In the course of my recent interviews with prospective new companies, as well as recruiters, revenue recognition is one of the most sensitive topics out there.  If you don’t have a clear understanding of this area it very well may limit your possibilities.  The sensitivity to this topic is extremely high since there have been so many companies that have had to restate their financials due to inappropriate recognition of revenues.  While some have been honest mistakes, others have been clear-cut cases of fraud to improve the stated financial results.  With a significant portion of the MGE Service revenues being contract related, and with time periods ranging from one quarter to multiple years, we had to be very diligent in our review of the monthly service revenues to ensure we were appropriately booking our orders and revenues.  Although our system may not have been the most current, our review by the Auditors was always smooth and we were not subject to any restatements or adverse opinions in this area.
While there is no shortage of accounting bulletins to clarify this area, perhaps an equally important perspective is what initiated this standardization in the first place and what were some of the considerations in drafting FASB 97-2.  The attached article will help you with that.
Read more on FASB 97-2 considerations ……