1.5 CPE This course is meant to complement the course that evaluates all aspects of the five steps to revenue recognition (ASC 606). The course “Complying with the Revenue Recognition Standard” examines the five-step model outlined in the standard that organizations must utilize when recognizing revenue. The new revenue recognition standard applies to all companies.
This course delves into step two of the revenue recognition process relating to performance obligations. Identifying performance obligations requires having a detailed understanding of the contract, deliverables, promises and contract timing. It involves being able to distinguish between distinct and non-distinct goods and services to identify whether one or more performance obligations exist. This task involves significant judgment and requires specific considerations be applied to properly identify the performance obligations.
Other aspects relating to performance obligations that will be discussed within this segment are the concepts of measuring progress over a period of time and identifying how to recognize revenue over a period of time. This segment also evaluates how to recognize revenue related to intellectual property.
This course is the first of two that evaluate performance obligations. Part two will examine elements surrounding factors that impact performance obligations and examining how to handle up-front fees or stand-alone offers.
The course utilizes many examples from numerous industries to enhance learning of the various concepts.
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 requirements behind step two of the revenue recognition standard “performance obligations”.
- Recognize the differences between distinct and non-distinct goods/services.
- Examine examples of both distinct and non-distinct goods/services.
- Identify how to measure progress over a period of time.
- Identify how to recognize revenue over a period of time.
- Explore the processes used for intellectual property.
Last updated/reviewed: March 8, 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”
94 Reviews (396 ratings)
Reviews
Anonymous
(CPA)
Great introduction to new accounting rules related to the determination of what constitutes a performance obligation (distinct versus non-distinct) and how this classification affects proper reporting of revenue on the income statement. Course has lots of helpful examples which make it easy to understand what can be a complex subject matter.
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.
Lawrence Hirsch
(Controller at Builders design)
This is my 5th course in this 6 course series. 100% on final test so you know Lynn is doing an amazing job with content and communication. I find Lynn's course series on ASC606 to be the best I have taken and has enhanced my understanding and ability to apply the knowledge more competently.
Lynn, thank you
Larry
Emma Chowns
(Senior Accountant at CipherHealth)
The examples are very helpful but there may be better examples for some of these concepts. The example with the customer who buys the lumber for the floor and also the labor is a little unclear. Is that customer buying them from different vendors or the same? This makes all the difference. And I’m left unclear.
Anonymous
(Revenue Assurance Manager)
Great introduction to determining a performance obligation distinct versus non-distinct. Its clear these determinations have many nuances, depending on the industry and can be very involved. This pt1 course provided many examples and breakdowns to help understand the complexities. Looking forward to pt2
Maya Walker
(Global Controller at Fourth Enterprises)
I really appreciate the examples. I am specifically working on learning when installation services can be broken out as a separate PO, especially around how long the installation may take. This course touched on that and I plan to listen to part 2 as well to see if there is more context on this.
Anonymous
(Revenue Operations Analyst)
This was exactly what I was looking for when I signed up. Covers the basics but also touch on the different nuances. I do think the training material for this specific course could have been more inclusive of all the instructor went over and much more detailed however.
Linda Forde
(Owner at The Forde Firm, LLC)
YOU NEED TO TAKE THIS COURSE. If you are in any construction related industry, you need to take this course and the series. Don't be surprised at audit time and have revenue deferred. Learn the information yourself and be sure of what you are doing.
Anonymous
(Associate Director)
This course is great insight into a complex topic that can be overlooked. The instructor did a great job at providing grey examples that are different from the normal black and white training examples. Great training.
Anonymous
(Owner)
I enjoy taking these shorter RevRec classes as a refresher to the 8 hour course. Given the amount of information provided in the standard this is an effective way to 'drive home' the content of each section
Anonymous
()
This was a good course which detailed the logic around performance obligations and revenue recognition. It also gave specific details and circumstances in which goods and services do NOT meet the criteria.
Mary Behnen
( at Jamul Casino)
This course on the considerations for performance obligations is a good overview. It provides a number of examples to help explain the concepts. It also includes quizzes to help practice the concepts.
Anonymous
(cpa)
A lot to know about ACS606. Quite detailed lecture re: contract performance obligations. Lynn Fountain is great instructor. Glossary pages are by themselves an excellent summary of the lecture.
Anonymous
(Inventory Accounting Manager)
This on-demand training fulfilled its obligations. It covered what a performance obligation was. It was easy to understand the material and then be able to apply it to real life situations.
Anonymous
(Construction Assistant Controller)
The course is helpful to learn how to properly recognize revenue throughout industries. Everything is clearly outlined, and it’s easy to follow the instructor as she presents the topics.
Anonymous
(Sys Ops Manager)
Very helpful course to understand the basics of performance obligation determination. Specifically the focus on the distinct and separable element from customer perspective is important.
Ian Strader
( at Slalom, Inc.)
Thorough coverage, however, some of the examples are a bit unclear. Still not quite sure what is different between the contractor who is building the wall vs building the floor.
