This course provides an overview of critical challenges companies encounter under ASC 606, emphasizing several key areas that can be particularly challenging for effective revenue recognition. This includes identifying valid contracts and determining performance obligations.

Chapter 1 – Identifying the Contract with the Customer

This chapter focuses on the critical first step of identifying a contract with the customer under ASC 606. For a contract to qualify for revenue recognition, it must meet certain criteria. That is, both parties must agree, there should be clear rights and payment terms that can be enforced, and it must be likely that the seller will collect the expected payment. However, this process can be tricky, especially with situations involving multiple contracts with the same customer, contract modifications, unique payment terms, or contract cancellations.

Chapter 2 – Determining Performance Obligations

This chapter addresses the important step of identifying distinct performance obligations within contracts under ASC 606. It emphasizes the significance of determining whether goods or services are separately identifiable and addresses the challenges that arise from bundled offerings, where multiple products or services are provided together, as well as the complexities introduced by customization requirements, changes in customer requirements, and long-term contracts.

The other Segments of this series ASC 606 Insights are:

1. ASC 606 Insights: Contract Identification and Performance Obligations (Text Based Course)
2. ASC 606 Insights: Timing of Revenue Recognition & Principal vs. Agent Considerations (Text Based Course)
3. ASC 606 Insights: Managing Variable Consideration and Modifications (Text Based Course)
4. ASC 606 Insights: Licensing Revenue and Financial Statement Disclosures (Text Based Course)

NOTE: There is a 8 CPE Credit Hours combined course also available:
Revenue Recognition - Top Challenges in Applying ASC 606 (Text Based Course)