Article
The ASC 606 (revenue recognition) transition: Effective dates and transition methods
Dec. 6, 2016
Over these last several months we have explored the new revenue recognition standard, ASC 606, in great detail. We conclude the series with this article discussing effective dates and transition methods, including the related guidance.
Effective dates
For annual periods beginning after Dec. 15, 2017, the following entities must apply ASC 606:
Public business entity, is an entity meeting any of the below criteria:
a. It is required by the U.S. Securities and Exchange Commission (SEC) to file or furnish financial statements, or does file or furnish financial statements (including voluntary filers), with the SEC (including other entities whose financial statements or financial information are required to be or are included in a filing).
b. It is required by the Securities Exchange Act of 1934 (the Act), as amended, or rules or regulations promulgated under the Act, to file or furnish financial statements with a regulatory agency other than the SEC.
c. It is required to file or furnish financial statements with a foreign or domestic regulatory agency in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer.
d. It has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market.
e. It has one or more securities that are not subject to contractual restrictions on transfer, and it is required by law, contract, or regulation to prepare U.S. GAAP financial statements (including notes) and make them publicly available on a periodic basis (for example, interim or annual periods). An entity must meet both of these conditions to meet this criterion.1
Not-for-profit entity, that:
Has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market.
Employee benefit plan, that:
Files or furnishes financial statements with or to the Securities and Exchange Commission (Form 11-K)
Note that the definitions used in ASC 606 noted above have not changed from current practice in the Codification. The standard must be applied for any interim periods within the above fiscal years. As such for an issuer, the first period reported in accordance with ASC 606, will be the first quarter of 2018.