“Historically, revenue recognition was based on the revenue recognition principle. Under this principle, revenue would be recognized when the earnings process was complete and the party providing the good or service had a reasonable assurance of collection. Due to significant complexity with multi-year contracts and transactions that involved the transfer of several different products or differing services, a new approach has been developed as presented in accounting standard update No. 2014-09. As of December 2016 this new standard applies to all public companies who issue reports under US GAAP and is expected to be tested on the Uniform CPA exam as of 2017.
This article is from the Accounting Instructor’s Resource, an electronic journal that provides teaching tips and insights to those who teach accounting and other business courses.”
Mitchell Franklin, LeMoyne College