COVID-19 and its related impact on the economic environment have raised numerous questions that affect almost each step of the updated standard. Those that have already implemented ASC 606 may need to review the terms of their contracts and adjust as necessary. Companies must recognize the impact and execute appropriate considerations within each step. The pandemic could affect various aspects embedded within each step of an entity's revenue recognition process. It is critical to note the potential significant impact that the COVID-19 crisis has brought to aspects of the revenue standard. Some impacts within the various steps include:

• Step 1: Identify the contract with a customer
• Contract enforceability
• Collectability
• Contract modifications and combinations

• Step 2: Identify performance obligations
• Material rights

• Step 3: Determine the transaction price
• Price concessions and other variable considerations
• Significant financing component
• Other extended payment terms

• Step 4: Allocate the transaction price
• Changes impacting standalone selling prices

• Step 5: Recognize Revenue
• Revenue recognized overtime
• Impairment of receivables and contract assets
• Contract costs
• Disclosures

On May 28, 2014, the FASB completed its Revenue Recognition (RR) project issuing ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). Guidance establishes principles to report information about the nature, timing, and uncertainty of revenue from contracts with customers. The standard affects all entities that have contracts with customers with some exclusions. This session will discuss basic concepts around each step of the revenue model and also implications that COVID-19 have surfaced.

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/