2 min read
Close-up on cutoffs for reporting revenues and expenses
Under U.S. Generally Accepted Accounting Principles (GAAP), there are strict rules on when to recognize revenues and expenses. Here’s important...
For 2019, there is a new accounting standard (ASC 606) that Baldwin will be implementing that relates to how revenue is recognized. This standard is especially relevant to contractors.
As part of this new standard, each contract will have to be evaluated according to 5 core principles in order to determine the proper recognition of revenue. These principles are as follows:
- Identify the contract
- Identify separate performance obligations (some contracts may need to be broken down into multiple obligations (phases) for revenue and cost tracking)
- Determine the transaction price
- Allocate the transaction price to performance obligations
- Recognize revenue when each performance obligation is satisfied
In order to assist you in this endeavor, we have created a spreadsheet that will need to be used to analyze each contract in progress at the end of both 2018 and 2019.
We’ve tried to make this as simple as possible, but we realize that this is a major change to your accounting policies. We will be glad to assist you, if needed, in filling out these schedules and helping you determine the proper recognition of revenue on your projects.
Please feel free to reach out to Chris Hatcher, Myron Fisher, or Barb Lasky with any questions and we will help you walk through this major new change.
1 min read
Private companies: Have you implemented the new revenue recognition standard?
Marketing : 5/6/19 12:00 AM
Private companies that follow U.S. Generally Accepted Accounting Principles (GAAP) must comply with the landmark new revenue recognition standard in...
Understanding Percentage Completion and Completed Contracts
Marketing : 9/30/15 12:00 AM
In the construction industry there are two main methods that are used to recognize revenue, Percentage Complete and Completed Contract. The...