FASB seeks to reduce inconsistencies tied to customer-related payments

FASB has proposed amendments to its revenue recognition guidance to clarify how companies should account for payments made on behalf of customers or to their customers' customers.

Under Accounting Standards Codification Topic 606, such payments generally reduce reported revenue unless exchanged for a distinct good or service.

The proposed changes would clarify that payments connected to fulfilling customer contracts should be treated as consideration payable to customers when explicitly promised, reasonably expected because of an implicit promise, or effectively representing a price concession.

FASB will accept comments on the proposal through Monday, Nov. 23. Read more.