Complexity is only going to increase – consider the accounting rules for revenue recognition

I’ve realized for a long time that the complexity of everything is increasing. About the time you get your brain wrapped around that idea, consider that the rate of change will accelerate. Especially in accounting.

Just think about the revenue recognition exposure draft. Rules for revenue recognition are spread all over GAAP in the places relevant to the particular industry. As a mere overview, consider there are separate rules for construction, real estate development and sales, nonprofit contributions, split interest agreements, and leases.

The massive exposure draft for recognition will cover how to realize income for everything in all industries.

Ponder the complexity by the time all the cleanup revisions and clarifications have been made in one section that will resolve the revenue recognition issues for banking, insurance, construction, manufacturing, wholesale, retail, Ivy League colleges, hospital networks, mutual funds, investment companies, joint ventures, software development, relief and development NPO’s, derivatives, deferred giving, and every other sector of the U.S. economy.

All in one document compiled into one section of the ASC. You thought the derivatives section covered lots of pages.

Yep. The increasing complexity will accelerate.

Leave a Comment

Your email address will not be published.