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The New World of Revenue Recognition: A Deep Dive into the 5 Steps to Recognition

• Identify the relevant changes in the new revenue recognition guidance for your company

• Assess the technical aspects of the 5 Steps of revenue recognition in the new standard

• Discover the implications of “rules-based” and “principles-based” revenue recognition standards

After attending this event you will be able to:

Learning Objectives

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Welcome to Proformative

Ask, Share, Learn – Within the Largest Community of Corporate Finance Professionals

The New World of Revenue Recognition: A Deep Dive into the 5 Steps to RecognitionJeff Tchir, CPA, Director of Revenue Accounting, Silver Spring Networks

• It’s been a long time coming

• There is a methodology to the 5 Steps

• Management will have more judgments to make

• Impact on business models will vary and impact will vary within business models– Some things will stay the same– Some things will be a little different– Some things will be a lot different

• Your business model should drive design and execution of process, procedure and policy change

What You Will Hear From Me Today

The Joint FASB/IASB Project

Background and Status

January 2002 – FASB discusses potential major project on revenue recognition

June 2002 – IASB adds revenue recognition project to its agenda

September 2002 – formal agreement to work jointly on the project

2002 to 2008 - lots of meetings and discussion around the basic framework and model

December 2008 – discussion paper issued

Where it came from…

Background and Status

June 2010 Exposure Draft

November 2011 re-Exposure Draft

January 2012 revised Exposure Draft

2012 to 2014 – redeliberations May 2014

FINAL STANDARD

Where it’s at…

The Core Principle

“…an entity recognizes 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.”

Steps to achieve the core principle will replace current US GAAP and current IFRS with respect to revenue recognition.

Do not confuse this with the separate initiative that involves allowing US filers with the SEC to file financial statements prepared in accordance with IFRS.

Core Principle

Principles Based Approach

Steps to Achieve the Core Principle

• Identify the Contract(s)Step 1• Identify the Performance

ObligationsStep 2• Determine the Transaction PriceStep 3• Allocate the Transaction PriceStep 4• Recognize Revenue upon

Satisfaction of the ObligationStep 5

Thank you for your interest in this presentation. View the on-demand webinar or download the full

presentation at:www.Proformative.com

The New World of Revenue Recognition: A Deep Dive into the 5 Steps to Recognition