Defining Issues   |   May 2016
 

Revenue standard portends potential tax changes

KPMG reports on income tax implications of ASU 2014-09 on ASC 606. The FASB’s new revenue standard may change the timing and amount of revenue recognized. This requires additional tax considerations.

Applicability

ASU 2014-09

  • US GAAP company that is currently assessing the impact of the new requirements of ASC Topic 606
  • US GAAP company that is at an advanced stage of its ASC Topic 606 implementation

Effective dates

Mandatory effective dates and early adoption provisions:

Annual periods:

For public business entities and certain not-for-profit entities the effective date for annual periods is the fiscal years beginning after Dec. 15, 2017.

For all other entites the effective date for annual periods is the fiscal years beginning after Dec. 15, 2018.

Interim periods:

For public business entities and certain not-for-profit entities the effective date for interim periods is the fiscal years beginning after Dec. 15, 2017.

For all other entites the effective date for interim periods is the fiscal years beginning after Dec. 15, 2019.

Early adoption:

For public business entities and certain not-for-profit entities the effective date for early adoption is the fiscal years beginning after Dec. 15, 2016.

For all other entites the effective date for early adoption is the fiscal years beginning after Dec. 15, 2016.

Key impacts

  • Requires companies to change their tax accounting method if financial statement income recognition is accelerated or deferred
  • Creates or changes existing temporary differences, which will affect the income tax provision
  • Requires revisions to transfer pricing strategies and documentation
  • Requires updated policies, systems, processes and controls surrounding income tax accounting and financial reporting
  • Changes the presentation of sales or excise taxes because revenue may be recharacterized between product and service revenue

Report contents

  • Federal and state income tax accounting methods
  • Transfer pricing
  • Accounting for income taxes
  • Taxes not based on income
  • Other considerations

 

 

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