FASB seeks to reduce inconsistencies tied to customer-related payments

FASB is seeking feedback on a proposed Accounting Standards Update (ASU) aimed at addressing a diversity in practice observed when determining if payments should be accounted for as consideration payable to a customer based on Topic 606, Revenue from Contracts with Customers.

Stakeholders have until Nov. 23 to comment on the proposal.

Topic 606 establishes that consideration payable to a customer is accounted for as a reduction of the transaction price and, therefore, of revenue unless the payment is in exchange for a distinct good or service provided by the customer. However, according to a FASB news release, current guidance does not explicitly address when payments made to parties outside the direct distribution chain, such as those that do not purchase the entity’s goods or services either directly from the entity or indirectly through the entity’s customer, are consideration payable to a customer under Topic 606.

The proposed amendments would clarify that payments made on behalf of a customer, or to a customer of an entity’s customer, should be consideration payable to a customer when made in connection with the entity satisfying its promise to the customer if either (1) the entity has explicitly promised to make the payment or (2) the customer has a reasonable expectation that the entity will make the payment because the entity has implicitly promised to do so or the payment represents an in-substance price concession.

FASB hosts webcast for private companies, not-for-profits

Registration is open for FASB Update for Private Companies and Not-for-Profit Organizations, a semiannual webcast offering up to 2.5 CPE credits.

Attendance is limited to the first 1,000 registrants to log in for the webcast, scheduled for Nov. 2 at 2pm ET. FASB leaders will provide an overview of the board’s current agenda and updates on Private Company Council projects.

— To comment on this article or to suggest an idea for another article, contact Bryan Strickland at Bryan.Strickland@aicpa-cima.com.