The Financial Accounting Standards Board has issued a final Accounting Standards Update that clarifies aspects of the revenue recognition standard.
ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, aims to cover narrow aspects of guidance in number of areas, including, among others:
- Loan guarantee fees;
- Impairment testing in contract costs;
- Provisions for losses on construction-type and production-type contracts;
- The insurance contract scope exception in Topic 606;
- Disclosure of remaining performance obligations;
- Disclosure of prior-period performance obligations;
- Contract assets versus receivables;
- Refund liability;
- Advertising costs;
- Fixed-odds wagering contracts in the casino industry; and,
- Cost capitalization for advisors to private funds and public funds.
The amendments’ effective date and transitions requirements are the same as those for Topic 606.
The original standard was released in 2014 as ASU No. 2014-09; the new amendments are part of an ongoing project to clarify and correct the board’s guidance. They were prompted by stakeholder feedback from various sources, including an online feedback mechanism, and the board’s Transition Resource Group for Revenue Recognition.
The amendments are considered technical corrections, which the board does not expect to “have a significant effect on current accounting practice or create a significant administrative cost for most companies or other organizations.”