Handbook: Revenue recognition
KPMG explains the revenue standard (ASC 606) in detail. We provide detailed Q&As and examples, as well as comparisons to legacy US GAAP – updated for continuing developments in practice.
ASC 606 and ASC 340-40
Mandatory effective dates and early adoption provisions:
Public business and certain other entities*
Public business entities that are not SEC filers
|All other entities
|Annual periods – Fiscal years beginning after
|Interim periods – In fiscal years beginning after
||Dec. 15, 2019
|Early adoption allowed in fiscal years beginning after
||Dec. 15, 2016
|* (1) public business entities; (2) not-for-profits that have issued, or are conduit bond obligors for, securities that are traded, listed or quoted on an exchange or an over-the-counter market; and (3) employee benefit plans that file financial statements with the SEC.
This December 2019 edition includes new and updated interpretations based on our experiences with companies implementing ASC 606, as well as discussions with the FASB and SEC staff.
Incorporates the following:
- ASU 2019-08, Shared-based consideration payable to a customer.
- ASU 2018-18, Targeted improvements for collaborative arrangements.
- ASU 2018-08, Clarifying the scope and accounting guidance for contributions received and contributions made.
- ASU 2018-07, Improvements to nonemployee share-based payment accounting.
- ASU 2016-20, Technical corrections and improvements to ASC 606.
- ASU 2014-09, Revenue from contracts with customers.
- ASU 2016-11, ASU 2017-13, and ASU 2017-14, Amendments to SEC guidance related to ASC 606.
- Step 1: identify the contract(s) with a customer
- Step 2: identify the performance obligations in the contract
- Step 3: determine the transaction price
- Step 4: allocate the transaction price to performance obligations
- Step 5: recognize revenue when (or as) the entity satisfies a performance obligation
- Customer options for additional goods or services
- Principal vs. agent
- Licensing of intellectual property
- Contract modifications
- Contract costs
- Loss contracts
- Presentation and disclosure
- Effective date and transition