Step 1 : Contract

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.

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.

The ASC 606 revenue recognition standard requires that multiple contracts with the same customer be combined under some circumstances.

Contract Modifications
Part I – Separate Contracts

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Analysis of the two options for treatment of contract modifications under ASC 606: (1) treated as a modification or (2) treated as a separate, standalone contract.

Changes to contracts present challenges in accounting that must be processed according to guidance from ASC 606 and other accounting standards.

Contract Modifications
Part II – Contract Modification Treatment

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The prospective treatment method vs. the cumulative catch-up adjustment method of applying contract modification treatment under ASC 606.

Contract and changes in the business context have important implications for revenue recognition under ASC 606.

Contract Modifications
Part III – The Hindsight Expedient

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Analysis of ASC 606's practical expedient for contract modifications -- to use hindsight to account for all contract modifications at once.

The hindsight practical expedient helps entities address contract modifications under ASC 606.

Definition of a Customer

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Analysis of the updated definition of a customer in ASC 606's scope considerations, including examples of common transactions in a business context.

The customer in a transaction has a specific definition and criteria under ASC 606.

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.

Contract details must conform to specific criteria under the ASC 606 Revenue Recognition standard.

Scope of ASC 606 and Interaction with Other Guidance

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Analysis of the scope considerations of ASC 606 and how ASC 606 interacts with other guidance, including an example of a transaction with mixed guidance.

Revenue recognition under ASC 606 requires careful consideration of the scope of guidance and its interaction with other guidance.

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.

Contracts include termination clauses that should be considered carefully.