Welcome back! Ask questions, get answers, and join our large community of tax professionals.
cancel
Showing results for 
Search instead for 
Did you mean: 

Tax Impact of ASC 606 adjustment to retained earnings

michael-zhang
Level 2

An S-corporation signs contracts with franchisees and earns franchise fee income. In the past years, the S-corporation recognizes revenue once the money is received, however, in 2019, the client adopted a new revenue standard (ASC 606) that it recognizes revenue once it is earned but not received. The accountant of the S-corporation uses a modified retrospective method that results in an adjustment recognized to the opening balance of retained earnings as of the first day of 2019. Does anyone know the tax impact of this issue? I mean, how do I deal with the reduction of beginning retained earnings because of adoption of ASC 606, and 2019, for the tax basis, do we only recognize revenue when we earned it, or all money of franchise income we receive, we recognize it as the income of the S-corporation?

0 Cheers

This discussion has been locked. No new contributions can be made. You may start a new discussion here

1 Best Answer

Accepted Solutions
sjrcpa
Level 15

Is the S Corp cash or accrual for tax purposes?

The more I know, the more I don't know.

View solution in original post

0 Cheers
3 Comments 3
sjrcpa
Level 15

Is the S Corp cash or accrual for tax purposes?

The more I know, the more I don't know.
0 Cheers
michael-zhang
Level 2

The company use accrual basis.

0 Cheers
michael-zhang
Level 2

The S-Corp use accrual basis now

0 Cheers