This course is dedicated to the evaluation of case scenarios related to Step Four and Five of the revenue recognition model.  Step Four entails “Allocating the Transaction Price to Performance Obligations”.  Step Five entails “Recognizing Revenue”.  Previous courses have outlined each of the individual five steps of the model and provided case examples.  We have also developed two broad case study courses that cover scenario examples for each of the five steps.

In order to focus directly on aspects within each step, individual courses have been created with multiple case scenarios that apply to the individual given steps.  This course includes the many considerations companies must take into account when determining how to allocate the transaction price to performance obligations and then move to the final step of recognizing revenue.  We review the concepts of allocation methods and methods to estimate stand-alone selling price.  We also discuss aspects involved in recognizing revenue including accounting for discounts, variable consideration and how to recognize revenue over time versus at a point in time.

After taking this course, you should be able to effectively apply your understanding of Step Four and Five of the revenue recognition model to specific scenarios within your business.  Each learning objective listed utilizes multiple examples from various industries to help interpret and practice the concept.

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
  • Identify important components involved in Step Four – Allocate transaction price to Performance Obligations (PO).
  • Explore the various estimation approaches for determining stand-alone selling price (SSP) outlined by the standard.
  • Identify how to allocate discounts between performance obligations.
  • Explore concepts of variable consideration.
  • Explore elements of Step Five – recognize revenue.
  • Identify how to recognize revenue over time vs. at a period of time.
  • Identify methods for measuring progress towards completion of a project including input method and output method.
  • Explore concepts of enforceable right of payment.
  • Identify components necessary when a right of return exists.
Last updated/reviewed: August 16, 2023

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”
41 Reviews (171 ratings)

Reviews

4
Anonymous Author
Overall, a very group recap. I find allocation of discounts and variable consideration to PO's one of the more challenging aspects of the guidance. The instructor does a decent job of going through the examples. I would recommend Illumeo look into a more traditional offering (class room set up) where students can dive deeper into the more nuanced aspects of the guidance. All in all, this coursework is good value for money.

4
Member's Profile
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.

4
Anonymous Author
The review here was enhanced by coverage of additional nuances of the standard, such as the discussion of the effect of consideration of determination of market share, expected profit margin, and distribution channel on the adjusted market estimation approach. The additional examples are also helpful.

5
Anonymous Author
Lynn Fountain is a thorough instructor for this seemingly "endless" topic. She does an excellent job dissecting intricacies of the standard as written. While audio/video is a bit monotonous, but the PP slides are excellent in supporting her narrative. Do use them along with the video stream!

4
Member's Profile
There are so many practical and interesting examples in the course and I thought it was so funny to study the lesson. But I still think there are so enouth examples to practice the revenue recognition. Thanks for MS.Lynn's instruction.

5
Member's Profile
Overall, great course and excellent instructor. The recorded video presentations were broken up in nice chunks which makes it more digestible. The examples and case scenarios were very helpful with understanding the material.

5
Anonymous Author
I liked how the instructor went through multiple case scenarios, and then tweaked the facts to show how a small change can alter how transaction is allocated to performance obligations and how revenue is recognized.

4
Anonymous Author
This is a good course that dives deep into examples of determination of transaction price and recognition of revenue. This course would benefit technical accountants and/or finance management personnel.

4
Anonymous Author
Another great course from Lynn Fountain on the topic of revenue recognition. Well-presented and informative, this course combined with others in the series builds a solid foundation of knowledge.

5
Anonymous Author
This is a great course to take in order to have a better understanding of Steps 4 & 5 of ASC Topic 606. Ms. Fountain provides great examples to be able to apply the concepts of steps 4 & 5.

5
Anonymous Author
Great course! This scenarios course felt to me like a summary of the two individual courses of "Allocating Transaction Price" and "Recognize Revenue" by the same instructor.

4
Anonymous Author
Good course in reviewing Allocations with the different methods of SSP. Thanks for another useful course on the topic of revenue recognition!

5
Member's Profile
Great course and excellent material the video presentations were very informative. The examples were very helpful in understanding the topic.

4
Member's Profile
It is a good course to solidify your the knowledge, but it repeats a lot from previous sessions. I wish it had more examples instead.

5
Anonymous Author
The course provides very good examples on transaction price allocation and recognition based on the new revenue recognition standards

5
Anonymous Author
This was a very informative course with lots of great information that will help me to apply ASC 606 standards in my current role.

4
Anonymous Author
This is an informative course on how Revenue should be recognized. The examples were very useful in understanding the topic.

