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ARTICLE · 10 SEPTEMBER 2012

Sales Personnel Can Help Avoid Premature Revenue Recognition

FTI Consulting
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Issues with revenue recognition have been around for decades.

United StatesAccounting and Audit
Amy Gonce
Amy Gonce

Issues with revenue recognition have been around for decades. The American Institute of CPAs and the U.S. Securities and Exchange Commission have tried to provide detailed guidance to assist companies in their revenue determinations for complicated transactions. Ultimately, the appropriateness of revenue recognition boils down to the facts and circumstances of a given sale. There certainly are intricate revenue recognition rules (especially related to software), but many of the issues about premature recognition result from the normal blocking and tackling required by Staff Accounting Bulletin No. 104, "Revenue Recognition," which requires persuasive evidence of a sales arrangement, delivery, a fixed or determinable sales price and that collectability is reasonably assured.

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