Revenue Recognition (Topic 605)

Transcription

1 Proposed Accounting Standards Update Issued: January 4, 2012 Comments Due: March 13, 2012 Revenue Recognition (Topic 605) Revenue from Contracts with Customers Proposed Amendments to the FASB Accounting Standards Codification This Exposure Draft of a proposed Accounting Standards Update of Topic 605 is issued by the Board for public comment. Comments can be provided using the electronic feedback form available on the FASB website. Written comments should be addressed to: Technical Director File Reference No

2 The FASB Accounting Standards Codification is the source of authoritative generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. An Accounting Standards Update is not authoritative; rather, it is a document that communicates how the Accounting Standards Codification is being amended. It also provides other information to help a user of GAAP understand how and why GAAP is changing and when the changes will be effective. Notice to Recipients of This Exposure Draft of a Proposed Accounting Standards Update The Board invites comments on all matters in this Exposure Draft and is requesting comments by March 13, Interested parties may submit comments in one of three ways: Using the electronic feedback form available on the FASB website at Exposure Documents Open for Comment ing a written letter to director@fasb.org, File Reference No Sending written comments to Technical Director, File Reference No , FASB, 401 Merritt 7, PO Box 5116, Norwalk, CT Do not send responses by fax. All comments received are part of the FASB s public file. The FASB will make all comments publicly available by posting them to the online public reference room portion of its website. An electronic copy of this Exposure Draft is available on the FASB website. Copyright 2012 by Financial Accounting Foundation. All rights reserved. Permission is granted to make copies of this work provided that such copies are for personal or intraorganizational use only and are not sold or disseminated and provided further that each copy bears the following credit line: Copyright 2012 by Financial Accounting Foundation. All rights reserved. Used by permission. Financial Accounting Standards Board of the Financial Accounting Foundation 401 Merritt 7, PO Box 5116, Norwalk, Connecticut

3 Proposed Accounting Standards Update Revenue Recognition (Topic 605) Revenue from Contracts with Customers Proposed Amendments to the FASB Accounting Standards Codification January 4, 2012 Comment Deadline: March 13, 2012 CONTENTS Page Numbers Questions for Respondents...1 Amendments to the FASB Accounting Standards Codification Amendments to the XBRL Taxonomy

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5 Questions for Respondents This is a companion document to the Exposure Draft of proposed Accounting Standards Update, Revenue Recognition (Topic 605): Revenue from Contracts with Customers (proposed Update on revenue recognition), which was issued on November 14, This companion proposed Accounting Standards Update, Revenue Recognition (Topic 605): Revenue from Contracts with Customers Proposed Amendments to the FASB Accounting Standards Codification, includes both the proposed amendments that codify the guidance in the proposed Update on revenue recognition and the proposed amendments to Subtopics that will be consequentially affected by this proposed Update. The proposed consequential amendments reflect changes to the Codification as of the issuance of Accounting Standards Update No , Health Care Entities (Topic 954): Presentation and Disclosure of Patient Service Revenue, Provision for Bad Debts, and the Allowance for Doubtful Accounts for Certain Health Care Entities. These proposed amendments would not supersede the proposed amendments to Subtopics and from proposed Updates, Financial Services Investment Companies (Topic 946): Amendments to the Scope, Measurement, and Disclosure Requirements, and Real Estate Investment Property Entities (Topic 973). Specific comments on the proposals in the proposed Update on revenue recognition should be provided as part of the response to that document. Separately, the Board invites individuals and organizations to comment on the questions below concerning the proposed amendments to the Codification. Comments are requested from both those who agree with the proposed amendments and those who do not agree. Comments are most helpful if they identify and clearly explain the question, the issue, and the Codification reference to which they relate. Those who disagree with a proposed amendment are asked to describe their suggested alternative(s), supported by specific reasoning. Question 1: Do you agree that the proposed amendments that codify the guidance in the proposed Update on revenue recognition have been codified correctly? If not, what alternative amendment(s) do you recommend and why? Question 2: Do you agree that the proposed consequential amendments that would result from the proposals in the proposed Update on revenue recognition have been appropriately reflected? If not, what alternative amendment(s) do you recommend and why? 1

