Introduction
Brief Overview of the Five-Step Model for Revenue Recognition
In this article, we’ll cover the common journal entries for recognizing revenue under the five step model. The Five-Step Model for Revenue Recognition, as outlined in the Accounting Standards Codification (ASC) 606, provides a structured approach for recognizing revenue from contracts with customers. This model standardizes how companies should account for revenue across different industries, ensuring consistency and comparability in financial statements. The five steps in this model are:
- Identify the Contract with a Customer: A contract is an agreement between two or more parties that creates enforceable rights and obligations.
- Identify the Performance Obligations in the Contract: Performance obligations are promises to transfer distinct goods or services to the customer.
- Determine the Transaction Price: The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services.
- Allocate the Transaction Price to the Performance Obligations: The transaction price is allocated to each performance obligation based on the relative standalone selling prices.
- Recognize Revenue When (or As) the Entity Satisfies a Performance Obligation: Revenue is recognized when the entity transfers control of a good or service to the customer.
Importance of Accurate Revenue Recognition in Financial Reporting
Accurate revenue recognition is crucial in financial reporting because it directly impacts the financial statements’ reliability and integrity. Revenue is often one of the most significant figures reported in an entity’s financial statements, and it is a key indicator of business performance and profitability. Inaccurate or inconsistent revenue recognition can lead to misleading financial results, affecting stakeholders’ decisions, including investors, creditors, and regulatory authorities. Proper revenue recognition ensures that the financial statements present a true and fair view of the company’s financial position and performance, adhering to the principles of relevance, reliability, and comparability.
Purpose of the Article
The primary purpose of this article is to provide detailed guidance on the common journal entries associated with each step of the Five-Step Model for Revenue Recognition. By understanding these journal entries, accounting professionals can ensure accurate and consistent revenue recognition in compliance with ASC 606. This article aims to serve as a comprehensive resource, offering practical examples and scenarios to illustrate the application of the Five-Step Model in various contexts. Whether dealing with straightforward sales transactions or complex multi-element arrangements, this guide will help navigate the intricacies of revenue recognition and maintain adherence to accounting standards.
The Five-Step Model Overview
Step 1: Identify the Contract with a Customer
The first step in the Five-Step Model is to identify the contract with a customer. A contract is defined as an agreement between two or more parties that creates enforceable rights and obligations. For a contract to exist under ASC 606, the following criteria must be met:
- The parties to the contract have approved the contract and are committed to perform their respective obligations.
- The entity can identify each party’s rights regarding the goods or services to be transferred.
- The entity can identify the payment terms for the goods or services to be transferred.
- The contract has commercial substance, meaning that the risk, timing, or amount of the entity’s future cash flows is expected to change as a result of the contract.
- It is probable that the entity will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.
Step 2: Identify the Performance Obligations in the Contract
Once the contract with a customer has been identified, the next step is to identify the performance obligations within the contract. Performance obligations are the distinct goods or services promised in the contract. A good or service is distinct if:
- The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer.
- The entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract.
If goods or services are not distinct, they should be combined with other goods or services until a distinct performance obligation is formed.
Step 3: Determine the Transaction Price
The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. Determining the transaction price involves considering several factors:
- Variable Consideration: Includes discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, and penalties. The entity estimates the amount of variable consideration using either the expected value method or the most likely amount method.
- Significant Financing Component: Adjusts the promised amount of consideration for the effects of the time value of money if the timing of payments agreed to by the parties provides the customer or the entity with a significant benefit of financing.
- Non-cash Consideration: Measured at fair value, if it can be reasonably estimated. If not, the entity refers to the standalone selling price of the goods or services promised in exchange for the consideration.
- Consideration Payable to a Customer: Includes cash amounts that an entity pays, or expects to pay, to a customer or the customer’s customers, reducing the transaction price.
Step 4: Allocate the Transaction Price to the Performance Obligations
After determining the transaction price, the next step is to allocate it to the performance obligations in the contract. The allocation is based on the relative standalone selling prices of each distinct good or service. If the standalone selling price is not directly observable, the entity estimates it using one of the following methods:
- Adjusted Market Assessment Approach: Evaluates the market in which the entity sells goods or services and estimates the price that customers in that market would be willing to pay.
