More than five years have passed since most companies have adopted ASC 606 Revenue from Contracts with Customers for financial reporting, and the guidance continues to evolve. One provision that has prompted clarification requests to the Financial Accounting Standards Board (“FASB”) revolves around the presentation and disclosure related to conditional retainage.
In response, FASB has released a Staff Educational Paper to address concerns expressed by financial statement users. Please note that this educational paper does not alter Generally Accepted Accounting Principles (GAAP) related to revenue recognition and associated retainage provisions. Rather, it provides explanations regarding the presentation and disclosure requirements for conditional retainage and offers disclosure examples that include more detailed information about contract asset and contract liability balances, inclusive of conditional retainage.
The full announcement can be viewed here: FASB Staff Educational Paper Clarifies Guidance on the Presentation and Disclosure of Retainage for Construction Contractors.
Contact your Grassi Construction advisor, Carl Oliveri, Construction Practice Leader, or Stephen J. Mannhaupt, Assurance & Attest Services Leader for any questions regarding this clarification release.