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7 Amendments to the FASB Accounting Standards Codification Note: These proposed amendments do not replace or affect guidance issued by the SEC or its staff for public companies in their filings with the SEC. Furthermore, the content labeled as SEC staff guidance does not constitute rules or interpretations of the SEC, nor does such guidance bear official Commission approval. Content in the SEC Sections is expected to change over time in accordance with the SEC s normal procedures for making changes to SEC rules, regulations, interpretive releases, and staff guidance. Summary of Proposed Amendments to the Accounting Standards Codification 1. This proposed Accounting Standards Update describes a revenue model applicable to a wide range of industries and transactions. Consequently, the Board proposes to supersede or amend various Subtopics of the Accounting Standards Codification. Those proposed amendments are summarized below. 2. The following Topic would be superseded: 430 Deferred Revenue 3. The following Subtopics would be superseded: Other Assets and Deferred Costs Capitalized Advertising Costs Property, Plant, and Equipment Real Estate Sales Revenue Recognition Products Revenue Recognition Services Revenue Recognition Multiple-Element Arrangements Revenue Recognition Milestone Method Revenue Recognition Rights to Use Revenue Recognition Construction-Type and Production-Type Contracts Revenue Recognition Principal Agent Considerations Revenue Recognition Customer Payments and Incentives Airlines Revenue Recognition Contractors Construction Revenue Recognition Contractors Federal Government Balance Sheet Contractors Federal Government Notes to Financial Statements 3

8 Contractors Federal Government Revenue Recognition Development Stage Entities Revenue Recognition Entertainment Broadcasters Receivables Entertainment Broadcasters Revenue Recognition Entertainment Broadcasters Nonmonetary Transactions Entertainment Cable Television Deferred Revenue Entertainment Films Deferred Revenue Entertainment Films Revenue Recognition Entertainment Films Nonmonetary Transactions Entertainment Music Deferred Revenue Entertainment Music Revenue Recognition Extractive Activities Oil and Gas Revenue Recognition Financial Services Broker and Dealers Revenue Recognition Financial Services Depository and Lending Revenue Recognition Financial Services Mortgage Banking Revenue Recognition Franchisors Other Assets and Deferred Costs Franchisors Other Expenses Health Care Entities Deferred Revenue Real Estate General Revenue Recognition Real Estate Common Interest Realty Associations Deferred Revenue Real Estate Retail Land Revenue Recognition Real Estate Time-Sharing Activities Accounting Changes and Error Corrections Real Estate Time-Sharing Activities Revenue Recognition Software Revenue Recognition 4. The following Subtopics would be added: Other Assets and Deferred Costs Contracts with Customers Cost of Sales and Services Accounting for Consideration Received from a Vendor Real Estate Real Estate Investment Trusts Other Expenses 4

9 5. The following Subtopics would be amended as described: Codification Subtopic Generally Accepted Accounting Principles Overall Balance Sheet Overall Interim Reporting Overall Risks and Uncertainties Overall Receivables Overall Receivables Troubled Debt Restructurings by Creditors Description of the Proposed Amendments Amend paragraph to reflect the removal of Subtopic Supersede paragraph to reflect the removal of Subtopic Amend paragraph to include the disclosures about revenue from contracts with customers that an entity should include in its interim financial statements. Supersede paragraph to reflect the removal of Subtopic Amend paragraph and add paragraph A to reflect revisions regarding a customer s credit risk made to Subtopic Amend the references in paragraphs through 40-5 to reflect the removal of Subtopic Amend paragraph to reflect the removal of Subtopic Amend paragraph and supersede paragraphs A through 40-7 and through to reflect the removal of Subtopic

10 Codification Subtopic Inventory Overall Other Assets and Deferred Costs Overall Other Assets and Deferred Costs Capitalized Advertising Costs Intangibles Goodwill and Other General Intangibles Other than Goodwill Property, Plant, and Equipment Overall Property, Plant, and Equipment Real Estate Sales Description of the Proposed Amendments Supersede paragraphs and to reflect the removal of Subtopic Amend paragraphs through to reflect the removal of Subtopic Supersede paragraphs through 60-6 to reflect the removal of Subtopics and Supersede paragraph to reflect the removal of paragraph Supersede Subtopic However, paragraphs through are amended and moved to paragraphs A and C through 25-1I. Add paragraph to reflect the proposed guidance on the derecognition of nonfinancial assets. Supersede paragraph and amend paragraph to reflect the proposed guidance on the derecognition of nonfinancial assets. Amend paragraph to reflect the moving of paragraph to paragraph Supersede Subtopic However, paragraph is amended and moved to paragraph and paragraphs through 15-8 are moved to paragraphs through

11 Codification Subtopic Liabilities Overall Asset Retirement and Environmental Obligations Asset Retirement Obligations Commitments Overall Contingencies Overall Guarantees Overall Description of the Proposed Amendments Amend paragraph to reflect the removal of Topic 430. Amend paragraph to reflect the removal of Subtopic Amend paragraph to clarify the scope for repurchase agreements. Supersede paragraph and amend paragraph to reflect the removal of Subtopics and Supersede paragraphs through to reflect the removal of Subtopic and amendments made to Subtopic Amend paragraph to reflect the removal of Subtopic Amend paragraph to reflect the removal of Subtopic Amend paragraph to include content amended and moved from paragraph (e). Amend paragraphs , , , and to reflect the proposed guidance on warranties. Amend paragraph and supersede paragraph to reflect the removal of Subtopic Supersede paragraphs through and to reflect the removal of Subtopics , , , and

