By Carol Wagner, ASL Principal
The new accounting standard for revenue recognition is finally here! It’s officially referred to as ASU 2014-09 – Revenue from Contracts with Customers. FASB issued the final revenue recognition standard in May 2014.
By Carol Wagner, ASL Principal
The new accounting standard for revenue recognition is finally here! It’s officially referred to as ASU 2014-09 – Revenue from Contracts with Customers. FASB issued the final revenue recognition standard in May 2014.
In the midst of the buzz around the Groupon IPO in the last half of 2011, Groupon was forced to restate its pre-IPO revenues to nearly half of what was previously reported at the request of the SEC. Why? The SEC required Groupon to report its revenues at net proceeds (the amount a merchant actually pays Groupon to run an ad) instead of gross proceeds (the total out of pocket amount a customer actually pays to Groupon for an online coupon, which includes the merchant’s share). As we reflect on the lessons learned from this, it begs the question: What should you think about when reporting your revenues at gross vs. net?…
Is revenue the driver of your company’s business? Do your investors care more about the top line than the bottom line? For most technology companies I work with, revenue is the key driver of the business and investors care much less about net income than they do about net revenues. It is for this reason that I’m recommending that you write a revenue recognition policy. If you have no other policy in place, this is the policy to start with. Here’s a suggested roadmap to get started…