The new Financial Accounting Standards Board (FASB) revenue-recognition guidelines are causing many companies to change the way they sell goods and services.
Since December, when the new rules unified how companies account for revenues from sales and services went into effect, many companies have spent countless hours and dollars adjusting their business operations. In a survey by PwC, one in five public companies said they spent or expect to spend $1 million or more on this effort.
The new rules align U.S. standards closer to international guidelines. The framework is more focused on contracts and when goods and services are delivered and require companies to more thoroughly account for the cost of sales, such as discounts and marketing.Some businesses say the timing of when they can record earned revenue will be delayed, and others expect the new rules to accelerate revenue.