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By Denise Lugo
Companies choosing to adopt the new revenue recognition standard shouldn’t underestimate the level of effort it will take, Josh Paul, Google Inc.’s director of technical accounting, said at an accounting conference in Philadelphia.
The new rule, Revenue from Contracts with Customers (ASC 606), is effective Jan. 1, 2018, for public companies, but can be adopted earlier.
Google, which early adopted the standard Jan. 1, saw a $15 million impact on its first quarter from adopting the new revenue recognition standard, Paul told attendees at a Financial Executive International’s 2017 accounting conference. The company reported revenue of about $24 billion during the first quarter. Alphabet Inc. is the parent company of Google.
“You have no idea of the impact until you go in there and lift up the hood and you’re going through contracts and you’re looking at the basis for conclusions,” said Paul. “It is a lot of work—don’t underestimate the impact of disclosures and the level of effort it takes.”
Asked by Bloomberg BNA after the discussion whether the company’s $15 million hit was more than expected, Paul declined to comment other than to point to the company’s 10-Q filings.
Google started its assessment process early, which benefited the company because it allowed it to adopt the rules early, Paul said. “At this point it’s a little bit late for companies to start early—but leases and financial instruments are coming and if they haven’t started early, now’s the time,” he said.
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