The Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09 in May 2014 to revise revenue recognition from customer contracts for all industries. An AICPA task force has been working on implementation and clarification of the new rules for life plan communities/continuing care retirement communities and continuing care at home programs. Based on current information, it is apparent that the new rules will significantly change how monthly fees and entry fees are recognized as income. The new rules are effective for fiscal years beginning after December 15, 2017, for public entities, including entities with public debt, and after December 15, 2018, for non-public entities without public debt.
Since October 2014, AV Powell & Associates has been closely monitoring the efforts and documents prepared by the AICPA task force and has provided technical assistance and projections to help with their evaluation of proposed amortization options. Once the guidance is finalized, we will provide an automated software solution in FORCAST to handle the new rules for monthly fee and entry fee income recognition.
We look forward to helping you navigate these changes in the near future. If you have any questions/comments about implementation of the ASU 2014-09 in FORCAST, please contact your AVP consultant.