Revenue Recognition - Fasb

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Ameriprise Financial, Inc. 802 Ameriprise Financial Center Minneapolis, MN 55474 Via Email: October 22, 2010 Technical Director File Reference No. 1820‐100 Financial Accounting Standards Board 401 Merritt 7 Post Office Box 5116 Norwalk, Connecticut 06856‐5116 Re: File Reference: No. 1820‐100, Revenue Recognition (Topic 605) – Revenue from Contracts with Customers Dear Technical Director: Ameriprise Financial, Inc., one of the nation’s leading financial planning, asset management and insurance companies, appreciates the opportunity to offer comments with respect to the Proposed Accounting Standards Update, Revenue Recognition (Topic 605) – Revenue from Contracts with Customers (the “Proposed Statement”).…show more content…
In particular, we believe the alternative interpretation may require nonrefundable fixed rate fees earned/collected to be partially recognized for the percentage of the contract year that has been completed with the remaining recognized evenly during the remainder of the contract year. See the example provided in Appendix A for an illustration of the issue. The alternative interpretation is based on the following guidance in the Proposed Standard: • Paragraph 33(c) which requires straight‐line revenue recognition over the expected duration of the contract if services are transferred evenly over time. • Paragraph 38 and the requirement to recognize revenue from satisfying a performance obligation only if the transaction price can be reasonably estimated. • Paragraphs 39 and IG76 (Example 18) that indicate if consideration is susceptible to external factors (for example volatility in the market) it should not be estimated to determine the amount of revenue to recognize from satisfying a performance obligation. The alternative interpretation is focused on the following facts: • The management contracts generally are for one year. • Fixed fees for asset management contracts are variable based on markets
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