RevenueHub | Revenue Recognition: Simplified

The RevenueHub team provides plain-English articles outlining technical insights and other valuable information for applying the ASC 606 revenue recognition standard to your business.

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Common ASC 606 Issues: Airline Entities

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Airlines face unique issues as they apply ASC 606. Gain a deeper understanding of how to navigate these key issues.

Significant Financing Component in ASC 606

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Analysis and examples of when a significant financing component exists in a contract and how to account for it under ASC 606.

Trending Topics

Accounting Input vs. Output Methods in ASC 606

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Standalone Selling Prices in ASC 606

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Revenue Recognition Over Time

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Presentation of Contract Assets and Contract Liabilities in ASC 606

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The Five-Step Method

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General Overview

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Implementing ASC 606

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Get practical answers for the most common questions on what to expect when implementing ASC 606's standards in your business.

Overview of ASC 606

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Collaboration between FASB and IASB resulted in ASC 606. Filers have choice between Full Retrospective and Modified Retrospective Adoption methods.

The Five-Step Method

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Summary of each of the five steps of ASC 606 and key issues entities need to consider when completing each step.

Transition Dates and Methods

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Stay up-to-date on an entity’s required ASC 606 transition date and its most beneficial transition method, which varies based on entity type and industry.

Step 1 : Contract

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Collectibility of Consideration

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Analysis of the collectibility requirement of ASC 606, including accounting for contract's with initial and subsequent collectibility issues.

Identify the Contract

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The first step of ASC 606 is to identify the contract with a customer. ASC 606 outlines many criteria, including legal enforceability and collectability.

Termination Clauses

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Termination clauses can impact the contract term, which has implications for all steps of the revenue model. Read about the most common issues that entities face related to termination clauses.

Combining Contracts

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Analysis and examples of the criteria for determining if contracts entered into with a customer at or near the same time must be combined for revenue recognition.

Step 2 : Performance Obligations

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Stand-Ready Obligations

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Analysis and examples of the different types of Stand-Ready Obligations under ASC 606.

Identifying Promised Goods & Services

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Identify promised goods and services by analyzing customer perspective, immateriality, implicit promises, setup activities, and marketing incentives.

Distinct Goods or Services in ASC 606

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Analysis of guidance and criteria under ASC 606 for distinct goods or services, along with case studies and examples.

Principal/Agent Considerations (Gross vs Net) in ASC 606

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Analysis and examples of the criteria for determining principal vs. agent (gross vs. net) presentation under ASC 606

Step 3 : Transaction Price

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Significant Financing Component in ASC 606

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Analysis and examples of when a significant financing component exists in a contract and how to account for it under ASC 606.

Variable Consideration and the Constraint

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Analysis and example of estimating variable consideration and applying the constraint under ASC 606.

Rights of Return and Customer Acceptance in ASC 606

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Depending on the type, a right of return may be a variable consideration under ASC 606.

Payments to Customers for Cooperative Digital Marketing

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Many digital marketing arrangements involve consideration payable to a customer. Learn whether such payments should be a reduction of revenue or a marketing expense.

Step 4 : Allocate Revenue

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Estimating Standalone Selling Prices: Case Study

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Home automation equipment contains many deliverables that may be assessed in different ways to estimate a standalone selling price under the ASC 606 guidance.

Standalone Selling Prices in ASC 606

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A breakdown of the methods used to identify standalone selling price.

Allocating Variable Consideration in ASC 606

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Analysis and illustrative examples of the two criteria given in ASC 606 for allocating variable consideration to performance obligations.

Allocating Discounts

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Allocating variable and fixed discounts to the transaction price under ASC 606, includes significant changes from ASC 605 to ASC 606.

Step 5 : Recognize Revenue

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Accounting Input vs. Output Methods in ASC 606

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Analysis of the input and output methods to measure progress towards completion of a performance obligation satisfied over time in ASC 606

Unexercised Rights (Breakage) in ASC 606

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Analysis and examples of how customers' unexercised rights (breakage) affect how the transaction price is allocated to performance obligations

Revenue Recognition Over Time

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Description of the three criteria in ASC 606 for determining whether revenue is recognized over time. Illustrative examples of each criterion are included.

Bill-and-Hold Arrangements in ASC 606

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ASC 606's four criteria for determining bill-and-hold arrangements and when storage service represents a separate performance obligation.

CASE STUDIES »

Software and Postcontract Customer Support (PCS): Case Study

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Software revenue recognition may change under ASC 606, especially when distinct elements of PCS are determined to be separate performance obligations.

Estimating Standalone Selling Prices: Case Study

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Home automation equipment contains many deliverables that may be assessed in different ways to estimate a standalone selling price under the ASC 606 guidance.

Mattel, Inc. and Toys R Us – Evaluating Collectibility when a Customer Experiences Financial Distress: Case Study

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Learn how Mattel evaluated the collectibility of revenue throughout Toys R Us’ bankruptcy.

SmokeyMan LO: Virtual Goods Case Study

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In today’s virtual gaming world, many games across multiple platforms allow players to access their virtual environment for free while in-game purchases of various virtual currencies and goods allow players to enhance gameplay. Popular freemium games such as Candy Crush,...

OTHER ISSUES »

Sales- and Usage-Based Royalties in ASC 606

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Analysis and examples of ASC 606's sales- and usage-based royalty exception criteria and how to recognize revenue using the exception

Licenses for Intellectual Property

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Description and examples of revenue recognition for licenses of intellectual property under ASC 606, including determining license nature and timing of recognition.

Warranty Obligations in ASC 606

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Analysis and examples of the two types of warranties under ASC 606 and the three factors used to distinguish between these types.

COVID-19 Impact on Revenue Recognition

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COVID-19 impacts much of the revenue model. Learn which parts of your revenue policy and procedures may need to be adapted in response to the recent pandemic.

INDUSTRY-SPECIFIC ISSUES »
Airline industry firms face unique challenges and considerations when implementing ASC 606 revenue recognition standards.

Common ASC 606 Issues: Airline Entities

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Airlines face unique issues as they apply ASC 606. Gain a deeper understanding of how to navigate these key issues.

Common ASC 606 Issues: Media and Entertainment Entities

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Media and Entertainment companies face unique issues as they apply ASC 606. Gain a deeper understanding of how to navigate these key issues.

Common ASC 606 Issues: Asset Management

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Asset managers face unique issues as they apply ASC 606. Gain a deeper understanding of how to navigate these key issues.

Common ASC 606 Issues: Automotive Entities

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Implementing ASC 606 requires a substantial amount of time and expertise, with specific challenges rising in each industry. Gain a deeper understanding of the key issues that automotive entities face as they transition to ASC 606.