Revenue Recognition Changes for Construction Contractors

Larry Davidson

Is your construction company ready for the new Revenue Recognition changes coming?

Hopefully you have heard something in the last few years regarding the changes coming for revenue recognition.  If not, we’ve got you covered. Construction Contractors may be the industry that is impacted the most by this change in accounting standard.

FASB Accounting Standard Codification (ASC) 606 will be effective for private non-public companies for reporting periods starting after December 15, 2018. A company with a calendar year end will apply the new standard as of January 1, 2019.

The new standard is principles-based, compared to what we have been used to in the past which was rules-based. This will require some evaluation and interpretation for each construction contract.

It starts with a 5-step process:

1. Identify the contract

2. Identify performance obligations

3. Determine the transaction price

4. Allocating the transaction price

5. Recognizing revenue

Each of the above steps comes with its challenges but getting educated or having a knowledgeable expert you can leverage can reduce any anxiety or stress you may have around this new standard. You do not have to do it all by yourself.

Change can be a scary thing, no matter what it is. Changing your toothbrush can be stressful or challenging event, well maybe not to that extreme? We have a dedicated and experienced construction team ready to assist and answer any questions you have regarding the new revenue recognition standard. Don’t wait until the last minute like I do every holiday season to buy gifts for family and friends. Get ahead of the curve and be prepared.

Contact Larry Davidson, CPA at for additional information on construction accounting issues.


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