The Securities and Exchange Commission has released a
The new revenue recognition standard is classified as Topic 606 in the Financial Accounting Standards Board’s Accounting Standards Codification. The old revenue recognition it’s replacing is classified as ASC Topic 13, and the SEC said Topic 13 is no longer applicable when a registrant adopts ASC Topic 606.
Public companies are supposed to apply the new revenue standard to annual reporting periods beginning after Dec. 15, 2017, while nonpublic organizations will apply the new standard to annual reporting periods beginning after Dec. 15, 2018.
The SEC also said it has updated its interpretative guidance related to bill-and-hold arrangements and vaccine stockpiles.
The SEC noted that Topic 606 provides a single set of revenue recognition principles governing all contracts with customers and supersedes the existing revenue recognition framework in Topic 605, which eliminates the need for Topic 13. Upon adoption of Topic 606, a registrant should no longer look to the guidance in Securities Exchange Act Release No. 23507 and Accounting and Auditing Enforcement Release No. 108, In the Matter of Stewart Parness, for criteria to be met in order to recognize revenue when delivery has not occurred, which are commonly referred to as “bill-and-hold” arrangements, as ASC Topic 606 provides specific guidance for such arrangements. Before adopting Topic 606, companies should continue to refer to prior SEC and staff guidance on revenue recognition topics.
In terms of Topic 8, which is the part of the codification pertaining to retail companies, the SEC noted that Topic 8 is no longer applicable upon a registrant’s adoption of ASC Topic 606. The new standard generally eliminates industry-specific guidance.
