In a recent blog post on the website of Acuity, Brian Hamm, a Senior Manager in Bennett Thrasher’s Financial Reporting and Assurance department, explains new revenue recognition guidance issued by the Financial Accounting Standards Boards. Hamm touches on the main takeaways that entrepreneurs should know regarding the update and helps to explain what the new revenue recognition process will look like. The steps are:
- Identify the contract(s) with a customer
- Identify the separate performance obligations
- Determine the transaction price
- Allocate the transaction price to the performance obligation
- Recognize revenue when or as the performance obligation is satisfied
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