The Effects Of Accounting Standards Update 2014-09: Revenue From Contracts With Customers

The purpose of this paper is to create a semi-comprehensive compilation of information about Accounting Standards Update 2014-09: Revenue from Contracts with Customers, to analyze the effects of the standard, and to provide clarity about significant changes it will cause. This standard created a new section in the Accounting Standards Codification, ASC 606: Revenue from Contracts with Customers, and its international counterpart, IFRS 15. In place of current guidance, which varies widely across industries and types of transactions, the new standard establishes a five-step process for recognizing revenue, which will be universally applied with few exceptions. Because revenue is such an important tool in measuring the success and effectiveness of a business, a complete overhaul of the regulations regarding it will indubitably have numerous consequences. This paper provides an overview and discussion of the documentation concerning the new standard issued by governing accounting bodies, educational institutions, accounting firms and Certified Public Accountants, users of financial statements, and other third parties. Additionally, this paper discusses the theoretical implications of the principles of the new guidance.<p></p>