The new revenue recognition standard 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 steps one through four 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: Considerations for Transaction Price – Part One and Part Two
• Revenue Recognition: Allocate Transaction Price to Performance Obligations

This segment is designed to evaluate Step Five of the new model dealing with recognizing revenue which is the final step in applying the new revenue recognition standard. For performance obligations that are fulfilled at a point in time, revenue is recognized at the fulfillment of the performance obligation. For performance obligations satisfied over time, an entity must decide how to appropriately measure the progress and completion of the performance obligation. A performance obligation is satisfied when or as control of the good or service is transferred to the customer. There are several issues companies should consider in applying step 5 of the standard:

• Determining if a Performance Obligation is satisfied over time
• Identifying indicators of transfer of control of goods/services
• Utilizing input and output methods to measure progress of revenue recognition
• Understanding stand-ready obligations and how to apply discounts.

Within this segment, we will cover the aspects of recognizing revenue.

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/

NOTE: The revenue recognition courses and the certificate are fully accurate and up-to-date per the standard. In a few places, Covid examples were used however the example does not impact the accuracy of the course. Although COVID continues to be an issue in many areas, similar events can be related to other examples that may occur in today’s economy. These are just examples and something to consider in the event of future economic issues that may occur that would be impactful to the company in the same manner.