2 CPE This course is dedicated to the evaluation of case scenarios related to Step Four and Five of the revenue recognition model. Step Four entails “Allocating the Transaction Price to Performance Obligations”. Step Five entails “Recognizing Revenue”. Previous courses have outlined each of the individual five steps of the model and provided case examples. We have also developed two broad case study courses that cover scenario examples for each of the five steps.
In order to focus directly on aspects within each step, individual courses have been created with multiple case scenarios that apply to the individual given steps. This course includes the many considerations companies must take into account when determining how to allocate the transaction price to performance obligations and then move to the final step of recognizing revenue. We review the concepts of allocation methods and methods to estimate stand-alone selling price. We also discuss aspects involved in recognizing revenue including accounting for discounts, variable consideration and how to recognize revenue over time versus at a point in time.
After taking this course, you should be able to effectively apply your understanding of Step Four and Five of the revenue recognition model to specific scenarios within your business. Each learning objective listed utilizes multiple examples from various industries to help interpret and practice the concept.
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
- Identify important components involved in Step Four – Allocate transaction price to Performance Obligations (PO).
- Explore the various estimation approaches for determining stand-alone selling price (SSP) outlined by the standard.
- Identify how to allocate discounts between performance obligations.
- Explore concepts of variable consideration.
- Explore elements of Step Five – recognize revenue.
- Identify how to recognize revenue over time vs. at a period of time.
- Identify methods for measuring progress towards completion of a project including input method and output method.
- Explore concepts of enforceable right of payment.
- Identify components necessary when a right of return exists.
Last updated/reviewed: March 11, 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”
48 Reviews (190 ratings)
Reviews
Anonymous
(Director)
Overall, a very group recap. I find allocation of discounts and variable consideration to PO's one of the more challenging aspects of the guidance. The instructor does a decent job of going through the examples. I would recommend Illumeo look into a more traditional offering (class room set up) where students can dive deeper into the more nuanced aspects of the guidance. All in all, this coursework is good value for money.
Oscar Young
(Vice President of Technical Accounting at Enviva)
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.
Anonymous
(Senior Accountant)
The review here was enhanced by coverage of additional nuances of the standard, such as the discussion of the effect of consideration of determination of market share, expected profit margin, and distribution channel on the adjusted market estimation approach. The additional examples are also helpful.
Anonymous
(cpa)
Lynn Fountain is a thorough instructor for this seemingly "endless" topic. She does an excellent job dissecting intricacies of the standard as written. While audio/video is a bit monotonous, but the PP slides are excellent in supporting her narrative. Do use them along with the video stream!
Shuting He
(Risk manager at China Eastern Airlines leasing)
There are so many practical and interesting examples in the course and I thought it was so funny to study the lesson. But I still think there are so enouth examples to practice the revenue recognition. Thanks for MS.Lynn's instruction.
Alvin Scott
(Revenue Operations Analyst at SurveyMonkey)
Overall, great course and excellent instructor. The recorded video presentations were broken up in nice chunks which makes it more digestible. The examples and case scenarios were very helpful with understanding the material.
Anonymous
(Associate Director)
I liked how the instructor went through multiple case scenarios, and then tweaked the facts to show how a small change can alter how transaction is allocated to performance obligations and how revenue is recognized.
Anonymous
(VP, Finance)
This is a good course that dives deep into examples of determination of transaction price and recognition of revenue. This course would benefit technical accountants and/or finance management personnel.
Anonymous
(-)
Another great course from Lynn Fountain on the topic of revenue recognition. Well-presented and informative, this course combined with others in the series builds a solid foundation of knowledge.
Anonymous
(Director of Accounting)
This is a great course to take in order to have a better understanding of Steps 4 & 5 of ASC Topic 606. Ms. Fountain provides great examples to be able to apply the concepts of steps 4 & 5.
Anonymous
(Assistant Controller)
Great course! This scenarios course felt to me like a summary of the two individual courses of "Allocating Transaction Price" and "Recognize Revenue" by the same instructor.
Anonymous
(Revenue Accountant)
Good course in reviewing Allocations with the different methods of SSP. Thanks for another useful course on the topic of revenue recognition!
Dowton Martin
(Accounting and Finance Consultant at DLC Inc)
Great course and excellent material the video presentations were very informative. The examples were very helpful in understanding the topic.
Inna Shmukler
(Controller at Fornetix LLC)
It is a good course to solidify your the knowledge, but it repeats a lot from previous sessions. I wish it had more examples instead.
Anonymous
()
The course provides very good examples on transaction price allocation and recognition based on the new revenue recognition standards
Anonymous
(Sr. Accountant)
This was a very informative course with lots of great information that will help me to apply ASC 606 standards in my current role.
