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Track 10 of 19 · Specialized

US GAAP essentials: revenue under ASC 606

Revenue from contracts with customers under ASC 606 and contract costs under ASC 340-40: identifying contracts and performance obligations, measuring and allocating the transaction price, recognizing revenue over time or at a point in time, private-company expedients, disclosures, and the audit procedures that respond to revenue risk.

14 lessonsAbout 61 minASC 606 · ASC 340-40 · ASU 2014-09 · AU-C 240
0 of 14 complete
Syllabus

For: Audit staff and seniors on revenue sections, and accountants who prepare revenue memos for private and public companies.

  1. 01The ASC 606 five-step model and the core principleThe core principle of Topic 606, the five steps that apply it, the ASUs that built the standard, and where each step creates audit risk.5 min · worked example · 4 self-check questions
  2. 02Step 1: contract criteria, combination and contract modificationsWhen a customer arrangement becomes a contract under 606-10-25-1, when two contracts must be combined, and the three ways to account for a modification.5 min · worked example · 4 self-check questions
  3. 03Step 2: performance obligations, the distinct test and the series guidanceHow to identify promised goods and services, apply the two-part distinct test as clarified by ASU 2016-10, and decide when a series is one obligation.4 min · worked example · 4 self-check questions
  4. 04Step 3: variable consideration and the constraintHow to estimate rebates, bonuses, returns and price concessions with the expected value or most likely amount, then apply the reversal constraint.4 min · worked example · 4 self-check questions
  5. 05Step 3 continued: financing components, noncash consideration and payments to customersWhen to adjust the price for time value of money, how to measure noncash consideration after ASU 2016-12, and when payments to customers reduce revenue.4 min · worked example · 4 self-check questions
  6. 06Step 4: standalone selling price and allocating the transaction priceHow to estimate standalone selling prices, when the residual approach is allowed, and when a discount or variable amount goes to only some obligations.4 min · worked example · 4 self-check questions
  7. 07Step 5: over time or point in time, and measuring progressThe three over-time criteria, the point-in-time control indicators, and how to choose and apply an input or output measure of progress.4 min · worked example · 4 self-check questions
  8. 08Principal versus agent: reporting revenue gross or netHow to identify the specified good or service, test whether the entity controls it before transfer, and use the ASU 2016-08 indicators to decide gross or net.4 min · worked example · 4 self-check questions
  9. 09Licenses of intellectual property: right to use, right to access and royaltiesHow ASU 2016-10 sorts licenses into functional and symbolic IP, when each is recognized, and how sales- or usage-based royalties and renewals are handled.4 min · worked example · 4 self-check questions
  10. 10Contract costs under ASC 340-40: commissions and fulfillment costsWhen incremental costs to obtain a contract and costs to fulfill one are capitalized, how they are amortized and impaired, and the one-year expedient.4 min · worked example · 4 self-check questions
  11. 11Practical expedients and private company elections in Topic 606The recognition expedients and policy elections in Topic 606 and 340-40, the disclosure relief for entities that are not PBEs, and the franchisor expedient.5 min · worked example · 4 self-check questions
  12. 12Revenue disclosures: disaggregation, contract balances, obligations and judgmentsWhat the Topic 606 disclosure objective requires: disaggregated revenue, contract balances, performance obligations, remaining obligations and key judgments.4 min · worked example · 4 self-check questions
  13. 13Customer options, returns, warranties, breakage and bill-and-holdImplementation guidance auditors meet often: material rights, rights of return, assurance and service warranties, breakage and bill-and-hold criteria.5 min · worked example · 4 self-check questions
  14. 14Auditing revenue: the presumed fraud risk, estimates and procedures by assertionHow to assess revenue risks including the presumed fraud risk, test the ASC 606 judgments and estimates, and design procedures that address each assertion.5 min · worked example · 4 self-check questions
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