The Countdown Begins: FASB/IASB Updates for JD Edwards

custom_src=”””Revenue as Relative?” “‘Revenue’, is one of the most critical measurements used by global investors in assessing a company’s yearly performance and growth. But surprisingly, the methods to measure this important aspect differ greatly.” US GAAP had complex, detailed, and disparate revenue recognition requirements for specific transactions and industries. As a result, different industries used different accounting for economically similar transactions. This resulted in inconsistencies, weaknesses in revenue recognition process and comparability issues across industries and capital markets.” The Resolution” “In May 2014, Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) issued converged guidance on recognizing revenue in contracts with customers:”

US GAAP Topic 606 (ASC 606) – Revenue from Contracts with Customers (issued by FASB)
” ]”

IFRS 15 – Revenue from Contracts with Customers (issued by IASB)
” Effective Dates:” ]”22px”]”For public business entities in US:”

New effective date is 12/15/2017
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Early adoption allowed starting 12/15/2016
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This also includes certain not-for-profit organizations and employee benefit plans
” For all other entities in US:”

New effective date 12/15/2018
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Early adoption allowed starting 12/15/2016.
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Interim reporting as early as 12/15/2016 or one year after annual reporting first under new standard
” New Revenue Recognition Method:” ]”22px”]”The new guidance on revenue recognition affects any reporting organization that enters into contracts with customers. Insurance contracts and lease contracts are not under scope of this new standard. An entity must apply the following steps:” Step 1: Identify the contract(s) with a customer.” ]”Step 2: Identify the performance obligations in the contract.” ]”Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.” ]”Step 3: Determine the transaction price.” ]”Step 4: Allocate the transaction price to the performance obligations in the contract.” Revenue Recognition in JD Edwards:” ]”22px”]”Both JD Edwards EnterpriseOne 9.1 & 9.2 are now equipped for this new revenue recognition process. First, users must define a revenue recognition trigger setup which defines hierarchy setup, date setup and revenue configuration setup. JD Edwards uses this setup to determine whether to send an A/R invoice to the revenue recognition process.” New finance AAIs (RP, RQ) and DMAAI 4225 have been introduced for Performance Liability Accounting (PLA). When a sales update is run, the invoice amount is booked on the balance sheet under the
PLA account (instead of income statement) until the performance obligation towards the contract is complete.” Additionally, a New Revenue Recognition program (P03B116) has been added to recognize revenue for an individual invoice, for multiple invoices, or by batch and to transfer amount from PLA account to Revenue Account. Suitable changes have also been made in Job Cost, Contract Billing, and Service Billing module for performance obligation setup and revenue recognition process.” Summary:” With a mandatory new FASB standard that touches nearly all businesses and industries, there is an increasingly important reason for JD Edwards clients to upgrade to EnterpriseOne. For existing JD Edwards EnterpriseOne customers, stakeholders will need to evaluate the scope of work for this change, scrutinize existing contracts, identify contractual obligations and break up the contract price.” At Circular Edge, our strong functional and technical JDE team is ready to help you to make this project a huge success!” Get… Set… Go! Let’s win!” “Additional Resources:” “Oracle JD Edwards FAQ” “Slide share: FASB/IASB for JD Edwards – What to Expect” ]”22px”]<iframe src=’’></iframe> “22px”]”FASB/IASB for JD Edwards from Circular Edge” ]

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