One of the biggest changes in revenue recognition in the last decade is approaching. FASB and IASB bodies have issued the joint accounting standard IFRS 15 / ASC 606 for income accounting. These standards change how and when sales can be posted.
Are you ready for the changes?
What is IFRS 17 / ASC 606 about and who is affected by the changes?
- IFRS 15:
- IFRS 15 is relevant for fiscal years beginning on or after January 1, 2018
- US-GAAP public institutions:
- ASC 606 is relevant for fiscal years starting December 15, 2017
- US-GAAP non-public institutions:
- ASC 606 is relevant for fiscal years starting December 15, 2018
5-stage model of revenue recognition in IFRS 15 / ASC 606
- Identify the contract with the customer
- Identify separate performance obligations in the contract
- Determine the transaction price and the retail price
- Allocation of the transaction price of the separate service to the obligations in the contract
- Recognize income when a performance obligation is met
For those who are not yet familiar with the standard, we recommend that you familiarize yourself with the subject using the links below.
Would you like to know more?
For more information on IFRS 15, please visit the following websites:
- Grant Thornton:
http://www.grantthornton.com.ph/globalassets/accounting-alerts/2016/11.11.2016/ifrs-15-special-edition-newsletter.pdf - Global Upside:
http://www.globalupside.com/judgment-day-for-revenue-recognition-youve-been-warned/ - Deloitte:
https://www.iasplus.com/de/standards/ifrs/ifrs15 - PwC:
https://inform.pwc.com/?action=informContent&id=1449262206139404
SAP will offer enhancements that enable customers to cover the five-step model of revenue recognition in IFRS 15 / ASC 606. SAP’s approach here is that explaining the improvements along the lines of the business scenarios and their respective effects can best break down the complexity of the topic. SAP will document all changes in case documents, which can also serve as conceptual references.
Early adopter program
When you’re ready for IFRS 15 / ASC 606, you can apply to SAP for the early adopter program and get early access to the new features. The program is limited to selected customers. You must confirm that you are ready for IFRS 15 / ASC 606 by answering “yes” to the following three questions:
- I report to IFRS and / or US-GAAP; I am publicly listed at US-GAAP.
- I have to report in accordance with IFRS 15 or ASC 606 in my SAP Business ByDesign system by January 1, 2018.
- I have defined and prepared the necessary adjustments to business operations in order to meet the five-step model of revenue recognition in IFRS 15 / ASC 606.
When you are ready for IFRS 15 / ASC 606, you can register here: https://webinars.sap.com/145214-1-sap-business-bydesign-registration-early-adopter/en/registration.aspx
Please note: The number of participants in the early adopter program is limited. Please register by November 12, 2017 at the latest. As soon as you are registered, SAP will contact you for detailed information on how to start the qualification process.
More information
This post is based on the English blog post by Thomas Meder on the official SAP blog, available at https://blogs.sap.com/2017/10/11/ifrs-15-asc-606-new-accounting-standards-for-revenue-with-customers/
All statements without guarantee.