Anonymous
(Sr. Director of Cost Management and Comp..)
Good summary of different types of performance obligations, including numerous examples of the differences between a single objective or identification of multiple objectives
Roy Singer
( at N/A)
Informative course to understand the guidance of the second step of the revenue recognition model. Course includes many examples to help understand performance obligations.
Anonymous
(Consultant)
Good course overall. I liked the use of examples, and the fact that the instructor spend more of the time on distinct/non distinct, which for me is the hardest part
Karis Davis
(Finance Director at Belden)
Very useful and appropriate examples. Also, good job of highlighting nuances of separate vs combined performance obligations. For me, the course moved a bit slow.
Dowton Martin
(Accounting and Finance Consultant at DLC Inc)
This is a great course. I really learnt a lot from this informative and in-dept material. I would recommend it to anyone wanting to learn more about this topic.
Nicola Mighty-Dorman,CPA,CGA
(Finance Manager/Controller at Cipher Pharmaceuticals Inc.)
The audio wasn't not very clear, I
had to turn up my speaker very high.
I like the knowledge review test and this was consistent throughout the webinar.
Kathleen Busk Varas
(Principal Financial Consultant at V Ventures Consulting)
Well organized and articulated information. Makes it easier to digest the specific elements of performance obligations, distinct and non-distinct items, etc.
Anonymous
(Senior Accounting Coordinator)
I really liked the level of detail that was given for obligations and determining what is a distinct good/service. This will be very useful in my industry.
Lilian Dendrinos
(consultant at DLC Group)
Great course on the second of five steps of revenue recognition. Lynn provides great examples with clear explanations. I highly recommend this class.
Anonymous
(Drone)
This course was a really great high level introduction to performance obligations under the new standard - Would definitely recommend to others.
Anonymous
()
I can identify the differentiation between
distinct and non-distinct goods/
services and how to measure
progress over a period of time
Anonymous
(VP of Accounting)
The Performance obligation is one of the important steps for recognizing revenue and Lynn covered it well, I like how Lynn keeps it simple
Anonymous
(Contoller)
Good overviewof obligations. Really creates more questions of application for me than it answers, but it might be my specific questions.
Anonymous
(Assistant Controller)
Great course! A lot of examples of different industries (automotive, construction and software, etc) help you understand the concepts.
Jay Bineau
( at Seigler & Tweedlie)
This course on obligations was very complete. More example would have been helpful to fully clarify the nature or contract obligation.
Anonymous
(Director of Accounting)
Another necessary course to complete to be able to understand the new revenue recognition standard and how complicated it is to apply.
John Simpson
( at Curtiss-Wright)
Overall this course was concise and provided me with valuable information. I will definitely reference these materials for future use!
Anonymous
(Business Partner - Strategic Projects)
This topic can be complex and the instructor has broken it down to easily explain the individual components of revenue recognition.
Anonymous
()
Well taught course, although the material (and the new standard) is quite confusing. The slides are good references for the future.
Anonymous
(Controller)
Concepts were a little more difficult and technical, but author did an excellent job demonstrating their use through examples.
Anonymous
(Self)
This is easy to follow along, same as the other courses. One suggestion would be to update the examples that use Sears.
Anonymous
(Executive Director, Corporate Controller)
This course provides a great summary of performance obligation and its related revenue recognition rule under ASC 606.
Mandy Wong
(Consultant at DLC Group)
Good material within the course. Examples included in the course really help reinforce understanding of the concepts.
Anonymous
(Financial Analyst)
I found this course section very interesting and complex. Everything taught is very applicable to my upcoming role.
Derek Ettinger
( at GP Fund Solutions, LLC)
Lynn is an excellent instructor. She walked through this course nicely, presenting topics in an organized manner.
Joshua Bourquard
(Accounting Manager Financial Reporting a.. at TPx Communications)
Great examples and understanding of how/when to recognize revenue. some can be tricky so examples bring it home.
Anonymous
(-)
Thus course was very informative and adequately summarizes the key considerations for applying this standard.
Fernando Vertoli
(Senior Director of Financial Projects at VFM)
Good Overview of Topic 606 Revenue Recognition's new standard - Considerations for Performance Obligations
Anonymous
(Director)
Revenue recognition is important to accounting and more courses covering 606 is beneficial to accountants.
Anonymous
()
This is an excellent, detailed and easy to follow course and I plan to take all of them in the series.
Inna Shmukler
(Controller at Fornetix LLC)
A very informative and detailed course. Liked all the examples evaluated in comparisons between them.
Anonymous
(Risk manager)
It would be better to illustrate more examples to explain the theory. Thanks for Ms Lynn' great work!
Anonymous
(CFO)
This course was very clear and well organized. The examples provided were helpful for understanding.
Anonymous
(Principal)
this course was really helpful in gaining a better understanding of performance obligations per 606
Tania Roberts
(Revenue Accountant at OEConnection, LLC)
This was a well designed course. I found it thorough and will be able to apply to my current role
Anonymous
(Accountant II)
What you would expect for a foundation level course. The questions proved to be a nice refresher.
