Stay Up-to-Date with New Revenue Recognition Standards

Private and publicly traded companies alike are required to adhere to stringent requirements outlined by the new standards--ASC 606 and IFRS 15. Is your business ready?

ASC 606 and IFRS 15

Depending on the nature of your business, ASC 606 and IFRS 15 may have a significant impact on your accounting practices. ASC 606, set by the Financial Accounting Standards Board (FASB) outlines a 5-step model to standardize accounting practices. The new policy is designed to increase cross-industry uniformity for financial statements. IFRS 15 is the international equivalent of this standard set by the International Accounting Standards Board (IASB). Whether you’re reporting in the US, internationally, or both, RightRev can help you calculate complex revenue recognition scenarios for compliance with the new standard.

As per ASC 606 / IFRS 15, the 5 steps to achieve maximum compliance are

  • Identify the contract with a customer
  • Identify the performance obligations (promises) in the contract
  • Determine the transaction price
  • Allocate the transaction price to the performance obligations in the contract
  • Recognize revenue when (or as) the reporting organization satisfies a performance obligation

Contract modifications can be a huge “gotcha”

Under ASC 606 and IFRS 15, you may be required to recalculate revenue when customers initiate a contract change. This can result from upgrades, down grades, add-on’s, partial cancellations, and more. Depending on your business model, you may need to re-allocate revenue across your performance obligations and apply the re-allocated amount prospectively or retrospectively. Don’t get caught trying to do any of this manually or customizing your technology to manage this complex scenario. Automate with RightRev.

SSP calculations can get very tricky

Standalone Selling Price (SSP) is the new way of determining appropriate “value” for each performance obligation (POB) for bundled contracts. It’s similar to determining VSOE for multiple-element arrangements under ASC 605, but not exactly the same. Calculating SSP, ensuring SSPs are mapped to appropriate POBs, and performing allocations across all bundled contracts leveraging SSPs can get complex very quickly. RightRev supports automation and compliance across this process.

Compliance reporting and the data behind it

Many companies, especially tech-based software, hardware, and service providers, change their business practices to maintain compliance with the new standards. In turn, these changes can curtail growth. RightRev helps companies maintain maximum compliance with the new standards, instilling a sense of confidence that lends way to new opportunities.

RightRev enables teams to focus on their core competencies while maintaining maximum compliance. Learn more today.

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