ASU 2014-09: Transition Requirements

This blog entry highlights the transition requirements for ASU 2014-09, Revenue from Contracts with Customers. This ASU requires companies to apply the new guidance retrospectively, but permits a choice of two transition methods. Both transition methods offer some form of relief from the general requirements for retrospective application of a new accounting principle, stated in ASC 250-10-45-5 through 45-10. The first method is more in line with the general requirements, but it grants elective expedients that companies can use to ease the transition to the new standard. This method requires restating of comparative periods presented, but offers relief from full restatement and related disclosures in certain situations. The second method relieves companies from restating comparative periods, but still requires them to recognize and present the cumulative effect of retrospective application on the beginning retained earnings for the year of adoption.