Revenue recognition guide for manufacturing and distribution
The implementation date for the new revenue recognition standard — 2019 for all other private organizations — is fast-approaching. The amount of work involved to switch to the new manufacturing revenue recognition framework can take years, depending on your business, so planning is critical.
The new standard is a framework that applies to all contracts with customers. With so much variation in manufacturing and distribution contracts, each contract will need to be analyzed individually or by portfolio of similar contracts.
We've compiled a list of key manufacturing revenue recognition considerations for manufacturers and distributors, including:
- Combining contracts and contract modifications.
- Separate performance obligations.
- Variable pricing.
- Customer supplied material.
- Point in time vs. over time revenue recognition.
- Tax and balance sheet impacts.