Revenue Recognition Under ASC 606

This chapter covers revenue recognition under the modern contract model. The challenge is to work through the steps in the right order and recognize the points where control, pricing uncertainty, or performance-obligation structure changes the answer.

In This Chapter

• The ASC 606 Five-Step Revenue Recognition Model explains the core revenue framework.
• Principal-Agent Analysis and Variable Consideration covers two major judgment areas.
• Contract Costs, Licenses, and Nonrefundable Fees addresses additional application issues.
• Revenue Presentation and Disclosure Requirements explains statement and note effects.

How to Use This Chapter

• Work the five steps in order before jumping to revenue timing.
• Focus on which facts change control transfer, gross-versus-net presentation, or transaction price.
• Return here whenever a FAR miss involves contract structure or customer-payment timing.

In this section

• The ASC 606 Five-Step Revenue Recognition Model
  FAR coverage of contract identification, performance obligations, transaction price, allocation, and revenue recognition timing.
• Principal-Agent Analysis and Variable Consideration
  FAR application of gross-versus-net reporting and constrained variable consideration under ASC 606.
• Contract Costs, Licenses, and Nonrefundable Fees
  FAR treatment for incremental contract costs, licensing arrangements, and upfront nonrefundable fees under ASC 606.
• Revenue Presentation and Disclosure Requirements
  FAR coverage for contract assets, contract liabilities, revenue disaggregation, judgments, and ASC 606 disclosure.