12 Codification Subtopic Debt Product Financing Arrangements Equity Equity-Based Payments to Non-Employees Revenue Recognition Overall Revenue Recognition Services Description of the Proposed Amendments Amend paragraphs , through 15-3, through 25-3, and through 55-2, and supersede paragraphs through 55-5 to remove certain guidance on product financing arrangements that are in the scope of Subtopic Amend paragraphs through 05-3, , through 30-10, , , and through to reflect the removal of the guidance on the accounting by the goods or service provider or grantee for shared-based payment transactions. Supersede paragraphs through 05-5, , , through 30-19, , through 35-16, , and through to reflect the removal of the guidance on the accounting by the goods or service provider or grantee for share-based payment transactions. Supersede all paragraphs in the Subtopic and replace that guidance with the proposed revenue guidance. Supersede Subtopic However, paragraph is moved to paragraph

13 Codification Subtopic Revenue Recognition Gains and Losses Revenue Recognition Customer Payments and Incentives Description of the Proposed Amendments Amend to require an entity to apply the proposed control and measurement guidance to account for the gain or loss for: The derecognition of nonfinancial assets that are within the scope of Topics 350 and 360 and are not an output of an entity s ordinary activities. An exchange of a group of assets that constitute a business or nonprofit activity (except for a sale of in substance real estate and conveyance of oil and mineral rights) would continue to be accounted for in accordance with Subtopic A transfer of a financial asset that is in substance real estate. Add paragraph to include guidance amended and moved from paragraph , and add paragraphs through 15-9 to include guidance moved from paragraphs through Supersede Subtopic However, paragraph is amended and moved to paragraph

14 Codification Subtopic Cost of Sales and Services Overall Other Expenses Start-Up Costs Other Expenses Contributions Made Other Expenses Advertising Costs Research and Development Overall Research and Development Research and Development Arrangements Description of the Proposed Amendments Amend paragraph and add paragraph A to include guidance added to Subtopic Amend paragraph to reflect the removal of Section Amend paragraph , and supersede paragraphs and to reflect the removal of Subtopics , , and Supersede paragraphs through to reflect the removal of Subtopic Supersede Section to reflect the removal of Subtopic Amend paragraph to reflect the removal of Subtopic Amend paragraph to reflect the removal of Subtopic Amend paragraph to reflect the revision made to the paragraph reference. Amend paragraphs , through 15-3, , and to reflect the removal of Subtopic Amend paragraph to reflect the moving of paragraphs through Add paragraph A to include guidance amended and moved from paragraph Amend paragraph to clarify when arrangements are not within the scope of Subtopic

15 Codification Subtopic Business Combinations Identifiable Assets and Liabilities, and Any Noncontrolling Interest Collaborative Arrangements Overall Consolidation Overall Derivatives and Hedging Overall Fair Value Measurement Overall Interest Imputation of Interest Description of the Proposed Amendments Amend paragraph to reflect the removal of Subtopic Amend paragraphs through 45-2 and paragraphs through to reflect the removal of Subtopic Amend paragraph to reflect the removal of Subtopics and Amend paragraphs A and A to reflect the removal of Subtopics and Amend paragraph to reflect the removal of Subtopic Amend paragraph to reflect the removal of Subtopics and Amend paragraph to reflect the removal of Subtopic and to refer to Subtopic (as amended by the proposed guidance). Amend paragraph to reflect the proposed guidance on the time value of money. 11

16 Codification Subtopic Leases Overall Leases Capital Leases Leases Sale- Leaseback Transactions Nonmonetary Transactions Overall Related Party Disclosures Overall Description of the Proposed Amendments Amend paragraph to reflect the proposed guidance on repurchase arrangements. Additional amendments will be considered as part of the Boards ongoing joint project on leases. Supersede paragraphs through and amend paragraph to reflect the proposed noncash consideration guidance. Amend paragraphs and to reflect the removal of Subtopics and Supersede paragraphs through 15-17, through 25-8, , through 55-37, and through 60-3 to reflect the removal of Subtopics , , and Amend paragraph to reflect revisions made to Subtopic Amend paragraphs , , and to reflect the removal of Subtopics and Amend paragraph to reflect the proposed guidance. Supersede paragraph to reflect revisions made to Subtopic Amend paragraph to update the reference for content that was moved from Subtopic

