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Costs to Fulfill a Contract in ASC 606

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Analysis of ASC 606's treatment of contract fulfillment costs, including scope considerations, the capitalization criteria, amortization, and impairment.

Understanding & Accounting for Cryptocurrency Payments

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This article addresses the trajectory of the digital asset world and its relation to accounting principles.

Trending Topics

Understanding & Accounting for Cryptocurrency Payments

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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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General Overview

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Deferred revenue from an acquisition can be a tricky thing to value. Read more about how to account for deferred revenue.

Deferred Revenue in a Business Combination

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Deferred revenue from an acquisition can be a tricky thing to value. Read more about how to account for deferred revenue.

It is important to understand the unique differences and considerations involved in implementing ASC 606 and IFRS 15.

ASC 606 vs IFRS 15

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This article outlines the differences between the U.S. and international accounting standards for revenue recognition.

Implementing ASC 606 in any firm requires careful consideration and planning to be successful.

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.

Applying the ASC 606 revenue recognition standard is an important consideration for companies of all types and sizes.

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.

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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Noncash Consideration

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Determine the transaction price of a contract with noncash consideration under ASC 606, including when and how to measure the variable consideration caused by fluctuating fair value.

Price Concessions in ASC 606

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Analysis and examples of price concessions based on either the customer's expectation or the company's intent

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.

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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Revenue Recognition for Shipping Agreements

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The final step of the Accounting Standards Codification (ASC) 606 five-step model states that a company recognizes revenue when control of a promised good or service is transferred to the customer. We explain this guidance generally in a separate article,...

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.

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 »

Costs to Fulfill a Contract in ASC 606

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Analysis of ASC 606's treatment of contract fulfillment costs, including scope considerations, the capitalization criteria, amortization, and impairment.

Understanding & Accounting for Cryptocurrency Payments

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This article addresses the trajectory of the digital asset world and its relation to accounting principles.

ASC 606 and the 2020 AICPA Conference

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In the recent 2020 AICPA conference, revenue recognition was a hot topic, especially relating to principal-agent guidance and identification of performance obligations.

Loss Contracts

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Guidance for loss contracts is not included in ASC 606, but is instead included in ASC 605.

INDUSTRY-SPECIFIC ISSUES »
Oil and gas entities face unique challenges and considerations when implementing ASC 606.

ASC 606 and the Oil and Gas Industry

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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 oil and gas entities face as they transition to ASC 606.

ASC 606 for Franchisors

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Franchisors face unique issues when accounting for revenue under ASC 606. This article addresses some of those issues.

Common ASC 606 Issues: Automotive Entities

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Automotive entities face unique issues as they apply ASC 606: Gain a deeper understanding of how to navigate these issues.

Common ASC 606 Issues: Power and Utility Entities

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Power and Utility entities face unique issues as they apply ASC 606: Gain a deeper understanding of how to navigate these issues.