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 licensing arrangements, with an emphasis on how to recognize revenue from agreements that grant customers rights to use or access intellectual property. This course also addresses the requirements and challenges with respect to financial statement disclosures.

Chapter 1 – Licensing Arrangements and Intellectual Property

This chapter focuses on the accounting for licenses, with an emphasis on how to recognize revenue from agreements that grant customers rights to use or access intellectual property. ASC 606 requires a detailed assessment of whether the license is distinct, and whether the IP is functional or symbolic. Distinct licenses typically involve functional IP, with revenue recognized at the point the customer gains control, while licenses that provide access to evolving IP require revenue recognition over time. This framework helps ensure accurate and consistent revenue recognition across different types of license arrangements.

Chapter 2 – Financial Statement Disclosures

This chapter focuses on financial statement disclosure requirements with respect to revenue recognition. Under ASC 606, companies are required to disclose detailed information about their revenue recognition policies, including the nature of the contracts, the timing of revenue recognition, and the methods used to allocate revenue. These disclosures help users of financial statements assess the quality, sustainability, and risks associated with a company’s revenue, ensuring consistency and comparability across entities.

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)