This is the second course in the ongoing series evaluating the (ASC 606) Revenue Recognition Standard.  This course relates to step two of the standard “Considerations for Performance Obligations”.  Part 1 evaluated the concept of distinct and non-distinct goods and services and how they related to performance obligations.

Properly identifying performance obligations is a critical step in the five-step revenue recognition model.  It is a step that must be completed at the inception of the contract and prior to moving on to step three of the model.  As discussed in segment one on performance obligations, there are many types and variations of obligations and as such, management will be required to utilize significant judgment when applying this step.  However, it is important that the judgment be supported by considerations of the proper factors.

The course further evaluates areas that impact performance obligations.  We utilize multiple examples from various industries to illustrate the considerations that must be evaluated in line with both identifying performance obligations and allocating the transaction price appropriately. 

 

Note: Information within this course comes from readily available public domain documents and is utilized by the trainer as a supplement for relaying the course content.

Resources Consulted:
• ASC 606-10-32-15 to 32-20, 55-244 to 55-246.
• ASU 2014-09: “Revenue from Contracts with Customers.” BC229-BC247.
• Croner-I, “A14 Revenue from Contracts with Customers.” (2019). Section 7.4.2-2 and 7.4.2-2.
• FASB, ”Revenue Recognition Implementation Q&As.” January 2020). Questions 31-37.
• FASB TRG Memo 20: “Significant Financing Components.” 26 January 2015.
• FASB TRG Memo 30: “Significant Financing Components.” 30 March 2015.
• EY, Financial Reporting Developments: “Revenue from contracts with customers.”January 2020. Section 5.5.
• KPMG, Handbook: “Revenue Recognition.”December 2019. Section 5.5.
• PWC, “Revenue from contracts with customers”March 2020. Section 4.4.
https://www.revenuehub.org/

Learning Objectives
  • Explore the concept of revenue recognition related to performance obligations that may involve components such as:
    • Options to purchase additional goods/services
    • Identifying material rights
    • Shipping and handling charges
  • Identify and examine factors impacting performance obligations including:
    • Principal vs. agent status
    • Warranties
    • Options for additional goods and services
    • Non-refundable up-front fees
    • Stand-ready obligations
    • Rights of returns
Last updated/reviewed: March 8, 2024

Included In Certifications

This course is included in the following Certification Programs:

17 CoursesRevenue Recognition Certification

  1. Revenue Recognition (ASC Topic 606) Standard Overview
  2. Revenue Recognition (ASC Topic 606): Identify The Contract Part 1
  3. Revenue Recognition (ASC Topic 606): Identify The Contract Part 2
  4. Revenue Recognition (ASC Topic 606): Performance Obligations Part 1
  5. Revenue Recognition (ASC Topic 606): Performance Obligations Part 2
  6. Revenue Recognition (ASC Topic 606): Transaction Price Part 1
  7. Revenue Recognition (ASC Topic 606): Transaction Price Part 2
  8. Revenue Recognition (ASC Topic 606): Allocating Transaction Price
  9. Revenue Recognition (ASC Topic 606): Recognize Revenue
  10. Revenue Recognition (ASC Topic 606): Scenarios For Identify The Contract
  11. Revenue Recognition (ASC Topic 606): Scenarios For Performance Obligations
  12. Revenue Recognition (ASC Topic 606): Scenarios For Transaction Price
  13. Revenue Recognition (ASC Topic 606): Scenarios For Transaction Price And Recognize Revenue
  14. Revenue Recognition (ASC Topic 606): Case Scenarios Part 1
  15. Revenue Recognition (ASC Topic 606): Case Scenarios Part 2
  16. Revenue Recognition (ASC Topic 606) COVID Implications
  17. Revenue Recognition (ASC Topic 606): Disclosure Requirements “Contracts with Customers”
85 Reviews (350 ratings)

Reviews

5
Member's Profile
I did it. Got 90% on this sixth course in the series. Lynn, I am very grateful for your ASC606 courses. I was long overdue getting my head around this standard. Now I am debriefed enough to tackle what may come my way. Also, I know you are available to answer a question about the course content if need be. Thank you for everything you bring to Illumeo. They are blessed to have you. Best, Larry

4
Anonymous Author
I've been completing each of the courses under the Revenue Recognition (ASC Topic 606) that Lynn has created. While this one was also great, along with the others, it did feel a bit haphazard and seemed to jump around a bit. Particularly with regard to the coupon/voucher examples and explanations. All in all, great course, I've learned a lot up to this point

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
Anonymous Author
Good introduction to various factors that need to be considered under the new revenue recognition standard relating to the timing and amount of revenue recognized for each separately classified performance obligation. Course contains lots of helpful and practical examples of how to calculate revenue under various scenarios.