- Expected Cost Plus a Margin Approach: Forecasts expected costs of satisfying a performance obligation and adds an appropriate margin for that good or service.
- Residual Approach: Uses the total transaction price minus the sum of the observable standalone selling prices of other goods or services promised in the contract.
Step 5: Recognize Revenue When (or As) the Entity Satisfies a Performance Obligation
Revenue is recognized when the entity satisfies a performance obligation by transferring control of a promised good or service to the customer. Control can be transferred either at a point in time or over time, depending on the nature of the performance obligation.
- Point in Time: Indicators that control has been transferred include the entity’s present right to payment for the asset, the customer’s legal title to the asset, the entity’s transfer of physical possession of the asset, the customer’s acceptance of the asset, and the customer’s significant risks and rewards of ownership of the asset.
- Over Time: An entity recognizes revenue over time if one of the following criteria is met:
- The customer simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs.
- The entity’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced.
- The entity’s performance does not create an asset with an alternative use to the entity, and the entity has an enforceable right to payment for performance completed to date.
The Five-Step Model provides a comprehensive framework for recognizing revenue in a way that reflects the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled. By following these steps, entities can ensure their revenue recognition practices are in line with ASC 606 requirements.
Common Journal Entries for Each Step
Step 1: Identify the Contract with a Customer
Journal Entries for Contract Inception
At the inception of a contract, typically, no journal entry is required. The contract itself does not immediately impact the financial statements unless there is an initial transaction such as cash received or an obligation to perform.
Examples of Entries When Cash is Received Before Performance
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| [Date] | Cash | 10,000 | |
| [Date] | Deferred Revenue | 10,000 |
This entry records the cash received and the corresponding liability for the obligation to provide services in the future.
Step 2: Identify the Performance Obligations in the Contract
Journal Entries for Distinct Goods or Services
For distinct goods or services, no journal entry is needed until the performance obligation is satisfied and revenue can be recognized.
Examples of Entries for Bundled Contracts
When multiple goods or services are bundled in a contract and are considered distinct performance obligations, entries will occur as each obligation is satisfied.
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| [Date] | Accounts Receivable | 15,000 | |
| [Date] | Revenue (Software) | 15,000 | |
| [Date] | Accounts Receivable | 5,000 | |
| [Date] | Revenue (Installation) | 5,000 |
These entries recognize revenue as each distinct obligation (software and installation) is satisfied.
Step 3: Determine the Transaction Price
Journal Entries for Variable Consideration
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| [Date] | Accounts Receivable | 12,000 | |
| [Date] | Revenue | 12,000 |
This entry reflects the estimated transaction price including the variable consideration.
Examples of Entries for Discounts, Rebates, and Returns
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| [Date] | Accounts Receivable | 10,000 | |
| [Date] | Revenue | 9,500 | |
| [Date] | Deferred Revenue (Discount) | 500 |
This entry reflects the revenue net of the expected discount.
Step 4: Allocate the Transaction Price to the Performance Obligations
Journal Entries for Allocation Based on Standalone Selling Prices
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| [Date] | Accounts Receivable | 15,000 | |
| [Date] | Revenue (Software) | 15,000 | |
| [Date] | Accounts Receivable | 5,000 | |
| [Date] | Revenue (Maintenance) | 5,000 |
These entries allocate the transaction price based on the relative standalone selling prices.
Examples of Entries for Changes in Transaction Price Allocation
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| [Date] | Accounts Receivable | 2,000 | |
| [Date] | Revenue (Additional Service) | 2,000 |
This entry reflects the adjustment in allocation due to the additional service.
Step 5: Recognize Revenue When (or As) the Entity Satisfies a Performance Obligation
Journal Entries for Point in Time Revenue Recognition
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| [Date] | Accounts Receivable | 10,000 | |
| [Date] | Revenue | 10,000 |
This entry recognizes revenue when the product is delivered and control is transferred.
