Hello Debra,Your external CPA was likely referring to the fact that the new revenue recognition standard (ASC 606) transitions away from the terms "percentage of completion method" and "completed contract method" which were hallmarks of the AICPA's Statement of Position 81-1 first issued all the way back in 1981. Now, ASC 606 uses a five-step model for determining revenue recognition, and it's that fifth step, which addresses when revenue is recognized. The terms that the new standard uses are "over time" vs. "at a point in time." Now, while in effect the "at a point in time" method may be similar to what the old "completed contract method' was, I think a lot of contractors are going to find that their contracts don't meet the criteria for revenues to be recognized at a point in time - effectively removing, if you will, the ability to utilize the completed contract method.Now if you didn't produce external financial statements, given your revenues being under $25M, you would qualify as a small business for tax purposes and likely would be able to use the cash method. However, if you issue a of GAAP basis financial statement, then ASC 606 must be adopted as of 01/01/19. Additionally, this standard applies to all businesses regardless of industry.I've attached a revenue recognition guide for contractors that my firm has put out jointly with CICPAC. For discussion of revenues recognized over time vs. a point in time, see pgs. 9-10. I hope you find it helpful.
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