For some, the new standard will have a significant impact on how and when they recognise revenue, with new estimates and judgements, and the possibility of revenue recognition being accelerated or deferred. For others, transition will be easier – but every company will be subject to extensive new disclosure requirements.
All companies will need to assess the extent of the standard’s impacts so that they can address the wider business implications. These could include changes to systems and processes, and the knock-on effects – for example, on taxation, dividend payments and bonus plans – of changes to financial ratios.
While the 2017 effective date may seem a long way off, decisions need to be made soon – namely, when and how to transition to the new standard. Companies need to start looking at their contracts now.