FASB proposes additional revenue recognition corrections

FASB’s efforts to clarify its new revenue recognition standard continued Monday when the board proposed technical corrections and changes to the standard.

The proposal covers four issues that have arisen out of the standard FASB and the International Accounting Standards Board issued in a convergence project in May 2014. As a result of questions raised with the boards’ joint transition resource group, the boards delayed the standard’s effective date and also issued clarifications to it.

Although the clarifications were converged in some cases, the boards did not always agree on which issues needed to be clarified.

The exposure draft FASB issued Monday addresses four additional issues with respect to FASB Accounting Standards Codification (ASC) Topic 606, Revenue From Contracts With Customers:

• Loan guarantee fees. The proposed amendments would clarify that guarantee fees within the scope of ASC Topic 460, Guarantees, (other than product or service warranties) are not within the scope of Topic 606.
• Contract asset versus receivable. The proposed amendments would provide a better link between the analysis in Example 38, Case B in Topic 606 and the receivables presentation guidance in Topic 606.
• Refund liability. The proposed amendments would remove a reference to the term “contract liability” from a journal entry in Example 40 in Topic 606.
• Advertising costs. The proposed amendments would reinstate the guidance on the accrual of advertising costs in Subtopic 340-20, Other Assets and Deferred Costs—Capitalized Advertising Costs.

Comments on the proposal can be submitted by Oct. 4 through FASB’s website.

—Ken Tysiac (ktysiac@aicpa.org) is a JofA editorial director.