ASUs on Revenue Recognition

On September 15, 2009 the FASB Accounting Standards Codification™ (Codification) became the source of authoritative U.S.GAAP. Rules and interpretive releases of the SEC are also sources of authoritative GAAP for SEC registrants. The FASB will not issue new standards in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts. Instead it will issue Accounting Standards Updates (ASU). ASUs are not considered as authoritative in their own right, instead they will serve to update Codification; provide background information about the guidance; and provide the bases for conclusions on the change(s) in the Codification.

As of this writing the FASB as issued 14 ASUs. Many of them are technical corrections to SEC material contained in the Codification. However, you should be aware of two of these Updates, 2009-13 and 2009-14. Both of these Updates have to do with revenue recognition.

ASU 2009–13 Revenue Recognition (Topic 605), Multiple–Deliverables Revenue Arrangement, (a consensus of the FASB Emerging Issues Task Force).

This Update addresses the accounting for multiple–deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. It requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method. The amendments in this update will affect accounting and reporting for all vendors that enter into multiple– deliverable arrangements with their customers when those arrangements are within the scope of Subtopics 605–25 (Revenue Multiple–Element Arrangements).

ASU 2009–14, Software (Topic 985) Certain Revenue Arrangements that Includes Software Elements (a consensus of the FASB Emerging Issues Task Force).

This update changes the accounting model for revenue arrangements that include both tangible products and software elements. The amendments also provide guidance on how a vendor should allocate arrangement considerations to deliverables in an arrangement that includes both tangible products and software.

ASUs are available for download at http://www.fasb.org/.

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