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Add tax to the growing list of revenue recognition crises

Tammy Whitehouse | July 11, 2017

Just as tax is the last thing to happen in a financial statement close, it seems to be the last thing happening in preparing for the new revenue recognition requirements as well.

“People are scrambling,” says Mike Mathieson, a senior advisor at Valuation Research Corp. “People are going to mobilize and turn it into a crusade at this point.”

Tax rules are not changing, but the new five-step method that public companies must begin to follow in 2018 changes the accounting method for recognizing revenue in financial statements. That means companies may be facing method changes for tax purposes as well, and that raises huge tax compliance and reporting implications.

“A lot of people forgot about that until now,” says Mathieson. “They are scrambling like crazy.”

Accounting for financial reporting purposes and accounting for tax purposes are two different animals. For financial reporting purposes, or book purposes, companies follow GAAP rules established by the... To get the full story, subscribe now.