2 CPE The new revenue recognition standard (ASC 606) outlines five steps for proper compliance. At the surface, these steps seem simplistic. However, there are many components that should be considered within each step based on your process and industry. Previous courses in this series have covered the standard at a high level and evaluated step one and two of the standard. They are:
- Complying with the Revenue Recognition Standard
- Revenue Recognition: Considerations for Identifying the Contract – Part One and Part Two
- Revenue Recognition: Considerations for Performance Obligations – Part One and Part Two
- Revenue Recognition: Determine the Transaction Price – Part One and Part Two
This segment is designed to evaluate Step Four of the new model dealing with allocating the transaction price. Transaction price is the basis for measuring revenue. It is the amount of consideration the entity expects to be entitled to in exchange for transferring promised goods or services. Transaction price is allocated to performance obligations (PO’s) based on relative stand-alone selling price (SSP). The standard identifies three separate estimation methods that can be used to estimate stand-alone selling price. These include: Adjusted market assessment approach; expected cost-plus margin approach and residual approach. These approaches can also be utilized when considering how to allocate discounts and variable consideration.
Within this segment, we cover the aspects of allocating the transaction price for revenue recognition.
Note: Information within this course comes from readily available public domain documents and is utilized by the trainer as a supplement for relaying the course content.
Resources Consulted:
• ASC 606-10-32-15 to 32-20, 55-244 to 55-246.
• ASU 2014-09: “Revenue from Contracts with Customers.” BC229-BC247.
• Croner-I, “A14 Revenue from Contracts with Customers.” (2019). Section 7.4.2-2 and 7.4.2-2.
• FASB, ”Revenue Recognition Implementation Q&As.” January 2020). Questions 31-37.
• FASB TRG Memo 20: “Significant Financing Components.” 26 January 2015.
• FASB TRG Memo 30: “Significant Financing Components.” 30 March 2015.
• EY, Financial Reporting Developments: “Revenue from contracts with customers.”January 2020. Section 5.5.
• KPMG, Handbook: “Revenue Recognition.”December 2019. Section 5.5.
• PWC, “Revenue from contracts with customers”March 2020. Section 4.4.
• https://www.revenuehub.org/
Learning Objectives
- Explore step four of the revenue recognition model: Allocate the Transaction Price.
- Identify examples of estimation approaches for stand-alone selling price (SSP).
- Explore the adjusted market assessment estimation approach.
- Identify examples of the adjusted market assessment approach.
- Explore the expected cost-plus margin approach.
- Identify examples of the expected cost-plus margin approach.
- Explore the residual estimation approach.
- Identify examples of the residual estimation approach.
- Explore how to allocate discounts.
- Explore variances between Accounting Standards Codification (ASC) 605 and ASC 606.
- Explore how to allocate variable consideration.
Last updated/reviewed: March 26, 2024
Included In Certifications
This course is included in the following Certification Programs:
17 CoursesRevenue Recignition (ASC 606) Certification
- Revenue Recognition (ASC Topic 606) Standard Overview
- Revenue Recognition (ASC Topic 606): Identify The Contract Part 1
- Revenue Recognition (ASC Topic 606): Identify The Contract Part 2
- Revenue Recognition (ASC Topic 606): Performance Obligations Part 1
- Revenue Recognition (ASC Topic 606): Performance Obligations Part 2
- Revenue Recognition (ASC Topic 606): Transaction Price Part 1
- Revenue Recognition (ASC Topic 606): Transaction Price Part 2
- Revenue Recognition (ASC Topic 606): Allocating Transaction Price
- Revenue Recognition (ASC Topic 606): Recognize Revenue
- Revenue Recognition (ASC Topic 606): Scenarios For Identify The Contract
- Revenue Recognition (ASC Topic 606): Scenarios For Performance Obligations
- Revenue Recognition (ASC Topic 606): Scenarios For Transaction Price
- Revenue Recognition (ASC Topic 606): Scenarios For Transaction Price And Recognize Revenue
- Revenue Recognition (ASC Topic 606): Case Scenarios Part 1
- Revenue Recognition (ASC Topic 606): Case Scenarios Part 2
- Revenue Recognition (ASC Topic 606) COVID Implications
- Revenue Recognition (ASC Topic 606): Disclosure Requirements “Contracts with Customers”
60 Reviews (299 ratings)
Reviews
Alvin Scott
(Revenue Operations Analyst at SurveyMonkey)
I liked this course, but felt the heavy focus on ASC 605 vs ASC 606 wasn't as relevant for me specifically because I don't have any experience with the old standard. It's definitely good to know the differences of course. Outside of that I think this course was great. I feel my understanding of variable consideration is getting much stronger.
