50 docs tagged with "asc-606"

An entity that arranges for another party to provide goods or services, requiring revenue to be recorded strictly on a net basis. The entity only reco...

When the total contract price is less than the sum of standalone selling prices, the discount must be allocated across the performance obligations. It...

A basic warranty guaranteeing the product functions as intended, treated strictly as a cost accrual rather than a revenue deferral. It does not provid...

A contract where an entity bills a customer for a product but retains physical possession of the product until a later date. Revenue can only be recog...

The portion of prepaid customer rights that the company statistically expects will never be exercised. Revenue is recognized proportionally as the act...

The Step 1 requirement stating a contract does not exist unless it is probable the entity will collect the consideration it is entitled to. Revenue ca...

A requirement for contract creation dictating that the risk, timing, or amount of the entity's future cash flows is expected to change. Without it, a ...

Delivering a product to another party while retaining control, meaning revenue cannot be recognized until a subsequent consumer sale occurs. The deliv...

A rule stating variable consideration can only be recognized if it is highly probable that a significant reversal will not occur. This prevents compan...

An entity's right to consideration in exchange for goods or services transferred, conditioned on something other than the passage of time. It reflects...

The requirement to account for two or more contracts entered into at or near the same time with the same customer as a single contract. This prevents ...

An entity's obligation to transfer goods or services for which it has already received consideration from the customer. It sits on the balance sheet u...

A change to an existing contract that requires an immediate, retroactive adjustment to revenue recognized to date. This happens when the remaining goo...

A change to the scope or price of a contract that is treated as a completely new, separate contract going forward. This occurs when additional distinc...

The exact moment a customer obtains the ability to direct the use of, and obtain substantially all remaining benefits from, an asset. This legal trans...

Direct costs incurred to satisfy a performance obligation that generate resources used in the future, which must be capitalized. They align the recogn...

Incremental costs of obtaining a contract, such as sales commissions, that the entity expects to recover and must capitalize. These costs are then amo...

Estimating variable consideration by calculating the sum of probability-weighted amounts in a range of possible outcomes. It is highly effective when ...

Initial fees paid to open a location, requiring distinct obligations to be heavily scrutinized and often unbundled. Equipment transfers may be recogni...

Upfront non-refundable fees charged to configure a system, which generally do not transfer a distinct service to the customer. They must usually be de...

Measuring project progress based on the entity's efforts or inputs relative to the total expected inputs. It is often calculated using labor hours exp...

An option provided to a customer to acquire additional goods or services at a discount they would not receive without the original contract. This requ...

A contract clause where the customer commits to spending a minimum amount of money, regardless of actual consumption. It requires careful reconciliati...

Estimating variable consideration by using the single most likely outcome in a contract with binary results. It is the required method when a company ...

When a customer pays for goods or services using items other than cash, such as equity, requiring measurement at contract inception fair value. Subseq...

A contract in which the unavoidable costs of meeting the obligations exceed the expected economic benefits. The entire expected loss must be recognize...

Measuring progress based on the direct, measurable value to the customer of the goods or services transferred to date. It is an objective standard rel...

Revenue recognized continuously as the entity satisfies a performance obligation over a period of time. This is the standard method for subscriptions,...

An over-time revenue recognition method based on the continuous progress made toward complete satisfaction of a performance obligation. It ensures rev...

A promise in a contract with a customer to transfer a good or service that is distinct. It serves as the foundational unit of account for determining ...

Revenue recognized at a single specific moment when control of the promised good or service transfers entirely to the customer. It is typically used f...

Allowed accounting shortcuts under ASC 606 designed to save time and effort if the final financial result isn't materially different. They prevent com...

An entity that controls a promised good or service before transferring it to the customer, allowing revenue to be recorded on a gross basis. The entit...

An obligation to refund some or all of the consideration received from a customer, requiring a reduction in recognized revenue. It represents cash hel...

A contract where an entity sells an asset but promises or has the option to repurchase it, often blocking immediate revenue recognition. These are typ...

An SSP estimation method allowed only when the standalone selling price is highly variable or uncertain. It involves subtracting the observable SSP of...

A customer's contractual right to return a product and receive a refund, credit, or exchange. Companies must estimate expected returns and recognize a...

A license where the seller continues to support, update, and maintain the intellectual property over the contract term. Revenue is recognized evenly o...

A license of intellectual property granting the customer the software or media as it exists at a point in time, with no expected updates. Revenue is r...

A specific exemption for IP licenses where revenue is recognized only when the subsequent customer sale or usage actually occurs. It eliminates the ne...

An extended warranty providing a service beyond basic functionality, treated as a completely distinct performance obligation. A portion of the transac...

A situation where the timing of payments provides the customer or the entity with a significant benefit of financing the transfer of goods. The transa...

A variable consideration constraint requiring the seller to refund money or issue credits if service level agreements are failed. These expected penal...

The price at which an entity would sell a promised good or service separately to a customer under similar circumstances. If a contract contains multip...

The amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services. It requires calculating...

A periodic reconciliation billing process where a customer is charged for usage that exceeded their baseline contract commitment. It ensures the compa...

A recognized right to consideration that is unconditional but has not yet been invoiced. It differs from a contract asset because only the passage of ...

A pricing model where the customer pays strictly based on their actual consumption of the promised good or service. Revenue is constrained and recogni...

Any portion of the transaction price that is not fixed, such as performance bonuses, penalties, refunds, or discounts. Entities must estimate this amo...

A pricing structure where the price per unit decreases retroactively as the customer's purchase quantity increases. It requires ongoing estimation of ...