In May 2014, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) issued a converged standard on revenue recognition (ASC Topic 606 and IFRS 15, respectively) aimed at ameliorating difficulties associated with determining when to recognize revenue and at what amount. Prior revenue recognition standards applied broad concepts together with a variety of requirements for specific industries or types of transactions, sometimes resulting in divergent accounting for economically similar transactions. In contrast, the new standard outlined a single comprehensive model to use in accounting for revenue from contracts with customers. Although the new standard simplified the guidelines down to one framework, it also generally required firms to use more judgment and estimation than prior guidance. In its second quarter of 2014 financial statement filed with the Securities and Exchange Commission (SEC) in August 2014, New York-based airliner JetBlue Airways Corporation (JetBlue) [NASDAQ: JBLU] acknowledged the new revenue recognition standard. While it had yet to determine the full impact of adoption, changes were imminent. This case examines how companies' accounting practices are affected by broad-based new accounting standards. It is designed to introduce the new revenue recognition standard, and help students walk through an assessment of how the standard might impact a company like JetBlue Airways.

Susan Barney, chief financial officer of Parcel Expeditors (Parcel), a thriving same-day package delivery company headquartered in the United States, had to make some decisions. The management of Parcel was planning to take the company public in the coming year but they had yet to determine the accounting for certain pension plan costs. The most important goal for management was to provide investors with useful information for their decision making; however, Barney was unsure as to how different choices allowed within the pension accounting standard might impact earnings. In order to assess the impact of each standard, Barney decided to evaluate the pension accounting of a few competitors in the package delivery industry.

On April 20, 2010, as BP p.l.c., the third-largest listed oil producer in the world, was preparing to report strong first quarter results, an explosion occurred on its drilling rig Deepwater Horizon, killing 11 workers and injuring 16 others. Over the next two days, the rig burned and sank, resulting in a massive offshore oil spill in the Gulf of Mexico. The spill was considered "the largest environmental disaster to hit the United States" and the largest accidental marine oil spill in history. The financial reporting implications of the accident and subsequent claims, especially the recognition and measurement of provisions and related expenses, and disclosure of contingent liabilities, were a major consideration for BP and its investors.