4
Member's Profile
some of the detailed issues touched upon (contract modifications for sure) were not really fully explained. specific to contract mods, I did not feel the accounting example with the numbers/amounts was sufficiently explained to help us understand what was happening and why the percentages of allocation did not add up to 1

4
Anonymous Author
I feel like the first section of "Options to Purchase Additional Goods/Services at Discount" was out of place. It started talking about that example first when in reality it should have come later after Material Rights and the other health club examples. Overall, very good though besides being a bit out of order

5
Member's Profile
Very very strong course. The material and examples are relatable and easy to understand, which make the bigger picture of considerations for performance obligations much easier to understand. The section on Principal vs Agent was critical for me to understand in my current role. Great course!

5
Member's Profile
I am really sorry for providing incorrect ratings on the previous courses, I thought on the left most is "strongly agree" , and I checked boxes for "strongly disagree" please disregard those and replace with strongly agree for all courses that I have opted so far on RevRec. Thanks

4
Anonymous Author
Quite detailed lecture re: extra considerations in accounting for performance obligations in ASC606. One of the best instructors here. PP slides have many words fused together probably because of font choice. They were hard to follow.

5
Anonymous Author
As the concepts get more complex and the situations more technical, the instructor keeps them understandable through clear descriptions and the use of examples to demonstrate proper interpretation of the standards.

5
Member's Profile
This course was easy to understand and provided a lot of good information about identifying service obligations. The slides were consistent with the presentation and helped to cement the ideas presented.

3
Anonymous Author
Lots of moving pieces to this description of performance obligations as they relate to options, warranties and other non-product transfers. Examples were simplistic, but explained the points well.

4
Anonymous Author
Pretty much anyone who's involved in revenue recognition (from technical accountants to owners) would benefit from this course. However, the style is not engaging. Makes it much harder to process.

3
Anonymous Author
I found this course section very interesting and complex. Everything taught is very interesting and i never knew there were so many details involved in identifying the performance obligations.

4
Anonymous Author
The course were a little easy to confused,and thanks for Ms.Lynn' clear and detailed examples to explain the lots of differences between the concepts. The courses are very helpful to my works.

5
Anonymous Author
The course provides a deep dive into step 2 which is one of the most important steps as the company needs to identify all performance obligations prior to determining the revenue recognition

5
Anonymous Author
This is a very interesting course on performance obligation with respect to the new revenue recognition standard. The course is presented in a clear manner and contains interesting examples.

5
Anonymous Author
This course is great! Enhance my knowledge of performance obligations: learning the factors that impact performance obligations. Also, I learned a new concept, stand-ready obligations!

5
Anonymous Author
Lynn is an excellent instructor as always. She provides clear and concise instruction regarding topics that can be considered complex and breaks them down into easily digestible pieces.

5
Member's Profile
informative, gets the overall concept done. Wish there were more relevant examples and specific calculations or show how to set up a workbook. Disappointed the instructor isn/t a CPA

4
Anonymous Author
Another excellent course presented by Lynn Fountain regarding the new revenue recognition standard - full of examples and information that serve to build a foundation of knowledge.

5
Member's Profile
this course was the best so far since it had more useful examples. Real life examples are very much needed in revenue recognition since the subject matter can be somewhat abstract

4
Anonymous Author
Worthwhile broad overview of the topic which was well presented. The materials were in the bottom quartile of courses on this website (e.g no page numbers) but were useful.

5
Anonymous Author
All of the sections on performance obligations presented in this course provide a great overview of changes. The examples for material rights were very very helpful

5
Member's Profile
These are very specific materials that need to be understood to properly handle situations affecting performance obligations. Great course but be ready to focus!

5
Member's Profile
Great course by Lynn! This ASC 606 Part 2 covered performance obligations and included thoughtful considerations about material rights, warranties, etc.

4
Member's Profile
Overall good webinar. The instructor, however, jumped back and forth between the slides during the first section, which made it a bit hard to follow.

5
Member's Profile
The course is very informative and provides great insight into the considerations for performance obligations. I would highly recommend this course.

4
Anonymous Author
I appreciate the examples walking through different scenarios and showing the related math. This helps drive home the theory behind the guidance.

4
Anonymous Author
Overall a very informative course that gives a deeper understanding of the nuances and complexities related to rev rec and pob determination.

3
Anonymous Author
The examples of calculating the SSP and determining the deferred amounts are not clear. I watched couple of u tube videos to understand it.

5
Anonymous Author
This is another great course to be familiar with Step 2 of the new revenue recognition standard on how to interpret Performance Obligations.

5
Anonymous Author
Great topic as 606 applies to almost every company and the identification of performance obligations is key in the 5 step 606 assessment.

3
Anonymous Author
Some examples were confusing. Would be great if the examples and the calculations can be shown in a table format and compare side by side

5
Anonymous Author
The examples that were given by Lynn were very accurate and easy to understand. I feel that I am truly getting a grasp of the material!

5
Anonymous Author
The course is well laid out and gives easy to follow examples. The instructor does a good job of covering essential elements of ASC 606.

5
Anonymous Author
Broad range of topics covered, without being too detailed or technical. Overall, course was effective and appropriate.

4
Anonymous Author
This course was a good addition to part 1. There were clear examples provided and the examples were easy to follow.

