What’s New in ASC 606?
- Consistent principles for recognizing revenue, regardless of industry and/or geography
- Cohesive set of disclosure requirements providing more useful info about organizations’ contracts with customers
- Ability to identify each of the goods or services promised to a customer, determine whether those goods or services represent a performance obligation, and recognize revenue when/as each performance obligation is satisfied
- Ability to allocate transaction price to each performance obligation in contract on basis of relative standalone selling price of the underlying goods or services
- Single model to consider for variable consideration including rebates, discounts, bonuses, or a right of return
What is the 5-Step Process to Apply ASC 606?
An entity recognizes revenue in accordance with ASC 606 by applying the following steps: