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The new (ASC 606) revenue recognition standard outlines five steps for proper compliance.  At the surface, these steps seem simple.  However, there are many components that should be considered within each step based on your company's processes and industry.  Previous courses in this series have covered the standard at a high level and evaluated step one and two of the standard.  They are:

  • Complying with the Revenue Recognition Standard
  • Revenue Recognition:  Considerations for Identifying the Contract - Part One
  • Revenue Recognition:  Considerations for Identifying the Contract - Part Two
  • Revenue Recognition:  Considerations for Performance Obligations – Part One
  • Revenue Recognition:  Considerations for Performance Obligations – Part Two

This segment is designed to evaluate Step Three of the new model dealing with Determining the Transaction Price.

Determining transaction price is more difficult than it may first appear. Transaction price is the basis for measuring revenue. It is the amount of consideration the entity expects to be entitled to in exchange for transferring promised goods or services. Determining transaction price requires election of policies and significant use of judgment.

Completing this step for fixed price contracts can be straightforward. However, the path becomes convoluted for variable priced contracts.  The new revenue recognition standard identifies three areas that affect the estimate of transaction price, which we will review:

  • Nature of consideration
  • Timing of consideration
  • Amount of consideration 

Learning Objectives

  • Explore the concepts that contribute to the transaction price.
  • Identify considerations when evaluating transaction price.
  • Explore the concept of variable consideration.
  • Identify methods to determine variable consideration.
  • Explore the concept of variability constraints.
  • Identify what constitutes implied variability.
Last updated/reviewed: October 28, 2018

Included In Certifications

This course is included in the following Certification Programs:

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

18 Reviews (94 ratings)Reviews

4
Anonymous Author
Good course for regular subscription price (not certification price). Benefited from taking all the courses. A lot of repetition could be viewed as reinforcing or redundant depending on how quickly can learn. Would rely on wording on slides more than those spoken, as less technically precise. Now have strong foundation in ASC 606.
5
Member's Profile
Another great session with Ms. Fountain. There is so much to consider with the new revenue recognition standard that you owe it to yourself to take this course.
4
Member's Profile
This course is full of detailed examples that drive home the underyling concepts from the revenue recognition standard. Very well presented as always.
5
Member's Profile
This course goes in-depth in term of determining the transaction price. It simplifies the standard and makes it interesting to follow and understand.
5
Anonymous Author
This was a challenging course, but well worth it! I really learned a lot and was able to expand my knowledge of the subject matter significantly.
4
Anonymous Author
Good summary level overview of Rev Rec step 3. This is a good natural progression through the series of revenue recognition training courses.
5
Member's Profile
Another great course by Lynn. In her style, the presentation material is filled with many great examples. Highly recommend this class.
4
Anonymous Author
This course was easy to follow thanks to the supporting materials that allows you to read through and review at your own pace.
4
Member's Profile
Great course in the revenue recognition series . A must for all accounting and financial reporting professionals
5
Anonymous Author
The instructor has a strong understanding of the topic and included good examples to apply the concepts to.
5
Anonymous Author
What you would expect for a foundation level course. The questions proved to be a nice refresher.
5
Member's Profile
Very informative course. All difficult aspects are well explained and examples helped a lot.
5
Anonymous Author
Useful course for those who work with revenue and all accounting professionals in general.
3
Member's Profile
Good examples for implied variability and for the expected value approach
5
Member's Profile
Good examples for implied variability and for the expected value approach
5
Member's Profile
Good overview of pricing under the new standard. Useful examples.
4
Anonymous Author
This course provided a good overview of revenue recognition.
5
Member's Profile
Great course with a lot of good examples. Highly recommend.

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
  2:08Introduction to Revenue Rec: Determine the transaction price Part 1
Determine the Transaction Price
  4:15Transaction Price
  6:31Considerations in Determining the Transaction Price
  4:55Methods to Determine Variable Consideration
  4:39Constrained Variability
  13:56Constrained Example
  8:43Implied Variability
  7:20Example
  3:44Example Variable Consideration Constrained
  2:13Summary Variable Consideration
CONCLUSION
  3:28Summary Constrained
CONTINUOUS PLAY
  1:01:52Revenue Rec: Determine the transaction price Part 1 Full Video
SUPPORTING MATERIALS
  PDFSlides: Revenue Rec: Determine the transaction price Part 1
  PDFRevenue Rec: Determine the transaction price Part 1 Glossary/Index
REVIEW AND TEST
  quizREVIEW QUESTIONS
 examFINAL EXAM