February 5, 2020 | Blog
Accounting Methods maven Andrea Mouw explains how ASC 606, the new accounting that requires many businesses to change how they recognize revenue, can also change tax returns in a new Eide Bailly Insight:
For example, taxpayers that sell “bundled” goods and services for a single price may find that they will now have two separate obligations under the contract and will be forced to split the contract price and revenue recognition among the separate obligations.
Additionally, taxpayers whose contract price includes discounts, rebates, bonuses, chargebacks or other types of price adjustments must adjust the amount of revenue recognized to reflect the amount of revenue they expect to collect after considering the impact of these price adjustments. Other taxpayers may find that they are now required to recognize more revenue over a period of time rather than at a single point in time.
Most privately-held businesses are switching to the new standards for 2019 reporting, so now is the time to deal with the tax implications. Read more here.
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