Journal Entries for Over Time Revenue Recognition
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| [Date] | Contract Asset (CIP) | 50,000 | |
| [Date] | Revenue (Construction) | 50,000 |
This entry recognizes revenue based on the progress towards completion of the contract.
Examples of Entries for Contract Modifications
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| [Date] | Accounts Receivable | 5,000 | |
| [Date] | Revenue (New Obligation) | 5,000 |
This entry reflects the allocation and recognition of revenue for the new performance obligation.
By following these journal entries for each step of the Five-Step Model, entities can ensure accurate and compliant revenue recognition in accordance with ASC 606.
Detailed Examples and Scenarios
Example 1: Sale of Goods with Variable Consideration
Contract Details
ABC Corporation enters into a contract to sell 1,000 units of its product to XYZ Company at $10 per unit. The contract includes a clause for a volume discount if XYZ Company purchases more than 900 units, reducing the price per unit to $9 if the threshold is met. Therefore, the transaction price is variable based on the final quantity purchased.
Step-by-Step Journal Entries
Step 1: Identify the Contract with a Customer
- The contract between ABC Corporation and XYZ Company is identified, meeting all the criteria outlined in ASC 606.
Step 2: Identify the Performance Obligations in the Contract
- The performance obligation is the delivery of 1,000 units of the product.
Step 3: Determine the Transaction Price
- The transaction price is variable due to the volume discount clause. ABC Corporation estimates that XYZ Company will purchase more than 900 units and applies the discount, setting the transaction price at $9 per unit.
Step 4: Allocate the Transaction Price to the Performance Obligations
- The transaction price is allocated entirely to the delivery of the 1,000 units of the product.
Step 5: Recognize Revenue When (or As) the Entity Satisfies a Performance Obligation
- Revenue is recognized when control of the goods is transferred to XYZ Company. The journal entries will reflect the variable consideration.
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| [Date] | Accounts Receivable | 10,000 | |
| [Date] | Revenue (at $10/unit initially) | 10,000 |
This entry records the initial sale of 1,000 units at $10 per unit.
Upon realization that the volume discount applies (i.e., XYZ Company purchases more than 900 units):
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| [Date] | Revenue | 1,000 | |
| [Date] | Accounts Receivable | 1,000 |
This entry adjusts the revenue to reflect the volume discount, reducing the price per unit to $9. The final transaction price for 1,000 units is therefore $9,000.
Summary of Journal Entries:
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| [Date] | Accounts Receivable | 10,000 | |
| [Date] | Revenue | 10,000 | |
| [Date] | Revenue | 1,000 | |
| [Date] | Accounts Receivable | 1,000 |
By following these journal entries, ABC Corporation can accurately recognize revenue for the sale of goods with variable consideration, ensuring compliance with ASC 606.
Example 2: Service Contract with Multiple Performance Obligations
Contract Details
Tech Solutions Inc. enters into a contract with a customer to provide a software license, installation services, and one year of technical support. The total contract price is $30,000. The standalone selling prices are as follows:
- Software license: $20,000
- Installation services: $5,000
- Technical support: $5,000
Step-by-Step Journal Entries
Step 1: Identify the Contract with a Customer
- The contract between Tech Solutions Inc. and the customer is identified, meeting all the criteria outlined in ASC 606.
Step 2: Identify the Performance Obligations in the Contract
- The performance obligations are:
- Providing the software license
- Installation services
- One year of technical support
Step 3: Determine the Transaction Price
- The total transaction price is $30,000.
Step 4: Allocate the Transaction Price to the Performance Obligations
- The transaction price is allocated based on the standalone selling prices:
- Software license: ($20,000 / $30,000) * $30,000 = $20,000
- Installation services: ($5,000 / $30,000) * $30,000 = $5,000
- Technical support: ($5,000 / $30,000) * $30,000 = $5,000
Step 5: Recognize Revenue When (or As) the Entity Satisfies a Performance Obligation
- Revenue is recognized when each performance obligation is satisfied.