Anonymous
(Vice President of Technical Accounting)
Good course for regular subscription price (not certification price). Benefited from taking all the courses. A lot of repetition could be viewed as reinforcing or redundant depending on how quickly can learn. Would rely on wording on slides more than those spoken, as less technically precise. Now have strong foundation in ASC 606.
Liubov Barrington
(cpa at self-employed)
A very thorough instructor for this seemingly "endless" topic. Ms. Fountain does an excellent job dissecting intricacies of the standard as written. While audio is a bit monotonous, but the PP slides are excellent in supporting her narrative. Do use them along with the audio stream and separately!
Joshua Bourquard
(Accounting Manager Financial Reporting a.. at TPx Communications)
Very thorough class with plenty of examples to drive home each principle which also made understand each allocation estimation method approach. What made it even better were the comparisons to ASC 605 to make ASC 606 more understandable in relations to the old standard.
Anonymous
(CPA)
Comprehensive review of methods used under new revenue recognition standard to allocate the transaction price to various performance obligations. Lots of easy to follow examples are used to illustrate the practical application of the rules.
Anonymous
(-)
Another great course from Lynn Fountain - full of examples to clarify the relevant guidance, moving at a great pace, and well organized to facilitate understanding. The series on revenue is an excellent learning opportunity.
Shuting He
(Risk manager at China Eastern Airlines leasing)
After listening to the course, I still was a little counfused with the contents and could not tell the big differenced between the 605/606 and some other concepts, Maybe more examples could be helpful!!!
Anonymous
()
This is the most challenging part of the new pronouncement, for me. The course contained the right amount of detail to retain, and I'm sure I'll reference back to this course in the future.
Anonymous
(Director of Accounting)
This course is really necessary to understand step 4 of the new revenue recognition rule under ASC 606 and Ms. Fountain does a great job in providing examples to clarify the standard.
Steven Collins
(Sr. Director of Cost Management and Comp.. at Vertex Aerospace)
Excellent coverage of part 4 of the revenue recognition process. This course effectively covers a broad spectrum of issues associated with allocation of the transaction price.
Anonymous
(Assistant Controller)
This is a great overview of the step 4 (Allocating Transaction Price). I like the section of comparison to ASC605 as you can learn what is the change in the new standard.
Anonymous
(Financial Analyst)
I liked the section and thought that the review questions were good to help challenge myself and ensure I know the knowledge and all that ins and outs of each scenario
Derek Ettinger
( at GP Fund Solutions, LLC)
Solid course that provides a detailed overview of Step 4 in the new revenue recognition process. If you need to know this material, this course will suit your needs.
Anonymous
()
The course explains the fourth step in the new revenue recognition standard - allocating the transaction price to performance obligations. Very good course
Anonymous
(Sr. Accountant)
This was a tough course due to the massive amount of terminology, but Lynn's examples helped me to learn the material in an efficient and effective way.
Inna Shmukler
(Controller at Fornetix LLC)
Very good course overall. Examples really helped with understanding all major concepts. It might have been even better if examples were not that simple.
Anonymous
()
Adjusted Market
Assessment
Approach: Estimate stand alone selling price by estimating price the
customer would pay for the good/service in the market
Anonymous
(Partner)
I enjoy the style of this instructor. The slides are useful and a good reference point to refer back to when needed for a simple language definition.
Anonymous
(Controller)
Excellent description of the proper application of 606 to allocation to Performance Obligations. Solid use of examples to make application practical.
Anonymous
()
Good overview of revenue recognition as it applies to Transaction pricing as well as the major changes from ASC 605 and 606 recognition principals.
Anonymous
()
Course was very thorough. A comprehensive review of methods under the new standard ASC 606, in comparison to some of the old ones (ASC 605).
Cynthia Lam
(Executive Director, Corporate Controller at CytomX Therapeutic Inc)
This course has easy to understand course materials and a lot of good examples to illustrate the concept of allocation of transaction price.
Megan Randa
(Senior Staff Accountant at OneLive LLC)
Great course with helpful examples. The instructor goes into enough detail to feel comfortable understanding this step in the new guidance.
