In May 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers, which modifies when companies recognize revenue from long-term contracts and requires more detailed footnote disclosures. Manufacturers and distributors will generally report the same total amount of revenue under the existing and updated guidance.
However, the updated accounting standard will alter the timing of revenue recognition because it requires companies to estimate the effects of variable consideration, such as sales incentives, discounts and warranties. It also could create differences in book and tax recordkeeping.
On August 12, the FASB delayed implementation of the new standard for another year. The effective date of ASU 2104-09 for public companies is annual reporting periods beginning after December 12, 2015 (December 15, 2018  for non-public companies). Companies that issue comparative financial statements will need to start tracking the changes as soon as possible to meet the FASB’s retrospective application requirements.
In addition, many companies are uncertain exactly how to apply the principles-based revenue recognition standard to their contracts. In some cases, management may decide to modify contract terms and conditions to facilitate compliance with the recent FASB update.