17 Codification Subtopic Subsequent Events Overall Transfers and Servicing Overall Agriculture Receivables Agriculture Inventory Agriculture Revenue Recognition Airlines Property, Plant, and Equipment Airlines Other Expenses Contractors Construction Overall Contractors Construction Contract Costs Description of the Proposed Amendments Supersede paragraph to reflect the removal of Subtopic Amend paragraph to reflect the amendments made to Subtopic Supersede paragraphs through 25-2 and to reflect the partial removal of guidance from Subtopic Supersede paragraph and Section to reflect the partial removal of guidance from Subtopic Supersede the Cooperatives Patrons Subsections. Amend paragraph to reflect the amendments made to Subtopic Amend paragraph to reflect the removal of Subtopic Amend paragraphs and to reflect the removal of Subtopic Supersede paragraph to reflect the removal of Subtopic

18 Codification Subtopic Contractors Federal Government Overall Contractors Federal Government Contract Costs Contractors Federal Government Income Statement Contractors Federal Government Risks and Uncertainties Contractors Federal Government Receivables Contractors Federal Government Liabilities Description of the Proposed Amendments Amend paragraph to reflect the removal of the guidance related to contracts subject to renegotiation. Supersede paragraph to reflect the removal of Subtopic Amend paragraph to reflect the removal of paragraphs through Amend paragraph and supersede paragraphs through 45-2 to remove the guidance related to contracts subject to renegotiation. Supersede paragraph to remove the presentation guidance for sales related to terminated contracts. Amend paragraph and supersede paragraph to remove the guidance related to contracts subject to renegotiation. Supersede paragraphs , through 25-9, and through to remove the guidance related to unbilled amounts, progress payments, and advance payments. Amend paragraph and supersede paragraphs through 25-2, through 45-2, and to remove the guidance related to contracts subject to renegotiation. Supersede paragraph to remove the guidance related to advance payments. 14

19 Codification Subtopic Contractors Federal Government Contingencies Contractors Federal Government Cost of Sales and Services Contractors Federal Government Research and Development Entertainment Broadcasters Overall Entertainment Broadcasters Liabilities Entertainment Cable Television Intangibles Goodwill and Other Entertainment Cable Television Property, Plant, and Equipment Description of the Proposed Amendments Supersede paragraph to reflect the removal of Subtopic Supersede paragraph to reflect the removal of Subtopic Amend paragraphs through 15-3 to reflect the removal of Subtopic Amend paragraph to reflect the removal of barter transactions from Subtopic Supersede paragraph to reflect the removal of Subtopic Amend paragraphs and to reference acquisition costs in Subtopic Amend paragraph to reflect the proposed cost guidance. Amend paragraph to include content moved from paragraph

20 Codification Subtopic Entertainment Cable Television Revenue Recognition Entertainment Cable Television Other Expenses Entertainment Casinos Liabilities Entertainment Casinos Revenue Recognition Entertainment Films Overall Entertainment Films Other Assets Film Costs Entertainment Films Liabilities Extractive Activities Oil and Gas Interest Description of the Proposed Amendments Supersede the guidance relating to hook-up revenue. Move the guidance relating to the prematurity period to Subtopic Amend paragraph to reflect the proposed acquisition cost guidance. Amend Subtopic to include content moved from Subtopic on the accounting for jackpot liabilities. Supersede Subtopic However, paragraphs and through 55-2 are moved to Subtopic Amend paragraphs and to reflect the removal of Subtopic Amend paragraphs and to reflect the removal of Subtopic Amend paragraphs and to remove the reference to the term revenue. Amend paragraph to remove the reference to the term revenue. Amend paragraph to reflect the proposed guidance on the time value of money. 16

21 Codification Subtopic Financial Services Broker and Dealers Broker-Dealer Activities Financial Services Depository and Lending Financial Instruments Financial Services Insurance Acquisition Costs Financial Services Insurance Separate Accounts Financial Services Investment Companies Revenue Recognition Description of the Proposed Amendments Amend paragraph to reflect the removal of Subtopic Add paragraph to include content moved from paragraph Amend paragraph to reflect the removal of Subtopic Amend paragraph A to reflect the removal of Subtopic Add paragraphs C through 25-1I to include content amended and moved from Subtopic on direct-response advertising. Amend paragraph to reflect the removal of Subtopic Supersede the guidance relating to: Distributor transfer of rights to certain future distribution fees Distribution fees and costs for mutual funds with no front-end sales fee. Amend paragraphs and to link to the proposed acquisition cost guidance in Subtopic

