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The new revenue recognition standard (ASC 606) outlines five steps for proper compliance. At the surface, these steps seem simplistic. However, there are many components that should be considered within each step based on your process 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 and Part Two
- Revenue Recognition: Considerations for Performance Obligations – Part One and Part Two
- Revenue Recognition: Determine the Transaction Price – Part One and Part Two
This segment is designed to evaluate Step Four of the new model dealing with allocating the transaction price. 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. Transaction price is allocated to performance obligations (PO’s) based on relative stand-alone selling price (SSP). The standard identifies three separate estimation methods that can be used to estimate stand-alone selling price. These include: Adjusted market assessment approach; expected cost-plus margin approach and residual approach. These approaches can also be utilized when considering how to allocate discounts and variable consideration.
Within this segment, we cover the aspects of allocating the transaction price for revenue recognition.
Learning Objectives
- Explore step four of the revenue recognition model: Allocate the Transaction Price.
- Identify examples of estimation approaches for stand-alone selling price (SSP).
- Explore the adjusted market assessment estimation approach.
- Identify examples of the adjusted market assessment approach.
- Explore the expected cost-plus margin approach.
- Identify examples of the expected cost-plus margin approach.
- Explore the residual estimation approach.
- Identify examples of the residual estimation approach.
- Explore how to allocate discounts.
- Explore variances between Accounting Standards Codification (ASC) 605 and ASC 606.
- Explore how to allocate variable consideration.
Last updated/reviewed: November 19, 2019
Included In Certifications
This course is included in the following Certification Programs:
15 CoursesRevenue Recognition Certification
- Revenue Recognition Standard Overview
- Revenue Recognition: Identify The Contract Part 1
- Revenue Recognition: Identify The Contract Part 2
- Revenue Recognition: Performance Obligations Part 1
- Revenue Recognition: Performance Obligations Part 2
- Revenue Recognition: Transaction Price Part 1
- Revenue Recognition: Transaction Price Part 2
- Revenue Recognition: Allocating Transaction Price
- Revenue Recognition: Recognize Revenue
- Revenue Recognition: Scenarios For Identify The Contract
- Revenue Recognition: Scenarios For Performance Obligations
- Revenue Recognition: Scenarios For Transaction Price
- Revenue Recognition: Scenarios For Transaction Price And Recognize Revenue
- Revenue Recognition: Case Scenarios Part 1
- Revenue Recognition: Case Scenarios Part 2
24 Reviews (155 ratings)Reviews
Anonymous
(VP Finance)
This course is really necessary to understand step 4 of the new revenue recognition rule under ASC 606 and Ms. Fountain does a great job in providing examples to clarify the standard.
Anonymous
(Vice President and Corporate Controller)
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.
Anonymous
(-)
Another great course from Lynn Fountain - full of examples to clarify the relevant guidance, moving at a great pace, and well organized to facilitate understanding. The series on revenue is an excellent learning opportunity.
Shuting He
( at China Eastern Airlines leasing)
After listening to the course, I still was a little counfused with the contents and could not tell the big differenced between the 605/606 and some other concepts, Maybe more examples could be helpful!!!
Anonymous
()
This is the most challenging part of the new pronouncement, for me. The course contained the right amount of detail to retain, and I'm sure I'll reference back to this course in the future.
Steven Collins
(Sr. Director of Cost Management and Comp.. at Vertex Aerospace)
Excellent coverage of part 4 of the revenue recognition process. This course effectively covers a broad spectrum of issues associated with allocation of the transaction price.
Anonymous
(Sr. Accountant)
This was a tough course due to the massive amount of terminology, but Lynn's examples helped me to learn the material in an efficient and effective way.
Inna Shmukler
(Controller at Fornetix LLC)
Very good course overall. Examples really helped with understanding all major concepts. It might have been even better if examples were not that simple.
Anonymous
()
Good overview of revenue recognition as it applies to Transaction pricing as well as the major changes from ASC 605 and 606 recognition principals.
Jay Bineau
( at Seigler & Tweedlie)
Allocating the price to the performance obligation was not as diffucult as one assumes if you flollow the step by step analysis
Robert Stellato
( at DS Smith)
Very good course.. Lots of really good examples that were easy to follow and dealt well with the complexities of the standard.
Sharon King
(Contractor at Self employed)
A lot of material was covered in this topic, but the instructor provided several examples with thorough details.
Dowton Martin
(Accounting and Finance Consultant at DLC Inc)
The examples were excellent and the material covered was very in-depth and informative. This is a great course.
Anonymous
(Self)
Very good look at the various methods for allocating revenue, and the differences from the old standard.
Anonymous
(Accountant II)
What you would expect for a foundation level course. The questions proved to be a nice refresher.
Anonymous
(NA)
Very nicely explained concepts and appropriate examples for better understanding of the subject.
Sergiy Korytko
(Sr. Analyst at Chegg)
The examples were very helpful and allowed me to get a firm grasp of the material. Thank you!
Anonymous
()
The revenue recognition series of videos is excellent and I recommend them all. Thank you!
Chris Grimes
(Rules Master at Cisco)
Good overview of hwo to allocate transaction price based on performance obligations.
Anonymous
(Revenue Accountant)
Thank you for the coverage of Allocations! This course is very helpful.
Victor Fuentes
(Manager at RSM)
great course for financial reporting and accounting professionals
Anonymous
(Associate Director)
This course provided a good overview of revenue recognition.
Anonymous
(Sr. Revenue accountant)
Excellent course and practical examples. Very helpful!
Anonymous
(SVP, Finance)
Excellent practical course --well organized and clear
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 .