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Most nonpublic companies will be required to adopt the new revenue standard in 2019. As part of their implementation, companies will need to review their contracts and assess the accounting impact of various contract terms. This publication provides insights on performing an effective contract review and examples of terms and conditions that may have accounting implications under the new standard.

The new revenue standard (ASC 606, Revenue from contracts with customers) introduced a five-step model for recognizing revenue. While public companies have already adopted the standard, nonpublic companies may still have some work ahead of them to implement the new guidance. The standard is effective for most nonpublic companies in 2019.
A key aspect of the implementation process is performing reviews of the company’s contracts. This publication provides our insights on getting started and provides some examples of contract terms to look out for during a contract review.
This publication is not a comprehensive summary of the new revenue standard and does not provide an exhaustive list of contract terms that have accounting implications. It should be used in combination with review of the authoritative guidance (ASC 606), PwC’s 2018 global revenue guide (referred to as “RR” throughout this document), and other resources on our CFOdirect revenue webpage. For a refresher on ASC 606 and the five-step model, as well as the new disclosure requirements, see our publication, The new revenue standard: it’s time to get started .

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