July 14, 2014
Article by Ted Lucas, Assurance Services Senior Manager & Timothy Landry, Assurance Services Senior Manager, "Businesses Must Prep for New Revenue Recognition Rules" Featured in The Hartford Business Journal
By Ted Lucas, Assurance Services Senior Manager & Timothy Landry, Assurance Services Senior Manager
Today's financial world puts a great emphasis on meeting targets. From the perspective of those who run businesses and their employees, it can mean the difference between a large bonus or being let go. From a stockholder's perspective, it could mean the difference between selling or holding a stake in a company.
The most common measure used to gauge whether one has met targets is revenue, which is why attaining proper revenue recognition is paramount for a business's success.
Revenue recognition in some instances can be simple. Consider a manufacturer that sells a non-warranty product to a customer. In this instance, revenue is recognized when all four of the traditional revenue recognition criteria are met: (1) the price can be determined, (2) collection is probable, (3) there is persuasive evidence of an arrangement, and (4) delivery has occurred.