Should the FASB have overturned the software revenue recognition portion within ASC 985-605? As part of your explanation, consider whether firms will now have too much flexibility to manipulate revenues.
Should the FASB have overturned the software revenue recognition portion within ASC 985-605? As part of your explanation, consider whether firms will now have too much flexibility to manipulate revenues.
Financial accounting standards board (FASB): This is the organization that creates, develops, and approves accounting standards; and administrates GAAP.
The financial accounting standards board (FASB) in concurrence with the international accounting standards board (IASB) issued an update of accounting standards ASU(2014-09) revenue from contracts with customers in May 2014. Although much of the new standard is related to existing regulation, there is a number of main changes in the new standard that shall likely impact more companies reporting under GAAP and IFRS. One caused area is software revenue. As the standard is updated it uses a different procedure to assign the contract value and related discounts with the contract eliminating the need to establish vendor-specific objective evidence it may give a result in more aggressive revenue recognition depending upon the company and contract-specific factors. These changes can increase revenue substantially.
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