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Additional Guidance with respect to Section 3400 – AcSB

Date recorded:

At its meeting on September 17-18, 2019, the AcSB discussed feedback received on its Exposure Draft, Revenue, in comment letters and during roundtable consultations with stakeholders. The Board also considered recommendations from its Private Enterprise Advisory Committee to address stakeholder feedback.

The Board decided to:

  1. clarify that the guidance related to determining the unit of account and whether to combine or segment contracts is applicable to all types of revenue transactions;
  2. provide decision trees for the identification of units of account and allocation of revenue;
  3. revise the guidance for measuring the degree of completion based on the ratio of costs incurred to total estimated costs to allow the cost of uninstalled materials not specially produced or fabricated for the project delivered to the job site to be included in the costs incurred to date; and
  4. develop illustrative examples for the following: (a) software contracts containing multiple-elements; (b) contract losses when using the percentage of completion method; (c) computation of income earned for the period under the percentage of completion method when using “Alternative B”; and (d) upfront non-refundable fees or payment related to license contracts.

The AcSB also provided comments on the proposed Handbook text. The Board approved the issuance of final amendments, subject to final drafting and a written ballot. The AcSB plans to issue the final amendments no later than the fourth quarter of 2019.

Review the Executive Summary on the AcSB's Web site.

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