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This course is a continuation of the discussion of Step One in the (ASC 606) revenue recognition process: Identifying the Contract.  Specifically, this session delves further into the considerations surrounding contract modifications, change orders, unpriced change orders, cancellations, non-finalized changes and accounting treatment when a contract does not exist.

On May 28, 2014, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) issued converged guidance on recognizing revenue in contracts with customers.  The objective of the guidance is to establish principles to report useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue from contracts with customers.  The new guidance provides several benefits to financial statement users.  Entities applying the new standard for contract revenue recognition will follow five steps:

  • Identify the contract with the customer
  • Identify performance obligations
  • Determine transaction price
  • Allocate transaction price to performance obligations
  • Recognize revenue when each performance obligation is satisfied

 

 

The course utilizes many examples from numerous industries to enhance learning of the various concepts.

Learning Objectives

  • Explore the components and requirements around contract modifications.
  • Identify methods to determine contract modification status.
  • Explore accounting considerations for contract modifications.
  • Identify methods to account for unpriced change orders.
  • Explore modifications that fall under the cumulative catch-up accounting rules.
  • Explore accounting for non-finalized contract changes.
  • Explore accounting for contract cancellations.
  • Identify accounting treatment when it is determined a contract does not exist.
  • Explore the concept of contract combinations.
Last updated/reviewed: November 20, 2017

Included In Certifications

This course is included in the following Expert Certifications:

15 CoursesRevenue Recognition Certification

  1. Overview of Complying with the ASC 606 Revenue Recognition Standard
  2. ASC 606 Revenue Recognition: Considerations for Identifying the Contract Part 1
  3. ASC 606 Revenue Recognition: Considerations for Identifying the Contract Part 2
  4. ASC 606 Revenue Recognition: Considerations for Performance Obligations Part 1
  5. ASC 606 Revenue Recognition: Considerations for Performance Obligations Part 2
  6. ASC 606 Revenue Recognition: Determining the transaction price Part 1
  7. ASC 606 Revenue Recognition: Determining the transaction price Part 2
  8. ASC 606 Revenue Recognition: Allocating transaction price to performance obligations
  9. ASC 606 Revenue Recognition: Recognizing Revenue
  10. ASC 606 Revenue Recognition: Case Scenarios for Identifying the Contract
  11. ASC 606 Revenue Recognition: Case Scenarios for Performance Obligations
  12. ASC 606 Revenue Recognition: Case Scenarios for Transaction Price
  13. ASC 606 Revenue Recognition: Case Scenarios for Allocating Transaction Price & Recognizing Revenue
  14. ASC 606 Revenue Recognition: Case Scenarios for 5 Step Revenue Recognition Process Part 1
  15. ASC 606 Revenue Recognition: Case Scenarios for 5 Step Revenue Recognition Process Part 2

15 Reviews (69 ratings)Reviews

5
Member's Profile
Useful course for those who work with revenue and all accounting professionals in general.
3
Member's Profile
The examples are good and drive the concepts home. I would appreciate more examples of the same concepts using different industries. Manufacturing and widget sales are a good place to start, but then branch out to other industries like more software, etc.
5
Member's Profile
Ms. Fountain does it again! Contract modifications are tricky but she makes the topic understandable and clear. Her examples are easy to follow and concise.
5
Member's Profile
A good discussion of the intricacies involved in contract modifications - more good examples were included in this session.
5
Member's Profile
Very in-dept material which was very informative. The examples used were excellent and provided a wealth of information.
5
Anonymous Author
I loved the thorough examples that were included! It helped me learn the material much faster.
5
Anonymous Author
Great course, the slides are clear and concise, the instructor has good examples.
3
Member's Profile
Good overview of these new standards with practical examples. Thank you.
5
Member's Profile
Great detail - very helpful for preparing to use the new standard.
5
Member's Profile
Good discussion of the concepts related to contract modifications.
5
Member's Profile
material provided was helpful as the topic is a little confusing
5
Member's Profile
Great overview with lots of examples of modifying contracts.
4
Anonymous Author
Very informative with examples that are easy to understand.
4
Member's Profile
The examples were very helpful in this complex area
4
Member's Profile
great course in the series of accouting for revenue

Prerequisites

Course Complexity: Intermediate

No Advanced Preparation or Prerequisites are needed for this course. However, it is recommended to take the other courses in the series prior to completing this one.

Education Provider Information

Company:
Illumeo, Inc., 75 East Santa Clara St., Suite 1215, San Jose, CA 95113
Contact:
For more information regarding this course, including complaint and cancellation policies, please contact our offices at (408) 400- 3993 or send an e-mail to .
Course Syllabus
INTRODUCTION AND OVERVIEW
  2:12Introduction to Revenue Rec: Considerations for Identifying the Contract – Part 2
  6:31Contract Modifications
  6:53Determination of Modification Status
  8:39Accounting Considerations
  10:31Example 2
  3:55Example: Unpriced Change Order
  9:05Example Modifications: Cumulative Catch Up
  1:28Non-Finalized Changes
  2:30Cancellation Rights
  5:40Accounting When No Contract Exists and Examples
  4:42More Examples
  1:52Summary
CONTINUOUS PLAY
  1:03:56Revenue Rec: Considerations for Identifying the Contract – Part 2
SUPPORTING MATERIALS
  PDFSlides: Revenue Rec: Considerations for Identifying the Contract – Part 2
  PDFRevenue Rec: Considerations for Identifying the Contract – Part 2 Glossary/Index
REVIEW AND TEST
  quizREVIEW QUESTIONS
 examFINAL EXAM