What it is
A revenue contract memo records how the entity applied the five steps to one contract or one class of similar contracts. It gives the reviewer, the auditor and the next preparer the facts, the judgments and the entries in one place.
The template walks the steps in order, then covers principal versus agent, licenses, contract costs and contract balances. Each table has blanks for the entity’s own facts and thresholds. The memo ends with entries, a conclusion and the disclosure inputs.
When to use it
- When a new revenue stream, contract form or bundled offering starts.
- When variable pricing, rebates, rights of return or a financing component enters a contract.
- To give the auditor a single support document for a significant revenue judgment.
What’s inside
- Contract identification criteria and combination of contracts
- Performance obligation distinctness table with a material right check
- Transaction price build with variable consideration and the constraint
- Standalone selling price allocation and over-time or point-in-time conclusions
- Principal versus agent, license, contract cost and contract balance questions, with entries
Standard cited
This template follows ASC 606 / ASC 340-40. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use.
Questions
Does each contract need its own memo?
No. A portfolio of contracts with similar terms and the same judgments can share one memo. A contract with unusual terms, large size or a new judgment gets its own.
What is the constraint on variable consideration?
The entity includes variable consideration in the transaction price only to the extent that a significant reversal of cumulative revenue recognized is not probable when the uncertainty resolves. The memo records the factors weighed and the amount constrained.
How is a bundled discount allocated?
Proportionally to all performance obligations on relative standalone selling price, unless observable evidence shows the discount belongs to one or more specific obligations. The allocation table records which applies and why.
Where do capitalized sales commissions fit?
ASC 340-40 covers the incremental costs of obtaining a contract and the costs to fulfill it. The specific areas table asks for the capitalization conclusion, the amortization period and any expedient used.
Related templates
- ASC 606 Revenue Recognition Schedule
- Disclosure Checklist: Revenue (ASC 606)
- Deferred Revenue Rollforward and Ratable Recompute
- ASC 606 Contract Modification Memo
Last updated 11/05/2026. All free templates.