Revenue is arguably the most important financial statement line item as it impacts the depicted profitability during any reporting period as well as informs investors on the potential for value creation of reporting entities. This white paper is the third in a series of investor-oriented publications issued since 20161 that highlight the analytical implications of key changes resulting from the forthcoming adoption of the revised revenue recognition requirements. The International Financial Reporting Standards (IFRS) and GAAP revised revenue recognition requirements (IFRS 15 and Accounting Standards Codification [ASC] Topic 606) become effective at the beginning of 2018.

This paper provides a high-level review of the state of adoption (e.g., level of early adoption) and companies’ disclosures of anticipated impacts and transition reporting choices. It also reviews the likely effects of key judgments related to uncertain revenue and contract definition.