Anonymous
(CFO)
A detailed look at what an obligation is and how it will affect the revenue recognition process.
Anonymous
(CFO)
I enjoyed the course, was a good refresher on revenue recognition and performance obligations.
Anonymous
(Sr. Accountant)
The examples were very helpful and allowed me to get a firm grasp of the material. Thank you!
Joanne Mullins
( at Trimble)
I liked the course and its outline format of presenting the requirements and steps/conditions
Victor Fuentes
(Manager at RSM)
Everyone from controller, CFO and financial reporting professionals should take this course.
Anonymous
(Accountant)
The course was informative in understanding the considerations for Performance Obligations.
Anonymous
(VP, Finance)
This course dives deep through materials and examples on performance obligation questions.
Anonymous
(Senior Staff Accountant)
Goes in-depth and provides helpful examples to help solidify understanding of the guidance
Emily Moran
(Director of Finance at Kurtosys Systems)
Relevant examples and detailed explanations. Really helpful for refreshing on rev rec.
Anonymous
(Consultant)
Intellectual property seems a little tough so maybe a few more examples would be useful
Nichole Basham
(GL Accountant at UIC Government Services)
The examples provided allowed for understanding of the concept and were easy to follow.
Anonymous
(NA)
Very nicely explained concepts and appropriate examples. Easily understood the topic
Joe Isaacs
(Unemployed at N/A)
Ms. Fountain does a good job of explaining nuances in the revenue recognition rules.
Dane Fuhrman
(- at ---)
Good overview of an important change affecting the accounting profession. Thanks!
Anonymous
(Manager)
this is a great way to explain the subject. examples used were easy to understand.
Weber Jodesty
(Director of Accounting at Cortland)
Great course, easy to follow and great examples given. Looking forward to Part 2.
Lauren Reid
(Senior Accounting Manager at People.ai)
comprehensive easy to understand the rules for asc 606 performance obligations
Katherine Hart
(None at Not Applicable)
I'm completing all of Ms. Fountain's courses! Her 606 lessons are so helpful.
Sam Bakhshalian
(VP Finance at Aspire Food Group)
the great examples illustrated the points brought up and were very helpful
Anonymous
(Senior Accountant)
excellent info and lots of great examples to help understand the concepts
Anonymous
(Sr. Revenue Accountant)
Good course to better understand requirements for performance obligations
Sergiy Korytko
(Revenue Manager at Instacart)
Good overview of these new standards with practical examples. Thank you.
Anonymous
()
Great dive into performance obligations with clear examples for clarity.
Sharon King
(Contractor at Self employed)
The course provides many examples to help you understand the material.
Ann Marotta
(Consultant at DLC Group)
A lot of good detail on performance obligations with lots of examples.
Chris Grimes
(Rules Master at Cisco)
Good overview of the new revenue standard for pefromance obligations.
Anonymous
(Consultant)
Quick and easy course with easy to follow slides. Great instructor.
Snejana Vedmenskiy
(Senior FP&A Operations Manager at General Electric)
This is great course, good slides and examples. Highly recommend.
Anonymous
(Sr. Manager, Revenue Recognition)
Succinct presentation of a lot of information. Helpful slides.
Angela Duncan
(Consultant at DLC Group)
Good explanation and examples for the input and output methods
Anonymous
(Lead Revenue accountant)
Simple and easy course to understand the basic concept of PO
Anonymous
(Associate Director)
This course provided a good overview of revenue recognition.
Anonymous
(Chief Financial Officer)
The presenter aptly describes this complex topic very well.
Anonymous
()
Great course. Gives lots of detail on a difficult concept.
Anonymous
(Sr Revenue Analyst)
The variety of examples used in this course are helpful.
Olyli Bantuas
(Revenue Consultant at DeWinter Consulting)
It would be great if we could cover more for SaaS product
Carolyn Smith
(Director of Finance at HealthPay24)
Very good examples that pull all of the concepts together
Anonymous
(accountant)
The materials are well structured with detailed examples.
Anonymous
(Accounting Bookkeeper)
I liked the Test your knowledge part of the presentation.
Anonymous
()
Clear breakdown of what comprises performance obligation
Anonymous
(Revenue Accountant)
Thanks for the thorough one hour course! Very helpful.
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
.
Course Questions and Answers(2 Questions)
Lynn FountainCPA, CGMA, CRMA, MBA, cPIA, Consultant, Author, Trainer
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- Email: info@illumeo.com
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Hi! I'm wondering about treating software customization as non-distinct. I believe software customization is often handled by contractors/3rd parties, so if the company chooses to engage the original software company to do the customization, I would think that could be treated as distinct. Can you clarify a bit more? Thanks!
Many software company’s develop proprietary software where they are the only ones available to properly install the software. In that case the installation is non-distinct because they are the only vendor that can do it. If the software can be installed by a separate vendor but the customer still chooses the maker of the software then it is distinct. You may want to check out the separate course I had that specifically talks about revenue recognition for software avengers