The Wall Street Journal had an interesting article this morning about a change in accounting rules on revenue recognition.
Big yawn, right?
What the article says is that the FASB, the rule making body for accountants, is thinking about (emphasis thinking about) making a change to the way companies recognize revenue on long-term contracts, to bring it more into compliance with international norms.
As I recall from my accounting classes, there are already a variety of ways you can recognize revenue, but this change in rules might change all of them, if the FASB issues it. I would guess that they’re in the comment phase now, so have your accountants get in touch with the FASB if it affects you.
If we have any readers who are involved with public companies, the change will definitely affect you if it becomes official guidance. Ford, Verizon, Microsoft and several software companies have asked for a two year delay in issuing the guidance, because they’ve got to change electronic accounting systems.
So, talk to your accountant about what’s going on.