22 Codification Subtopic Franchisors Overall Description of the Proposed Amendments Add paragraph to include content amended and moved from paragraph Franchisors Revenue Recognition Health Care Entities Receivables Supersede Subtopic However, paragraph is moved to paragraph Supersede Section to reflect the amendment of Subtopic Health Care Entities Other Assets and Deferred Costs Health Care Entities Liabilities Amend paragraphs through 25-2 and to reference acquisition costs to the proposed guidance. Amend paragraph to reflect the removal of Subtopic Health Care Entities Commitments Health Care Entities Contingencies Supersede Sections , , and on the obligation to provide future services to reflect the proposed guidance on onerous performance obligations. Supersede paragraphs through 30-4 on losses on prepaid health care services contracts to reflect the proposed guidance on onerous performance obligations. 18

23 Codification Subtopic Health Care Entities Revenue Recognition Health Care Entities Other Expenses Notfor-Profit Entities Revenue Recognition Notfor-Profit Entities Other Expenses Real Estate General Overall Real Estate General Investments Equity Method and Joint Ventures Description of the Proposed Amendments Amend paragraph to reflect the removal of Subtopic Supersede the revenue recognition guidance in paragraphs through 25-8, , through 45-5, , and Section Amend paragraph to reflect the removal of the revenue recognition guidance. Amend paragraphs through 25-7 to link to the proposed acquisition guidance in Subtopic Amend the guidance on the recognition of exchange transactions in paragraphs and Supersede paragraph relating to the presentation of revenue. Supersede paragraph to eliminate the inconsistency between that paragraph and the proposed guidance. Amend paragraphs through 05-2 to reflect the removal of Subtopics and Amend paragraph and supersede paragraph to reflect the removal of Subtopic and amendments made to Subtopic Amend paragraphs through 30-4 and to reflect the removal of Subtopic Amend paragraph to reflect the removal of Subtopic

24 Codification Subtopic Real Estate General Other Assets and Deferred Costs Real Estate General Property, Plant, and Equipment Real Estate General Debt Real Estate General Revenue Recognition Real Estate Common Interest Realty Associations Notes to Financial Statements Description of the Proposed Amendments Supersede paragraph and Section to reflect the proposed guidance. Amend paragraphs and to reference acquisition costs to the proposed guidance. Amend paragraphs through 35-2 to reflect the removal of Subtopics and Add paragraphs through to include content moved from paragraphs through Amend paragraph to reflect the relocation of Section to Section Supersede paragraphs through 55-5 to reflect the removal of Subtopic Amend paragraph to reflect the relocation of Section to Section Supersede Subtopic However, paragraphs through 25-2 are moved to paragraphs through Add paragraph A to include content moved from paragraph

25 Codification Subtopic Real Estate Common Interest Realty Associations Revenue Recognition Real Estate Real Estate Investment Trusts Revenue Recognition Real Estate Retail Land Overall Real Estate Retail Land Receivables Real Estate Retail Land Cost of Sales and Services Real Estate Time- Sharing Activities Overall Description of the Proposed Amendments Supersede Subtopic However, paragraph is moved to paragraph A. Supersede Subtopic and move all paragraphs to Subtopic because the guidance does not relate to revenue recognition. Supersede paragraph to reflect the removal of Subtopic Supersede Section to reflect the proposed guidance. Supersede paragraph to reflect the removal of Subtopic Supersede paragraph to reflect the removal of the term full accrual method. Amend paragraph to reflect the removal of Section Amend paragraphs through 05-2 to reflect the removal of Subtopic and the guidance related to revenue. Supersede paragraph to reflect the removal of Subtopic Amend paragraph to reflect the relocation of paragraphs and through 15-8 to paragraphs through

26 Codification Subtopic Real Estate Time- Sharing Activities Receivables Real Estate Time- Sharing Activities Inventory Real Estate Time- Sharing Activities Other Assets and Deferred Costs Real Estate Time- Sharing Activities Other Expenses Regulated Operations Other Assets and Deferred Costs Description of the Proposed Amendments Amend paragraphs through 35-6 and and supersede paragraph to reflect the removal of Subtopic and the guidance related to revenue. Supersede Sections , , and to reflect the removal of Subtopic and the guidance related to revenue. Amend paragraph and supersede paragraph to reflect the removal of guidance in Subtopic Amend paragraphs , through 35-2, and and supersede paragraph to reflect the removal of Subtopic and Section Amend paragraph to reference the proposed cost guidance in Subtopic Supersede paragraphs through 25-3 and Section to remove the guidance related to costs to sell time-sharing intervals. Amend paragraph to reflect the removal of the guidance related to costs to sell timesharing intervals. Amend paragraphs through 25-2 to reference acquisition costs to the proposed guidance. Amend paragraphs , , and to reflect the removal of Subtopic

