The AICPA has added new industry related content to its Audit and Accounting Guide (AAG), Revenue Recognition (Updated as of January 1, 2018). The new chapter is Chapter 17, Hospitality Entities. Chapter 17 includes guidance for entities in hospitality industries in applying FASB Accounting Standards Codification™ Topic 606, Revenue from Contracts with Customers, and related interpretations from the FASB/IASB Joint Transition Resource Group for Revenue Recognition.
The new chapter of the Revenue Recognition AAG was developed by the AICPA Hospitality Entities Revenue Recognition Task Force and approved by the AICPA Revenue Recognition Working Group and AICPA Financial Reporting Executive Committee (FinREC). The accounting implementation issues discussed in the new chapter, like other guidance in AICPA’s AAGs, are a source of nonauthoritative accounting guidance for nongovernmental entities.
Revenue Recognition Issues for Hospitality Entities
The chapter discusses hospitality-related accounting implementation issues, including application of the Topic 606 five-step model in the context of hospitality industries and other issues, as follows:
- Identification of the contract with a customer;
- Identifying the performance obligations, including the effect of affinity programs and “tier status”;
- Determination of the transaction prices and consideration to the customer;
- Allocation of the transaction price to the performance obligations; and
- Revenue streams, including hotel management service arrangements, franchise fees; owned and leased property revenue.
The new revenue recognition AAG is available on CCH Accounting Research Manager at: http://www.accountingresearchmanager.com/#/index/view/csh-da-filter!WKUS-TAL-DOCS-PHC-%7B92ec557c-4d80-49f6-8cff-eb7a92682e4b%7D–WKUS_TAL_11010%23combined_DEE60CD8B8A1E1E986257AB000648C64TOC_9ca3d733e250383281da190158c48c0f!DEE60CD8B8A1E1E986257AB000648C64!Doc
Topic 606 is available on CCH Accounting Research Manager at: http://www.accountingresearchmanager.com/#/index/fasb/csh-da-filter!WKUS-TAL-DOCS-PHC-%7Bc4166cb6-d75a-4150-b28d-c3a3cda10517%7D–WKUS_TAL_11988%23FASBTOC606/view