5
Anonymous Author
The material is well organized. Provided many good examples. The instructor explained the concepts very well.

4
Anonymous Author
I learned how to account for the Options to purchase additional goods/services and identifying material rights.

5
Anonymous Author
This is a thorough course discussing the Performance Obligations. The slides are an excellent reference.

5
Anonymous Author
Using well thought out examples I thought the presenter did an excellent job of presenting the material.

5
Anonymous Author
Good work from Lynn, sometimes the additional services example were not very clear but over all good job

5
Member's Profile
This is another excellent revenue recognition course. I really like this series of courses. Thank you!

3
Member's Profile
Material Rights section needs cleaning-up & elaboration. Numbers didn't look right in all slides.

5
Anonymous Author
The program materials were relevant and contributed to the achievement of the learning objectives.

5
Anonymous Author
What you would expect for a foundation level course. The questions proved to be a nice refresher.

5
Anonymous Author
Very informative and interesting course. Would highly recommend it. Nicely explained concepts.

5
Member's Profile
Course covered the subject matter well. Gave a good overview of subject matter. Learned a lot.

5
Member's Profile
Good class, great slides and an exciting instructor. This is an important class for Rev rec.

5
Member's Profile
The examples illustrated in the presentation were very helpful in understanding the concepts.

3
Anonymous Author
This course was little confusing. The examples in the materials should have been more clear.

5
Member's Profile
very good examples that help to understand very complex rules with the new rev rec standard

5
Member's Profile
Goes in-depth and provides helpful examples to help solidify understanding of the guidance

5
Member's Profile
Lynn hits all the key points and provides excellent examples to help reinforce concepts.

5
Anonymous Author
Information was concise and the examples provided good information to support the lesson.

5
Anonymous Author
The course provide a good high level summary of performance obligations under ASC 606.

4
Member's Profile
A lot of information in this module. Good examples included but I could use even more,

5
Anonymous Author
Very accessible. It was easy to listen to the presentation and the slides were useful.

4
Anonymous Author
Nice overview of revenue recognition principles related to performance obligations.

5
Member's Profile
Really appreciated the examples to illustrate the accounting of the transactions

5
Member's Profile
Another well-done course with straightforward instruction and plenty of examples

5
Anonymous Author
The course was well organized and clear. The examples expanded my understanding.

4
Member's Profile
Lots of good examples and real life basis. Overall good lecture on this topic.

4
Anonymous Author
this was one the tougher sections, so the multiple examples really helped

4
Member's Profile
Good examples for material rights and principle vs agent considerations

5
Member's Profile
Good overview of these new standards with practical examples. Thank you.

4
Anonymous Author
This course provided a good overview of Step 2, performance obligations.

5
Anonymous Author
Provides additional detail of various types of performance obligations

4
Member's Profile
thorough and clear although the options section seemed out of sequence

5
Anonymous Author
Thanks Lynn, I am quite satisfied with the info. You are the best.

5
Anonymous Author
Very good content shared, good examples and scenarios presented,

4
Anonymous Author
Better examples were used. Very useful and informative module

4
Member's Profile
the course material was clear and the examples were helpful

5
Member's Profile
Just finished part 1 and learned even more here in part 2!

5
Member's Profile
Great course, offers some good examples, highly recommend.

4
Anonymous Author
great continuation from part 1. great choices of examples

5
Member's Profile
Another very thorough course provided by Lynn Fountain.

5
Anonymous Author
Another useful course for revenue recognition training!

4
Anonymous Author
Pretty good overview given the nature of the material.

4
Member's Profile
great course on performance obligations, very thorough

4
Anonymous Author
Helpful details and examples, appreciate the insight.

5
Anonymous Author
The materials are well organized with great examples.

5
Member's Profile
Good overview of material rights. Lots of examples.

5
Anonymous Author
Great information with clear and concise examples.

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 .
Instructor for this course
Course Syllabus
INTRODUCTION AND OVERVIEW
  Introduction to Revenue Rec: Considerations for Performance Obligations Part 2 1:41
Performance Obligations
  Options to Purchase Additional Goods/Services at Discount7:00
  Material Rights9:25
  Material Rights (Continued)3:33
  Shipping and Handling3:07
  Principal vs. Agent3:10
  Principle vs. Agent Changes From Past Standards4:55
  Warranties5:56
  Additional Goods/Services6:52
  Up-Front Fees7:32
  Example Up-Front Fees8:09
  Stand-Ready Fee4:44
CONCLUSION
  Rights of Return6:46
CONTINUOUS PLAY
  Revenue Rec: Considerations for Performance Obligations Part 2 1:12:52
SUPPORTING MATERIALS
  Slides: Revenue Rec: Considerations for Performance Obligations Part 2 PDF
  Appendix – Process Flow: Identify Performance ObligationsPDF
  Revenue Rec: Considerations for Performance Obligations Part 2 Glossary/IndexPDF
REVIEW AND TEST
  REVIEW QUESTIONSquiz
 FINAL EXAMexam