27 Codification Subtopic Regulated Operations Intangibles Goodwill and Other Regulated Operations Revenue Recognition Software Overall Software Costs of Software to Be Sold, Leased, or Marketed Software Revenue Recognition Description of the Proposed Amendments Supersede paragraph to reflect the proposed guidance on onerous performance obligations. Amend paragraph and add paragraphs through 35-7 to include content moved from paragraphs through Amend paragraph and supersede paragraphs through 15-3 and paragraphs through relating to long-term power supply contracts. Move paragraphs through to paragraphs through Amend paragraph to reflect amendments made to Section Add Section to reflect the proposed guidance on the presentation of alternative revenue programs. Amend paragraph to reflect the removal of Subtopic Amend paragraph to reflect the removal of Subtopics and Amend paragraphs , , and to reflect the removal of Subtopics and Add paragraph to include content amended and moved from paragraph Supersede Subtopic However, paragraph is moved to paragraph A, and paragraph is moved to paragraph

28 Introduction 6. The Codification is amended as described in paragraphs In some cases, to put the change in context, not only are the amended paragraphs shown but also the preceding and following paragraphs. Terms from the Master Glossary are in bold type. Added text is underlined, and deleted text is struck out. Amendments to Master Glossary 7. Supersede the following Master Glossary terms, with a link to transition paragraph Affinity Program Air Cargo Airbill Assumption Authorization Code B Shares Bargain Purchase Barter Buydowns Cash Consideration Consideration Continuing Investments Continuing Involvement (second definition) Contractor Cooperative Advertising Core Software Cost-Plus-Award-Fee Contract Cost-Plus-Incentive-Fee Contract (Incentive Based on Cost) Cost-Plus-Incentive-Fee Contract (Incentive Based on Performance) Cost Recovery Method (first definition) Cost-Sharing Contract Cost-Type Contracts Cost-Without-Fee Contract Cross-Collateralized Customer (second definition) 24

29 Delivery Deposit Method (first and second definitions) Direct Selling Costs Distributor (first definition) Enhancement Extended Warranty Fare Firm Fixed-Price Contract Fixed Fee Fixed-Price Contract Providing for Firm Target Cost Incentives Fixed-Price Contract Providing for Performance Incentives Fixed-Price Contract Providing For Prospective Periodic Redetermination Of Price Fixed-Price Contract Providing For Retroactive Redetermination Of Price Fixed-Price Contract Providing for Successive Target Cost Incentives Fixed-Price Contract with Economic Price Adjustment Fixed-Price Contracts Fixed-Price Level-of-Effort Term Contract Flip Transactions Front-End Sales Fee Front-End Sales Load Full Accrual Method Half-Turn Handling Costs Hosting Arrangement Incentive Independent Third Party Inducement Initial Franchise Fee Initial Services Installment Method Investor Notes Licensing Lifted Flight Coupon Lump-Sum Contract 25

30 Milestone (both definitions) Nonutility Generators Off-the-Shelf Software On-Line Lifts On-Line Sale and Off-Line Sale Other than Retail Land Sales OTRLS Ownership Interests Partnership Notes PCS Percentage-of-Completion Method Permanent Investor Planned Amenities Platform Platform-Transfer Right Postcontract Customer Support Prepaid Health Care Plan Product Maintenance Contracts Reduced-Profit Method Reload Rescission Reseller (first definition) Retrospective Insurance Arrangements Revenue Passenger Mile Right-to-Use Round-Turn RPM RTU Sales Value Separately Priced Contracts Shipping Costs Site License Slotting Fees Street Date Syndication Fees Time-and-Material Contracts Unit Profit Center 26

31 Unit-Price Contracts Upgrade (second definition) Upgrade Right User Vacation Club Win Upgrade Transaction 8. Add the following Master Glossary terms, with a link to transition paragraph Contract An agreement between two or more parties that creates enforceable rights and obligations. Contract Asset An entity s right to consideration in exchange for goods or services that the entity has transferred to a customer, when that right is conditioned on something other than the passage of time (for example, the entity s future performance). Contract Liability An entity s obligation to transfer goods or services to a customer for which the entity has received consideration from the customer. Performance Obligation A promise in a contract with a customer to transfer a good or service to the customer. Standalone Selling Price The price at which an entity would sell a promised good or service separately to a customer. Transaction Price The amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties (for example, sales taxes). 9. Amend the following Master Glossary terms, with a link to transition paragraph , as follows: 27

