Revenue Recognition Under ASC 606

Revenue recognition can be complex. Make sure you get it right using BDO's "Blueprint" publication.

BDO's Professional Practice publication (Blueprint) guides professionals through the application of FASB’s Accounting Standards Codification Topic 606, Revenue Recognition (“ASC 606” or the “revenue standard”) with practical examples and interpretive guidance. Summarizing key aspects of ASC 606, this Blueprint helps all companies, public and private, understand and continue to comply with the revenue standard as business models, service lines, and pricing practices change.

The revenue standard establishes a single, comprehensive framework to determine how much revenue is recognized, and when. The core principle is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognizes revenue when or as control over the goods or services is transferred to the customer. 

The core principle is applied in five steps, explore the steps below.

The Five-Step Revenue Recognition Model

Other key topics in this Blueprint include:

  • Scope of ASC 606
  • Principal versus agent considerations 
  • Contract modifications
  • Customer options for additional goods or services
  • Licensing
  • Onerous contracts (loss contracts) 
  • Contract costs 
  • Presentation and disclosures