Accounting experts are releasing their latest views on how to apply the new revenue recognition standard to some specific accounting conundrums identified in certain industry sectors.
The Financial Reporting Executive Committee at the American Institute of Certified Public Accountants has published 11 new working drafts meant for inclusion in a future edition of its Audit & Accounting Guide on Revenue Recognition. FinREC issued the first edition of the guide in January but plans updates as additional issues are vetted.
The latest drafts cover issues of concern to airlines and companies in gaming, hospitality, and timeshare segments. With respect to airlines, for example, the working drafts answer accounting questions like how to treat passenger ticket breakage, ancillary fees and change fees, and how to account for interline transactions, interline loyalty, and brand names and customer lists.
FinREC has assembled 16 task forces to work through industry-specific questions on how to apply the new rules because the new standard wipes out years of piecemeal, industry-specific guidance under GAAP. That has led to plenty of questions about how entities in certain sectors will be expected to comply with less-specific requirements. The new guide on revenue recognition is meant to provide some insight into how companies can address such questions in a way that will drive consistent interpretations across entities.
The new standard takes effect for public companies in 2018. FinREC is still working through questions that have been presented to the task forces for their consideration, but the task forces so far have acted on about 90 percent of those issues, said a spokesman at the AICPA. Almost half of the issues that have been identified for action have been explored in working drafts and issued for public comment, he said, meaning there are still plenty of working drafts yet to be published for comment and finalized for inclusion in the guide.
FinREC is asking for public comment on the latest round of working drafts by June 1.