Revenue Recognition Challenges: ASC 606 in Construction

Overview

For decades, scholars searched for a connection between a corporation’s current performance with respect to sustainability and the future returns of its stock. In 2016, Khan, Serafeim, and Yoon published an apparent breakthrough in this quest: guidance on materiality from the Sustainability Accounting Standards Board allowed the construction of corporate sustainability scales that reliably predicted stock returns. Their finding had an immediate and broad impact, but it remains, in its authors — own words, just — — first evidence. — — Here, we further explore the relationship between material sustainability and stock returns by performing a — — model uncertainty analysis. — — We reproduce the original estimate but conclude that it is a statistical artifact. We then use machine learning to explore the practicality of employing historical associations to determine which aspects of sustainability are material to investors. We conclude that, for one popular source of data on corporate sustainability, accurate guidance on materiality may be difficult to achieve.

Highlights

Core Principles of ASC 606 in the Construction Industry
Identifying and Defining Performance Obligations
Contract Modifications and Change Orders under ASC 606
Variable Consideration and Estimation Challenges
Allocating Transaction Price to Performance Obligations
Best Practices and Case Studies for Implementation and Compliance

Objectives

Identify ASC 606's five-step revenue recognition model for construction contracts.
Determine challenges in allocating revenue to performance obligations.
Evaluate best practices for accurate financial reporting and compliance.

Notice

This is a self-study/on demand course offered by a 3rd party vendor and will NOT be accessible in the My Upcoming CPE section of the ISCPA website. Course access information will be emailed directly to you by CalCPA. The course expires one year from the purchase date. Format = Online Self-Study.