🏗️ FASB Clarifies Retainage Rules for Construction Contracts
The FASB has released new guidance to help construction contractors better understand and apply revenue recognition rules related to retainage provisions.
Key Points
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- 📅 Release Date: April 1, 2025
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- 🏛️ Authority: Financial Accounting Standards Board (FASB)
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- 🏗️ Industry Impact: Construction contractors
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- 🔍 Focus: Presentation and disclosure of retainage
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- 💡 Resource: FASB Staff Educational Paper
🛠️ What's the Big Deal?
If you're in the construction biz, you know retainage provisions can be a headache. These provisions let customers hold back a chunk of payment until you hit certain milestones. The new FASB educational paper sheds light on how to present and disclose these retainage amounts, making your accounting a bit less of a mystery.
🧐 Why Now?
The paper was cooked up after private company stakeholders, including the Private Company Council, voiced their concerns. They wanted clearer guidance on how to handle retainage in their financial statements, and FASB delivered.
📘 What's Inside?
The document doesn’t change any existing rules but explains the presentation and disclosure requirements in GAAP. It also throws in some example disclosures to help you provide more detailed info about your contract assets and liabilities. Think of it as your new best friend for all things retainage.