If you are a privately held company or not-for-profit organization, coming January 1, 2019, your company will need to determine if you are in compliance with Generally Accepted Accounting Principles (GAAP).

The Financial Accounting Standards Board (FASB) has redefined the requirements to recognize revenue.  The new standards include a 5-step process that takes a deeper look into your contracts.  You might be thinking, “My company doesn’t have contracts.” – but think again! Contracts do not have to be formal agreements written by attorneys.  Instead, they can be verbal agreements that are implied contracts, or even a register receipt from a store

Depending on the terms of the agreement, you may have to wait to recognize your revenue, which will affect your bottom line!  The 5-step process is below:

Step 1: Identify the Contract(s) with the Customer

Step 2: Identify the Performance Obligations in the Contract

Step 3: Determine the Transaction Price

Step 4: Allocate the Transaction Price

Step 5: Recognize Revenue When or As Performance Obligations Are Satisfied

FASB spared no industry when developing the new standards.  All industries, including our niche groups: construction, health care, manufacturing and not-for-profits, will have industry specific changes that they need to consider when reviewing these upcoming changes.  Here at Corrigan Krause, we are prepared to assist you in diving deeper into these new standards and how it will affect your business.