Journal Entries for Each Performance Obligation
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| [Date] | Accounts Receivable | 20,000 | |
| [Date] | Revenue (Software License) | 20,000 |
This entry records the recognition of revenue for the software license when it is delivered to the customer.
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| [Date] | Accounts Receivable | 5,000 | |
| [Date] | Revenue (Installation Services) | 5,000 |
This entry records the recognition of revenue for the installation services upon completion.
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| [Date] | Accounts Receivable | 5,000 | |
| [Date] | Deferred Revenue (Technical Support) | 5,000 |
This entry records the deferral of revenue for the technical support service to be provided over the year.
Revenue Recognition for Technical Support Over Time
Each month, as the technical support is provided, Tech Solutions Inc. will recognize a portion of the deferred revenue:
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| [Month-End] | Deferred Revenue (Technical Support) | 417 | |
| [Month-End] | Revenue (Technical Support) | 417 |
This entry recognizes the revenue for one month of technical support ($5,000 / 12 months = $417 per month).
Summary of Journal Entries:
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| [Date] | Accounts Receivable | 20,000 | |
| [Date] | Revenue (Software License) | 20,000 | |
| [Date] | Accounts Receivable | 5,000 | |
| [Date] | Revenue (Installation Services) | 5,000 | |
| [Date] | Accounts Receivable | 5,000 | |
| [Date] | Deferred Revenue (Technical Support) | 5,000 | |
| [Month-End] | Deferred Revenue (Technical Support) | 417 | |
| [Month-End] | Revenue (Technical Support) | 417 |
By following these journal entries, Tech Solutions Inc. can accurately recognize revenue for the service contract with multiple performance obligations, ensuring compliance with ASC 606.
Detailed Examples and Scenarios
Example 3: Long-term Construction Contract
Contract Details
BuildCo Inc. enters into a contract to construct a custom building for a client. The total contract price is $1,000,000, and the construction is expected to take two years. The contract includes milestones for progress payments:
- 30% upon completion of foundation
- 30% upon completion of structure
- 40% upon final inspection and handover
BuildCo Inc. recognizes revenue over time based on the cost-to-cost method, which compares the costs incurred to date with the total estimated costs to complete the project.
Step-by-Step Journal Entries
Step 1: Identify the Contract with a Customer
- The contract between BuildCo Inc. and the client is identified, meeting all the criteria outlined in ASC 606.
Step 2: Identify the Performance Obligations in the Contract
- The performance obligation is the construction of the custom building.
Step 3: Determine the Transaction Price
- The total transaction price is $1,000,000.
Step 4: Allocate the Transaction Price to the Performance Obligations
- The transaction price is allocated entirely to the construction of the custom building.
Step 5: Recognize Revenue When (or As) the Entity Satisfies a Performance Obligation
- Revenue is recognized over time using the cost-to-cost method.
