Not-for-Profit: Revenue Recognition Standard

QuickBooks Newsletter

Written by Sandy Jensen

January 18, 2019

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09 – Revenue from Contracts with Customers (Topic 606), which attempts to clarify the principles for recognizing revenue. Although the ASU was issued in 2014, the FASB provided a long implementation period. For entities that are not considered public business entities (PBEs), the standard becomes effective for annual reporting periods beginning after December 15, 2018, which means January 1, 2019 for calendar year-ends.

To achieve the core principle, ASU 2014-09 provides a list of steps to be taken.

1. Identify the contract(s) with a customer.
2. Identify the performance obligations in the contract.
3. Determine the transaction price.
4. Allocate the transaction price to the performance obligations in the contract.
5. Recognize revenue when (or as) the entity satisfies a performance obligation.

Each Organization will apply the five-step approach listed in this document to determine when revenue and gains included within the scope of the standard should be recognized.

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Sandy Jensen
I joined Hawkins Ash CPAs in 2001 and am a partner in the firm's La Crosse office. I have extensive experience providing audit services to nonprofits and educational agencies. I am chair of the firm’s nonprofit service group and a member of the firm’s Audit and Accounting Committee.

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