Tania Roberts
(Revenue Accountant at OEConnection, LLC)
Another really good course on ASC606 steps. This has been extremely helpful. The examples help tremendously to reinforce concepts.
Jay Bineau
( at Seigler & Tweedlie)
Allocating the price to the performance obligation was not as diffucult as one assumes if you flollow the step by step analysis
Robert Stellato
( at DS Smith)
Very good course.. Lots of really good examples that were easy to follow and dealt well with the complexities of the standard.
Ian Strader
( at Slalom, Inc.)
Discussion of allocating royalty consideration was really hard to follow. Not sure it was even logical. Very confusing.
Maya Walker
(Global Controller at Fourth Enterprises)
Very helpful course. It gave me a lot of ideas on how I can think about our SSP analysis and discount practices.
Anonymous
(Consultant)
this was tougher than I thought, the use of multiple combinations in the answers made this the toughest section
Sharon King
(Contractor at Self employed)
A lot of material was covered in this topic, but the instructor provided several examples with thorough details.
Dowton Martin
(Accounting and Finance Consultant at DLC Inc)
The examples were excellent and the material covered was very in-depth and informative. This is a great course.
Anonymous
()
The lecture illustrates the abstract concepts with examples, which helps me better understand the standard.
Anonymous
(Self)
Very good look at the various methods for allocating revenue, and the differences from the old standard.
Anonymous
(Accountant)
Examples used could have been more practical. It was a little confusing. However understood the concepts.
Anonymous
(Accountant II)
What you would expect for a foundation level course. The questions proved to be a nice refresher.
Anonymous
(NA)
Very nicely explained concepts and appropriate examples for better understanding of the subject.
Sergiy Korytko
(Revenue Manager at Instacart)
The examples were very helpful and allowed me to get a firm grasp of the material. Thank you!
Anonymous
()
The revenue recognition series of videos is excellent and I recommend them all. Thank you!
Anonymous
(Corporate)
This course was really helpful. Made it easier to understand as examples were presented.
Anonymous
(Finance Director)
Informative, and plenty of examples to help you grasp more complex or layered concepts.
Chris Grimes
(Rules Master at Cisco)
Good overview of hwo to allocate transaction price based on performance obligations.
Anonymous
(Director of Finance)
Good examples that represent all of the different possible methods that can be used.
Anonymous
()
Helpful explanations and examples regarding nuances of allocating transaction price
Anonymous
(Director)
The information presented is clear and appropriate for the subject material.
Anonymous
(Accounting Bookkeeper)
The examples in the presentation were crucial to understanding the content.
Anonymous
(CFO)
Pretty good overview for the level of course provided. I would take again.
Joe Defelice
(Consultant at Kranz & Associates)
Good overview, with pretty good examples
Anonymous
(VP Finance)
The provided examples were great and helpful in understanding the material
Anonymous
(accountant)
The materials are well organized with great examples for the explanation.
Anonymous
(Revenue Accountant)
Thank you for the coverage of Allocations! This course is very helpful.
Anonymous
(CFO)
This course was well organized and easy to understand. I recommend it.
Anonymous
(Senior Accountant)
topics were covered thoroughly with great examples to apply info to
Victor Fuentes
(Manager at RSM)
great course for financial reporting and accounting professionals
Anonymous
(finance controller /Director)
too long, too deep .... hard to me. sorry mam. need to try more.
Anonymous
(Associate Director)
This course provided a good overview of revenue recognition.
Anonymous
(VP, Finance)
Very thorough. Instructor dives deep into various examples.
Anonymous
(N/A)
It was not as good as the previous courses in the series.
Anonymous
(Sr. Revenue Accountant)
lots of good examples of different allocation scenarios
Anonymous
(Lead Revenue accountant)
Excellent course and practical examples. Very helpful!
Anonymous
(CFO)
Excellent practical course --well organized and clear
Prerequisites
Course Complexity: Intermediate
No Advanced Preparation or Prerequisites are needed for this course. However, it is recommended to take the other courses in the series prior to completing this one.
Education Provider Information
Company:
Illumeo, Inc., 75 East Santa Clara St., Suite 1215, San Jose, CA
95113
Contact:
For more information regarding this course, including complaint and
cancellation policies, please contact our offices at (408) 400- 3993 or send an e-mail to
.
Lynn FountainCPA, CGMA, CRMA, MBA, cPIA, Consultant, Author, Trainer
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