Anonymous
(Staff Accountant)
Good course covering steps 4 & 5 of ACS 606. I like the use of examples to help explain the standard and how it should be applied.
Anonymous
(finance controller /Director)
Revenue recognition is required careful treatment in accounting division. Still I 'm considering current metnod of my company.
Anonymous
(NA)
This is an informative course on how Revenue should be recognized. The examples were very useful in understanding the topic.
Mandeep Kaur
(Lead Revenue accountant at None)
Liked the slides and its really helpful to have them to refer back to. Detailed explanation of revenue recognition methods.
Anonymous
(Accounting Manager)
The course covers very detailed material and the instuctor provides several relevant examples for each section.
Anonymous
(Finance Director)
Good stuff. Plenty of examples and content was not overly technical. Good starting point or refresher course.
Anonymous
(Senior Manager)
Though more time consuming it might be helpful to offer at least a workable problem in the final exam area.
Anonymous
(Accounting Director)
Great course which I recommend for additional knowledge and/or refresher on the Rec Rec Standard (ASC 606).
Anonymous
(VP of Accounting)
This was a good course, allocation examples were very clear and I like Lynn's way of explaining everything
Anonymous
(Executive Director, Corporate Controller)
This course provides good examples on applying Step 4 and Step 5 of ASC 606. They are easy to understand.
Anonymous
()
I learned how to explore the various estimation approaches for determining SSP
outlined by the standard.
Maxwell Mattord
( at Grapeman Farms)
Very straightforward and easy to follow. I like that the course materials are based on practical use.
Megan Randa
(Senior Staff Accountant at OneLive LLC)
Great course that goes into great detailed examples to help solidify the material being taught
Anonymous
()
This was a good course on revenue recognition. Several great examples were walked through.
Anonymous
(Consultant)
allocating the discount being limited to only some things in the bundle was bit of a shock
Anonymous
(Revenue Accountant)
Slides are very helpful for this course. The focus on recognition is clear and concise.
Dianne Conry
(Consultant at Kranz)
Overtime vs. over time has different meanings. Please adjust your handouts accordingly.
Anonymous
(CFO)
clear and easy to understand lesson with plenty of examples to drive the points home
Anonymous
(Consultant)
Good job in detailing out the information and showing how to apply them in practice.
Anonymous
(Corporate)
Examples presented aid in making the understandability of the conent present clear
Nicole Osborne
( at MAO Solutions, LLC)
Great course to reinforce information and concepts learned from prior courses.
Sam Bakhshalian
(VP Finance at Aspire Food Group)
The great examples illustrated the points brought up and were very helpful
Anonymous
(Accountant)
Good recap to scenarios for transaction price and recognizing revenue.
Anonymous
(CFO)
Really liked this overview and examples. Good course for the material.
Ian Strader
( at Slalom, Inc.)
As a practitioner, this training provided relevant and useful examples.
Anonymous
()
Well structure, well presented, contained good information to know.
Anonymous
(Director of Finance)
Very good summary of the concepts outlined and very good examples
Anonymous
(Self)
Appreciate the continued refinement of previously covered topics.
Chris Grimes
(Rules Master at Cisco)
Good examples and discussion on allocating price to obligations.
Anonymous
(accountant)
The materials are well-organized with detailed examples.
Anonymous
(Sr. Revenue Accountant)
good exercises to practice concepts previously covered
Anonymous
(Senior Accountant)
great info and examples to help solidify the concepts
Prerequisites
Course Complexity: Advanced
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(7 Questions)
Lynn FountainCPA, CGMA, CRMA, MBA, cPIA, Consultant, Author, Trainer
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Dear Mrs. Fountain,
Regarding the recognition of revenue, I have a PO for 02 same instruments, each instrument is independent from each other, only same pricing deal. Our customer requested to stage the shipment that one instrument ship in Q3 and the second one is to be shipped in Q4. We are in Q3 close, can we recognize the revenue for the first instrument that we already shipped?
Sincerely yours,
Han Vu
I am sorry but Illumeo does not allow us to provide consulting advice. I can only speak to questions directly related to course material
Referencing the final exam, question #10, I felt option 1 is the correct answer.
May I know why the "Customer has declined to accept the asset" is an indicator that transfer of control has occurred between the selling entity and customer? Thank you!
You are correct. Choice one is the right answer. I will have Illumeo correct the exam. Thanks for pointing this out
For question #8 in the final exam, why is the first choice wrong? The learning materials say that Compensation is meant to be the cost incurred to date plus a
reasonable margin. and I don't see performance to date "plus a reasonable margin" in the materials. So i think first choice is better.
I will take a look at this when I can access my computer and then reply
The answer is correct as marked. In the materials, right after the header page of enforceable rights of payment, it does state “performance to date” plus a reasonable margin