Plan to Solve ‘Disappearing Revenue’ to be Published by Year-End

July 28, 2021, 9:22 PM

U.S. accounting rulemakers plan to publish by year end an accounting update that will spell out how businesses buying other businesses tally up the half-finished customer contracts they acquire in a merger or acquisition.

Based on a proposal the Financial Accounting Standards Board released in December, the update deals with what’s called deferred revenue—revenue a company can’t book until the future, even if its customer has already paid for the good or service. Also known as unearned revenue, it’s technically a liability because the company hasn’t yet delivered the good or service to the customer. The plan aims to ...

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