Journal Entries for Cost Incurred and Progress Billing
Year 1:
- Recording Costs Incurred
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| [Date] | Construction in Progress (CIP) | 300,000 | |
| [Date] | Accounts Payable | 300,000 |
- Recording Progress Billing:
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| [Date] | Accounts Receivable | 300,000 | |
| [Date] | Billings on CIP | 300,000 |
- Recognizing Revenue:
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| [Date] | Construction Expenses | 300,000 | |
| [Date] | Revenue | 300,000 |
Year 2:
- Recording Additional Costs Incurred:
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| [Date] | Construction in Progress (CIP) | 500,000 | |
| [Date] | Accounts Payable | 500,000 |
- Recording Progress Billing:
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| [Date] | Accounts Receivable | 400,000 | |
| [Date] | Billings on CIP | 400,000 |
- Recognizing Revenue:
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| [Date] | Construction Expenses | 500,000 | |
| [Date] | Revenue | 500,000 |
Completion:
- Final Costs Incurred:
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| [Date] | Construction in Progress (CIP) | 200,000 | |
| [Date] | Accounts Payable | 200,000 |
- Final Billing:
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| [Date] | Accounts Receivable | 300,000 | |
| [Date] | Billings on CIP | 300,000 |
- Recognizing Final Revenue:
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| [Date] | Construction Expenses | 200,000 | |
| [Date] | Revenue | 200,000 |
Summary of Journal Entries:
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| Year 1 | Construction in Progress (CIP) | 300,000 | |
| Year 1 | Accounts Payable | 300,000 | |
| Year 1 | Accounts Receivable | 300,000 | |
| Year 1 | Billings on CIP | 300,000 | |
| Year 1 | Construction Expenses | 300,000 | |
| Year 1 | Revenue | 300,000 | |
| Year 2 | Construction in Progress (CIP) | 500,000 | |
| Year 2 | Accounts Payable | 500,000 | |
| Year 2 | Accounts Receivable | 400,000 | |
| Year 2 | Billings on CIP | 400,000 | |
| Year 2 | Construction Expenses | 500,000 | |
| Year 2 | Revenue | 500,000 | |
| Completion | Construction in Progress (CIP) | 200,000 | |
| Completion | Accounts Payable | 200,000 | |
| Completion | Accounts Receivable | 300,000 | |
| Completion | Billings on CIP | 300,000 | |
| Completion | Construction Expenses | 200,000 | |
| Completion | Revenue | 200,000 |
By following these journal entries, BuildCo Inc. can accurately recognize revenue for the long-term construction contract, ensuring compliance with ASC 606.
Special Considerations
Handling Contract Modifications and Changes
Contract modifications and changes can significantly impact revenue recognition. A contract modification occurs when the parties to a contract approve a change that either creates new or changes existing enforceable rights and obligations. ASC 606 outlines how to account for contract modifications:
- Determine if the modification creates a separate contract:
- If the modification adds distinct goods or services at their standalone selling prices, it is treated as a separate contract.
- If not a separate contract, update the original contract:
- Adjust the transaction price and the measure of progress toward the completion of the performance obligations.
Journal Entry Example:
- Scenario: A modification adds additional services to a contract without creating a separate contract.
- Original contract price: $50,000
- Additional services price: $10,000
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| [Date] | Accounts Receivable | 10,000 | |
| [Date] | Revenue | 10,000 |
This entry records the additional revenue from the modification of the contract.
Accounting for Significant Financing Components
When a contract includes a significant financing component, the entity must adjust the promised amount of consideration for the time value of money. This adjustment reflects the effect of financing on either the customer or the entity.
- Identify significant financing components:
- Compare the timing of the payments and the transfer of goods or services.
- Calculate the financing component:
- Use the discount rate that would be reflected in a separate financing transaction.
Journal Entry Example:
- Scenario: A contract with a total price of $100,000, where the payment is deferred for two years with a 5% annual interest rate.
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| [Date] | Accounts Receivable | 100,000 | |
| [Date] | Revenue | 90,703 | |
| [Date] | Interest Income | 9,297 |
This entry reflects the present value of the consideration and the recognition of interest income over the financing period.
Dealing with Non-cash Considerations
Non-cash considerations are measured at their fair value. If the fair value cannot be reasonably estimated, the entity should use the standalone selling price of the goods or services promised in exchange for the consideration.
- Measure non-cash consideration:
- Determine the fair value at the contract inception.
- Recognize revenue based on the fair value:
- Adjust the transaction price to include the fair value of non-cash consideration.
Journal Entry Example:
- Scenario: A contract where the customer provides equipment valued at $5,000 as part of the consideration.
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| [Date] | Non-cash Consideration | 5,000 | |
| [Date] | Revenue | 5,000 |
This entry records the revenue from the non-cash consideration provided by the customer.
By addressing these special considerations, entities can ensure accurate revenue recognition and compliance with ASC 606. These adjustments are crucial for reflecting the true economic substance of transactions in financial statements.
