This thesis examines the impact of the new revenue recognition standard, Accounting Standard Codification 606 (ASC 606), on the preparation and presentation of the financial statements. This thesis also inspects the impact of this change on the financial markets. This study begins with a qualitative examination of the impacts pertaining to ASC 606 through expert interviews and close examination of previously published reports. This paper later analyzes the financials of 10 specific companies and the effects attributed to ASC 606. And finally, this paper analyzes the effect of this change on the financials markets by examining the stock prices of each firm in the days surrounding the release of the updated financials.

<p>  </p> <p>The implementation of ASC 606 significantly changed revenue recognition practices for many firms in the capital market by increasing the level of discretion required to record revenue amounts. I examine the impact of this increase in discretion on revenue manipulation around external targets. I find that firms near analyst revenue targets have increased levels of discretionary revenues under ASC 606 relative to their peers, indicating increased revenue manipulation. Further analysis reveals that these increased levels of discretionary revenues are concentrated in firms characterized as having increased opportunity or incentive to use ASC 606 opportunistically to manipulate revenues upwards. Specifically, firms with more complex revenue operations and firms in earlier life cycles are associated with increased discretionary revenues under ASC 606. I also provide preliminary evidence of revenue manipulation varying systematically with industry characteristics. This paper is one of the first to provide evidence of capital market consequences stemming from ASC 606, while also highlighting the impact of firm characteristics on the choice to manage revenues.</p>

Sammanfattning Intäktsredovisningen har länge varit ett komplicerat område. Flera olika standarder har funnits och detta har lett till stora redovisningsskandaler. IASB och FASB började tillsammans att utveckla de två intäktsstandarderna IFRS 15 och ASC 606. Detta till följd av de tidigare skandalerna, målet var att ersätta tidigare standarder med IFRS 15 och ASC 606. Harmoniseringsarbetet syftade till att redovisningen skulle bli likadan världen över med hjälp av dessa standarder.    Denna studies syfte var att jämföra de båda standarderna, för att se hur långt harmoniseringsarbetet har kommit. För att lyckas med detta går studien igenom likheter mellan IFRS 15 och ASC 606 samt fortsätta skillnader. Sedan konstruerades sju typfall inspirerade från byggbranschen. Detta på grund av de ofta komplexa och långa arbetena i branschen. Målet var att se hur valet av standard påverkar ett företags resultaträkning, således hur harmoniseringen ser ut standarderna emellan.   Resultaten av typfallen visar på att det i stor utsträckning är harmoniserat standarderna emellan. Det finns vissa skillnader, det beror ofta på den friare tolkningen i IFRS 15. I några av typfallen innebär val av standard en differens i resultaträkningen eller andra delar av ett företags redovisning. Slutsatsen är att det är harmoniserat mellan standarderna trots att vissa skillnader består. Vi anser att det finns fördelar med bägge standarderna. För de som arbetar med redovisning kan IFRS 15 vara mer fördelaktigt på grund av den friare tolkningen. Externa parter såsom investerare, potentiella samarbetspartners och så vidare föredrar troligtvis ASC 606 hårdare riktlinjer då redovisningen blir mer likvärdigt företag emellan. / Abstract Revenue accounting has long been a complicated area. There have been several different standards, this has led to big scandals in revenue accounting. IASB and FASB started to develop the two revenue standards IFRS 15 and ASC 606 together. This as a result of the previous scandals, the goal was to replace previous standards with IFRS 15 and ASC 606. The harmonization work aimed at making accounting the same all over the world with the help of this standards. This studies purpose was to compare the both standards, this to see how far the harmonization work has come. To succeed with this the studie goes through similarities between IFRS 15 and ASC 606 and continued differences. After these seven hypothetical cases were constructed inspired by the construction industry. This because of the complex and long-time work spans in the industry. The goal was to see how the choice of standard affects a company’s income statement, thus how the harmonization looks between the standards. The results of the hypothetical cases shows that the standards are harmonized to a large extent. There are still some differences. This depends on the often-freer interpretation in IFRS 15. In some of the hypothetical cases the choice of standard makes differences in the income statement or other parts of the company`s accounting. The conclusion is that the standards are harmonized even though some differences persist. We believe that there are advantages with both standards. For the people that works with accounting IFRS 15 may be more advantageous because of the freer interpretation. External parts such as investors, potential partners and so on probably prefers ASC 606 tougher guidelines as accounting becomes more equal between companies.

Rapid digitization of enterprise processes and software applications simplifying daily-life routines enhance the need for software arrangements. Based on this growing trend, the underlying thesis discusses revenue recognition for software arrangements under US GAAP, the lingua franca of financial reporting framework in software industry. The thesis examines the first industry-specific guidance - SOP 97-2, its successor ASC 605 and aims at capturing the main implications resulting from the new converged US GAAP/ IFRS revenue recognition standard ASC 606/ IFRS 15 on a case study. The five-step revenue recognition model introduced by ASC 606 is applied to the US-based technology and software seller Apple Inc. and its wide range of product portfolio including software.