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Intro Video Transcript

Welcome to Topic 606, Revenue from Contracts with Customers. This is an introduction to the new standard for revenue recognition. I'm calling this Rev Rec 3.0 a revolution because it is certainly a revolution in accounting standards, nothing like we've ever seen before, at least in my career lifetime. I would call Rev Rec 1.0 the original rules that the SCC put in place back in the 30's after the stock market crash. I would label Rev Rec 2.0 as the rules that we've had implemented over the past 15 to 20 years with basic Rev Rec and SAB 104, with software revenue recognition with SAP 9072. Multiple element guidance in the EITF 00-21. Ultimately this is another level of evolution in the U.S. gap with respect to revenue recognition.

My name is Jeff Tchir, I'm currently the Director of Revenue at Silver Spring Networks. I also manage a consulting group that focuses on nothing but revenue recognition matters and I also give webinars and seminars, just like this. Here is what you will hear from me today. This standard has been a long time coming. It goes back way more than a decade and I'll talk about the history of it. There's actually a methodology to the madness and to the five steps that I will take you through. We will have to make more judgments as a principles based standard. The standard will require more disclosure in the judgments and estimates that we do make.

The impact on various business models will vary and the impact will vary even within your business model. Part of the reason your business model is successful is because it is somewhat unique. The standard will impact everybody just a little bit differently. You will notice some things will stay the same, some things will be a little different and some things will be actually a lot different and I'll take you through some of those differences. I want to emphasize that your business model, not the accounting standards, should drive the design and execution of any processes, procedures and policy changes you need to make to implement this new standard. I want to say that again, your business model is successful for a reason, don't let this accounting standard drive you to a business model that will ultimately be unsuccessful to you.

So first, I'm just going to talk a little bit about the history of the Joint FASB/IASB Project. That's the Financial Accounting Standards Board in the U.S. and the International Accounting Standards Board out of the U.K. We'll talk about the core principle, again that principle is based approach, it does have a core principle that's pretty easy to understand. And then while I go through the five steps of the new standard, I will also talk about some the implementation issues you may want to consider when you learn more about the standard and ultimately implement it.