the New Guidance? The Board will redeliberate the proposed change to effective dates once it completes its outreach at the close of the 15-day comment period on May 6, 2020. More details will be announced on the FASB website. Customers – Deferral of the Effective Date, in August 2015, to defer the effective date of ASU No. The deferment in the proposal would change the effective date for these companies to fiscal years end beginning after December 15, 2021. The board concluded that the guidance in ASU No. Targeted Improvements ASU 2018 -11 (issued in July 2018) Narrow-Scope Improvements ASU 2018-20 (issued in December 2018) Leases Codification Improvements ASU 2019-01 (issued in March 2019) Effective Date ASU 2019-10 (issued in November 2019) Effective Date ASU 2020-05 (issued in June 2020) The guidance also specifies the accounting for some costs to obtain or fulfill a contract with a customer, as well as enhanced disclosure requirements. 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