5
Member's Profile
Liked the slides and its really helpful to have them to refer back to. Detailed explanation of revenue recognition methods.

5
Anonymous Author
The course covers very detailed material and the instuctor provides several relevant examples for each section.

4
Anonymous Author
Good stuff. Plenty of examples and content was not overly technical. Good starting point or refresher course.

5
Anonymous Author
Though more time consuming it might be helpful to offer at least a workable problem in the final exam area.

5
Anonymous Author
Great course which I recommend for additional knowledge and/or refresher on the Rec Rec Standard (ASC 606).

5
Anonymous Author
This was a good course, allocation examples were very clear and I like Lynn's way of explaining everything

4
Anonymous Author
This course provides good examples on applying Step 4 and Step 5 of ASC 606. They are easy to understand.

4
Anonymous Author
I learned how to explore the various estimation approaches for determining SSP outlined by the standard.

5
Member's Profile
Great course that goes into great detailed examples to help solidify the material being taught

4
Anonymous Author
allocating the discount being limited to only some things in the bundle was bit of a shock

5
Anonymous Author
Slides are very helpful for this course. The focus on recognition is clear and concise.

4
Member's Profile
Overtime vs. over time has different meanings. Please adjust your handouts accordingly.

5
Anonymous Author
clear and easy to understand lesson with plenty of examples to drive the points home

5
Anonymous Author
Good job in detailing out the information and showing how to apply them in practice.

5
Anonymous Author
Examples presented aid in making the understandability of the conent present clear

4
Member's Profile
Great course to reinforce information and concepts learned from prior courses.

4
Anonymous Author
Good recap to scenarios for transaction price and recognizing revenue.

4
Anonymous Author
Really liked this overview and examples. Good course for the material.

5
Anonymous Author
Well structure, well presented, contained good information to know.

5
Anonymous Author
Very good summary of the concepts outlined and very good examples

4
Anonymous Author
Appreciate the continued refinement of previously covered topics.

5
Member's Profile
Good examples and discussion on allocating price to obligations.

5
Anonymous Author
The materials are well-organized with detailed examples.

5
Anonymous Author
great info and examples to help solidify the concepts

Prerequisites
Course Complexity: Advanced

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 Questions and Answers(7 Questions)
User picture

Dear Mrs. Fountain,
Regarding the recognition of revenue, I have a PO for 02 same instruments, each instrument is independent from each other, only same pricing deal. Our customer requested to stage the shipment that one instrument ship in Q3 and the second one is to be shipped in Q4. We are in Q3 close, can we recognize the revenue for the first instrument that we already shipped?
Sincerely yours,
Han Vu

Member's Profile

I am sorry but Illumeo does not allow us to provide consulting advice. I can only speak to questions directly related to course material

User picture

Referencing the final exam, question #10, I felt option 1 is the correct answer.
May I know why the "Customer has declined to accept the asset" is an indicator that transfer of control has occurred between the selling entity and customer? Thank you!

Member's Profile

You are correct. Choice one is the right answer. I will have Illumeo correct the exam. Thanks for pointing this out

User picture

For question #8 in the final exam, why is the first choice wrong? The learning materials say that Compensation is meant to be the cost incurred to date plus a
reasonable margin. and I don't see performance to date "plus a reasonable margin" in the materials. So i think first choice is better.

Member's Profile

I will take a look at this when I can access my computer and then reply

Member's Profile

The answer is correct as marked. In the materials, right after the header page of enforceable rights of payment, it does state “performance to date” plus a reasonable margin

Instructor for this course
Course Syllabus
INTRODUCTION AND OVERVIEW
  Introduction to Revenue Recognition: Case Scenarios for Allocate Transaction Price And Recognize Revenue3:35
Case Scenarios
  Allocate8:12
  Example Adjusted Market16:03
  Expected Cost Plus Margin7:03
  Residual Approach11:05
  Variable Consideration9:51
  Recognize Revenue Overtime15:22
  Methods for Recognizing Revenue Overtime9:03
  When Output and Input are Inappropriate7:41
  Recognize Revenue at a Point in Time8:08
Conclusion
  Summary1:52
CONTINUOUS PLAY
  Revenue Recognition: Case Scenarios for Allocate Transaction Price And Recognize Revenue 1:37:55
Supporting Materials
  Slides: Revenue Rec: Case Scenarios for Allocate Transaction Price And Recognize RevenuePDF
  Revenue Rec: Case Scenarios for Allocate Transaction Price And Recognize Revenue Glossary/IndexPDF
REVIEW AND TEST
  REVIEW QUESTIONSquiz
 FINAL EXAMexam