32 Amenities Features that enhance the attractiveness or perceived value of a time-sharing interval. Examples of amenities include golf courses, utility plants, clubhouses, swimming pools, tennis courts, indoor recreational facilities, and parking facilities. See also Planned Amenities and Promised Amenities. Customer A user or reseller. A party that has contracted with an entity to obtain goods or services that are an output of the entity s ordinary activities. Revenue Revenue earned by an entity from its direct distribution, exploitation, or licensing of a film, before deduction for any of the entity s direct costs of distribution. For markets and territories in which an entity s fully or jointly-owned films are distributed by third parties, revenue is the net amounts payable to the entity by third party distributors. Revenue is reduced by appropriate allowances, estimated returns, price concessions, or similar adjustments, as applicable.inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity s ongoing major or central operations. Amendments to Subtopic Amend paragraph , with a link to transition paragraph , as follows: Generally Accepted Accounting Principles Overall Transition and Open Effective Date Information > Transition Related to FASB Statement No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles The following represents the transition and effective date information related to FASB Statement No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles: 28

33 a. The pending content that links to this paragraph shall be effective for financial statements issued for interim and annual periods ending after September 15, b. The Financial Accounting Standards Board (FASB) Accounting Standards Codification shall become the source of authoritative generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. c. As of the effective date stated in paragraph (a), all thenexisting non-sec accounting and reporting standards that had been included in levels (a) through (d) GAAP are superseded, except as noted in paragraph (d) and as described in Section Concurrently, all nongrandfathered, non-sec accounting literature not included in the Codification is deemed nonauthoritative. d. The following standards shall remain authoritative until such time that each is integrated into the Codification: 1. FASB Statement No. 164, Not-for-Profit Entities: Mergers and Acquisitions 2. FASB Statement No. 166, Accounting for Transfers of Financial Assets 3. FASB Statement No. 167, Amendments to FASB Interpretation No. 46(R) 4. FASB Statement No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles. e. Nonpublic nongovernmental entities that previously have not applied the guidance in the paragraphs listed below shall account for the adoption of that guidance as a change in accounting principle on a prospective basis for revenue arrangements entered into or materially modified in those fiscal years beginning on or after December 15, 2009, and interim periods within those years: 1. Subparagraph superseded by Accounting Standards Update 201X- XX. Paragraph Subparagraph superseded by Accounting Standards Update 201X- XX. Paragraphs through Subparagraph superseded by Accounting Standards Update 201X- XX. Paragraphs through Subparagraph superseded by Accounting Standards Update 201X- XX. Paragraphs through Paragraphs through Paragraphs through f. The appropriate disclosures related to that adoption shall be made in accordance with Section

34 Amendments to Subtopic Supersede paragraph and its related heading, with a link to transition paragraph , as follows: Balance Sheet Overall Relationships > Revenue Recognition Paragraph superseded by Accounting Standards Update 201X- XX. For guidance on the presentation of provisions for losses on contracts, see paragraph Amendments to Subtopic Amend paragraph by adding item r, with a link to transition paragraph , as follows: Interim Reporting Overall Disclosure > Disclosure of Summarized Interim Financial Data by Publicly Traded Companies Many publicly traded companies report summarized financial information at periodic interim dates in considerably less detail than that provided in annual financial statements. While this information provides more timely information than would result if complete financial statements were issued at the end of each interim period, the timeliness of presentation may be partially offset by a reduction in detail in the information provided. As a result, certain guides as to minimum disclosure are desirable. (It should be recognized that the minimum disclosures of summarized interim financial data required of publicly traded companies do not constitute a fair presentation of financial position and results of operations in conformity with generally accepted accounting principles [GAAP]). If publicly traded companies report summarized financial information at interim dates (including reports on fourth quarters), the following data should be reported, as a minimum: 30

35 r. The information about revenue and costs from contracts with customers in paragraphs , , , through 50-16, and Amendments to Subtopic Supersede paragraph and its related heading, with a link to transition paragraph , as follows: Risks and Uncertainties Overall Relationships > Revenue Recognition Paragraph superseded by Accounting Standards Update 201X- XX. See Example 1 (paragraph ) for an illustration of the kinds of disclosures for risks and uncertainties related to long-term construction contracts. Amendments to Subtopic Amend paragraph and add paragraph A, with a link to transition paragraph , as follows: Receivables Overall Subsequent Measurement The inability to make a reasonable estimate of the amount of loss from uncollectible receivables because of a customer s credit risk (that is, failure to satisfy the condition in paragraph (b)) precludes accrual and may, if there is significant uncertainty as to collection, suggest that the installment method, the cost recovery method, or some other method of revenue recognition be used. See paragraphs through 25-4 for further guidance.does not affect the amount of revenue that the entity recognizes. However, if there is significant uncertainty about collection because of the customer s credit risk at contract inception, that uncertainty may indicate that the parties are not committed to perform their respective obligations under the contract and, thus, the criterion in paragraph (b) may not be met A Generally, a loss from uncollectible receivables shall be charged to operations. However, a reserve shall be recorded against the related contract 31