Conclusion
Recap of Key Points
In this article, we have explored the comprehensive approach of recognizing revenue under the Five-Step Model as outlined in ASC 606. The key points covered include:
- Overview of the Five-Step Model:
- Identify the Contract with a Customer
- Identify the Performance Obligations in the Contract
- Determine the Transaction Price
- Allocate the Transaction Price to the Performance Obligations
- Recognize Revenue When (or As) the Entity Satisfies a Performance Obligation
- Common Journal Entries for Each Step:
- Specific entries related to contract inception, performance obligations, variable considerations, and revenue recognition.
- Detailed Examples and Scenarios:
- Practical examples including the sale of goods with variable consideration, service contracts with multiple performance obligations, and long-term construction contracts.
- Special Considerations:
- Handling contract modifications, accounting for significant financing components, and dealing with non-cash considerations.
Importance of Adhering to the Five-Step Model
Adhering to the Five-Step Model is crucial for ensuring accurate and consistent revenue recognition across various industries. This model provides a robust framework that:
- Enhances comparability and reliability of financial statements.
- Ensures compliance with ASC 606, thereby avoiding regulatory issues.
- Improves transparency and understanding of revenue streams for stakeholders, including investors, regulators, and management.
Consistent application of the Five-Step Model helps in reflecting the true economic substance of transactions, leading to better financial decision-making and reporting.
Final Thoughts on Best Practices for Revenue Recognition Journal Entries
Accurate revenue recognition journal entries are fundamental to financial reporting. Here are some best practices to ensure precision and compliance:
- Understand the Contract Terms: Thoroughly review and understand all terms and conditions in contracts with customers to identify performance obligations accurately.
- Maintain Detailed Documentation: Keep comprehensive records of all transactions, including any estimates and judgments made, especially for variable consideration and significant financing components.
- Regularly Review and Update Estimates: Periodically reassess estimates related to variable considerations, contract modifications, and performance obligations to ensure they remain accurate and relevant.
- Ensure Clear Communication: Foster clear communication between departments (e.g., sales, legal, finance) to ensure all aspects of contracts are accurately captured and reflected in financial records.
- Stay Informed: Keep abreast of any updates to ASC 606 and other relevant accounting standards to ensure continued compliance.
By following these best practices, entities can enhance the accuracy of their financial reporting, maintain regulatory compliance, and provide clear and reliable financial information to stakeholders. Adhering to the Five-Step Model and implementing these practices will help achieve a high standard of revenue recognition, ultimately supporting the financial health and integrity of the organization.
References
List of Authoritative Literature and Standards
- ASC 606: Revenue from Contracts with Customers
- Official Source: Financial Accounting Standards Board (FASB)
- Read ASC 606 on FASB’s website
- International Financial Reporting Standard (IFRS) 15: Revenue from Contracts with Customers
- Official Source: International Accounting Standards Board (IASB)
- Read IFRS 15 on IASB’s website
- SEC Staff Accounting Bulletin No. 101: Revenue Recognition in Financial Statements
- Official Source: U.S. Securities and Exchange Commission (SEC)
- Read SAB 101 on SEC’s website
- AICPA Guide on Revenue Recognition
- Official Source: American Institute of CPAs (AICPA)
- Read AICPA’s Guide
Additional Reading and Resources
- FASB Revenue Recognition Implementation Q&As
- A resource providing practical questions and answers regarding the implementation of ASC 606.
- Read the Implementation Q&As on FASB’s website
- Deloitte’s Roadmap to Applying the New Revenue Recognition Standard
- Comprehensive guide to understanding and applying ASC 606.
- Read Deloitte’s Roadmap
- PwC’s Practical Guide to Revenue Recognition
- Detailed insights and practical advice on revenue recognition under ASC 606.
- Read PwC’s Guide
- EY’s Guide to Revenue Recognition
- Detailed guide and examples for applying ASC 606 in various industries.
- Read EY’s Guide
- KPMG’s Revenue Issues In-Depth
- Analysis and interpretation of key revenue recognition issues under ASC 606.
- Read KPMG’s Issues In-Depth
These authoritative literature and additional resources provide comprehensive guidance and practical insights into revenue recognition under ASC 606, helping ensure accurate and compliant financial reporting.
