This course is the first in a series on the Topic 606 (ASC 606) revenue recognition standard. The standard outlines five steps for proper compliance. At the surface, these steps seem simplistic. However, there are many considerations that should be considered within each step based on your process and industry.
This course is designed to provide an overview of the technical guidance and outline the five steps involved in the revenue recognition model. We also explore some concepts to consider within each step and then evaluate some challenges that specific industries may have when complying with the standard.
On May 28, 2014, the Financial Accounting Standards Board (FASB) completed its Revenue Recognition project. It issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606). The guidance establishes principles to report useful information to users of financial statements about the nature, timing, and uncertainty of revenue from contracts with customers.
The standard affects all entities (public, private, and not-for-profit) that have contracts with customers. Exclusions include:
- Leases accounted for under FASB Accounting Standards Codification (ASC) 840, Leases;
- Insurance contracts accounted for under FASB ASC 944, Financial Services—Insurance;
- Most financial instruments, and guarantees (other than product or service warranties).
Transaction and industry specific revenue recognition guidance is eliminated. It is replaced with a principle based approach for determining revenue recognition. The new standard requires significantly more disclosure than previous generally accepted accounting principles (GAAP).
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 the effective dates for the new revenue recognition standard.
- Explore the need for the new revenue recognition standard.
- Explore the new revenue recognition core principles and the five-step revenue model.
- Identify the impact of the new revenue recognition standard on various revenue concepts.
- Explore the impact of the revenue recognition standard on various industries.
Included In Certifications
This course is included in the following Certification Programs:
18 CoursesThe Controllership Series Certification
- The Controllership Series: The Controller Function - Elevating the Role
- The Controllership Series: The Controller Function - Strategic and Annual Planning
- GAAP Principles, Assumptions and Considerations
- The Treasury Function Part 1: Cash, Liquidity and Investments
- The Controllership Series: The Controller Function - Cash and Investments
- ASC 842 Accounting for Leases - Deep Dive
- Revenue Recognition (ASC Topic 606) Standard Overview
- The Controllership Series: The Controller Function - Inventory Part 1
- The Controllership Series: The Controller Function - Inventory Part 2 - Inventory Valuation, Physical Inventory Methods and Inventory fraud
- The Controllership Series: Overhead, Direct and Indirect Costs and Allocation Methods
- The Controllership Series: Financial Statement Preparation and Presentation
- Analyzing Financial Ratios - Leverage
- Analyzing Financial Ratios - Performance And Efficiency
- The Controllership Series: The Controllers Role in Data Analytics and Big Data
- The Controllership Series: The Financial Close Process
- The Controllership Series: Managerial Accounting Basics and Cost Principles
- The Controllership Series: Sales, Collections and Customer Credit
- Tools for The Controllership Series Certificate
17 CoursesRevenue Recognition Certification
- Revenue Recognition (ASC Topic 606) Standard Overview
- Revenue Recognition (ASC Topic 606): Identify The Contract Part 1
- Revenue Recognition (ASC Topic 606): Identify The Contract Part 2
- Revenue Recognition (ASC Topic 606): Performance Obligations Part 1
- Revenue Recognition (ASC Topic 606): Performance Obligations Part 2
- Revenue Recognition (ASC Topic 606): Transaction Price Part 1
- Revenue Recognition (ASC Topic 606): Transaction Price Part 2
- Revenue Recognition (ASC Topic 606): Allocating Transaction Price
- Revenue Recognition (ASC Topic 606): Recognize Revenue
- Revenue Recognition (ASC Topic 606): Scenarios For Identify The Contract
- Revenue Recognition (ASC Topic 606): Scenarios For Performance Obligations
- Revenue Recognition (ASC Topic 606): Scenarios For Transaction Price
- Revenue Recognition (ASC Topic 606): Scenarios For Transaction Price And Recognize Revenue
- Revenue Recognition (ASC Topic 606): Case Scenarios Part 1
- Revenue Recognition (ASC Topic 606): Case Scenarios Part 2
- Revenue Recognition (ASC Topic 606) COVID Implications
- Revenue Recognition (ASC Topic 606): Disclosure Requirements “Contracts with Customers”
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Prerequisites
No Advanced Preparation or Prerequisites are needed for this course.
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