36 liability when payment from the customer is due in a noncancellable contract and the entity has not yet transferred the promised goods or services. 15. Amend paragraphs through 40-5, with a link to transition paragraph , as follows: Derecognition Acquisition, Development, and Construction Arrangements If an acquisition, development, and construction arrangement is accounted for as an investment in real estate or joint venture and the expected residual profit is sold, gain recognition, if any, is appropriate only if the criteria in Section Subtopic are met after giving consideration to the entire acquisition, development, and construction arrangement including the continuing relationship between the financial institution and the project If a financial institution was the seller of the property at the initiation of the project, gain recognition, if any, should be determined by reference to Section Subtopic Amend paragraph , with a link to transition paragraph , as follows: Relationships > Revenue Recognition For guidance on loan guarantees, in which an entity (guarantor) lends its creditworthiness to another party (borrower) for a fee, thereby enhancing that other party s ability to borrow funds, see Subtopic Amendments to Subtopic Amend paragraph and supersede paragraphs A through 40-7, with a link to transition paragraph , as follows: Receivables Troubled Debt Restructurings by Creditors Derecognition > Foreclosure 32

37 Except in the circumstances described in the following paragraph, aa troubled debt restructuring that is in substance a repossession or foreclosure by the creditor, that is, the creditor receives physical possession of the debtor s assets regardless of whether formal foreclosure proceedings take place, or in which the creditor otherwise obtains one or more of the debtor s assets in place of all or part of the receivable, shall be accounted for according to the provisions of paragraphs ; through 40-4 and; , through 40-4, and, if appropriate, A Paragraph superseded by Accounting Standards Update 201X- XX. The guidance in the following paragraph applies to initial measurement of a foreclosed property in a transaction having all of the following characteristics: a. A sale of real estate was financed by the seller. b. The buyer s initial investment was not sufficient for recognition of profit under the full accrual method. c. The seller met the conditions of Subtopic to record a sale and recognized profit on the installment or cost recovery methods. d. Subsequently, the buyer defaulted on the mortgage to the seller. e. The seller forecloses on the property. f. At the time of foreclosure, fair value of the property is less than the seller s gross receivable but greater than the seller s net receivable, that is, the principal and interest receivable less the deferred profit on the sale and related allowances Paragraph superseded by Accounting Standards Update 201X- XX. In a transaction having all of the characteristics set forth in the preceding paragraph, the foreclosed property shall be recorded at the lower of the net amount of the receivable or fair value of the property. The net receivable assumes that the accrual of interest income on the financing, if any, is appropriate under the circumstances. This Topic would be applied to a foreclosure related to a sale accounted for under the full accrual method, and if appropriate, the repossessed property would be recorded at its fair value. The Impairment or Disposal of Long-Lived Assets Subsections of require a foreclosed asset that is newly acquired and that is classified as held for sale to be recognized at the lower of its carrying value or fair value less cost to sell. 18. Supersede paragraphs through and their related heading, with a link to transition paragraph , as follows: Implementation Guidance and Illustrations > Illustrations > > Example 1: Fair Value in Excess of the Seller s Net Receivable 33

38 Paragraph superseded by Accounting Standards Update 201X-XX. This Example illustrates the guidance in paragraph Paragraph superseded by Accounting Standards Update 201X- XX. In this Example, the foreclosed property would be recorded at the amount of the net receivable of $63 and $50, respectively, as illustrated in the following table. Installment Method Cost Recovery Method Original sale: Seller financing Buyer's initial investment (a) Sales value Sales value Cost Gain Amount recognized Deferred gain Foreclosure at the end of Year 1: Original note principal balance Interest accrued for Year 1 at 10% Gross receivable at foreclosure Less deferred profit Net receivable Fair value of property at foreclosure $ 90 $ $ 100 $ 100 $ 100 $ 100 (60) (60) (4) - $ 36 $ 40 $ 90 $ (36) 40 $ 63 $ 50 $ 80 $ 80 (b) (a) (b) Initial investment is inadequate for full accrual method. For purposes of this Example, assume that accrual of interest is inappropriate. Amendments to Subtopic Supersede paragraph and its related heading, with a link to transition paragraph , as follows: Inventory Overall Initial Measurement > Costs of Certain Construction-Type and Production-Type Contracts 34