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Revenue Recognition: Practical Guide (Course Id 2178)

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Author : Jae K. Shim, Ph.D., CPA
Course Length : Pages: 87 ||| Word Count: 43,965 ||| Review Questions: 18 ||| Final Exam Questions: 33
CPE Credits : 6.0
IRS Credits : 0
Price : $53.95
Passing Score : 70%
Course Type: NASBA QAS - Text - Technical - NASBA Registry
Primary Subject-Field Of Study:

Accounting - Accounting for Course Id 2178

Description :

In 2014, after years of deliberations, the Financial Accounting Standards Board (the FASB) and the International Accounting Standards Board (the IASB) jointly issued the Accounting Standard Update (ASU) No. 2014-09 (codified primarily in ASC 606) and IFRS 15, respectively. ASC 606 replaces virtually all (including industry-specific) U.S. GAAP revenue guidance with a single model. The standard does not just change the amounts and timing of revenue but potentially affects organizations’ financial statements, business processes, and internal control over financial reporting. The revenue recognition standard also affects other related accounting topics such as contract modification, rights of return, licensing, principal-versus-agent considerations, and income tax. Moreover, the standard creates new and expanded disclosure requirements.

This revenue recognition guide and course reorganizes the guidance contained in ASC 606, to follow the five-step revenue recognition model along with other guidance impacted by this standard. It also provides examples to illustrate the application. The course is designed to help you navigate the complexities of this standard and identify the implications of it. It provides a working knowledge of the fundamentals of the revenue standard that can be applied, regardless of the company size, in the real world. 

Usage Rank : 0
Release : 2023
Version : 1.0
Prerequisites : General Accounting.
Experience Level : Overview
Additional Contents : Complete, no additional material needed.
Additional Links :
Advance Preparation : None.
Delivery Method : QAS Self Study
Intended Participants : Anyone needing Continuing Professional Education (CPE).
Revision Date : 10-Aug-2023
NASBA Course Declaration : Participants must complete the final examination within one year of purchase and with a minimum passing grade of 70% or better to receive CPE credit unless otherwise noted on the Course History page (i.e. California Ethics must score 90% or better). After logging in click on the Course History links on your My Courses page for the Begin date and Expire date for the Final Exam.
Approved Audience :

NASBA QAS - Text - Technical - NASBA Registry - 2178

Keywords : Accounting, Revenue, Recognition, Practical, Guide, cpe, cpa, online course
Learning Objectives :

Course Learning Objectives

Upon completion of this course, you will be able to:
    1. Recognize the improvements over the revenue accounting through the release of ASC 606
    2. Cite the key changes of the revenue recognition practice compared to legacy GAAP
    3. Recognize the impact of the revenue standard on the organizations
    4. Identify the applicability of the revenue standard
    5. Recognize the steps involved in implementing the new revenue guidelines
    6. Identify the presentation and disclosure requirements
    7. Recognize the requirements for other revenue topics (e.g., warranties, principal-versus agent, licensing)
    8. Recognize the indicators for potential misstated revenue recognition
    9. Identify control activities that reduce the risk of misstatement in revenue
Course Contents :

Chapter 1 - Revenue Recognition: Practical Guide

Part I  Fundamentals of the Revenue Standard

A Uniform Framework

Rising to the Challenge

Major Improvements


Scope and Scope Exceptions

Collaborative Arrangements

Other Scope Considerations

Key Concepts of ASC 606

Attributes of a Contract

Essence of a Performance Obligation

Determination of the Transaction Price

Allocation of the Transaction Price

Recognition of Revenue

Accounting Policy Elections and Practical Expedients

Review Questions - Section 1

Part II   The Five-Step Revenue Recognition Model

Step 1: Identify the Contract with a Customer

General Rules

Attributes of a Contract

Combining Contracts

Modifying Contracts

Step 2: Identify Performance Obligations

General Rules

Identification of Promises in a Contract

Determination of Performance Obligations

Principal vs. Agent Assessment

Options for Additional Goods or Services

Sale with a Right of Return

Review Questions - Section 2

Step 3: Determine the Transaction Price

General Rules

Variable Consideration

Significant Financing Component

Noncash Consideration

Nonrefundable Upfront Fees

Consideration Payable to a Customer

Step 4: Allocate the Transaction Price to Performance Obligations

General Rules

Determination of Standalone Selling Prices

Allocation of Discounts

Allocation of Variable Consideration

Changes to the Transaction Price

Step 5: Recognize Revenue

General Rules

Satisfaction of Performance Obligations Over Time

Satisfaction of Performance Obligations at a Point in Time

Repurchase Agreements

Consignment Arrangements

Bill-and-Hold Arrangements

Review Questions - Section 3

Part III  Other Revenue Topics

Contract Costs

Costs to Obtain a Contract

Costs to Fulfill a Contract


Licenses of Intellectual Property

General Rules

Identification of Performance Obligation

Determination of the Nature of License

Review Questions - Section 4

Part IV   Presentation and Disclosure

General Rules


Contract Asset and Contract Liability

Accounts Receivable


Contract with Customers

Significant Judgments

Assets Recognized from the Costs to Obtain or Fulfill a Contract

SEC Common Letters

Review Questions - Section 5

Part V  Internal Control over Financial Reporting

Implications to Internal Controls

Internal Control over Financial Reporting

Revenue-Related Issues

Estimates and Judgment

Internal Control System

Control Environment

Risk Assessment

Control Activities

Information and Communication


Review Questions - Section 6


ASC 606  vs. ASC 605 Comparison


Table of Examples



Example 1: Nonmonetary Transaction

Example 2: Collaborative Arrangement

Example 3: Research Grant

Example 4: Payment Relating to an Existing Exchange Transaction

Example 5: Sales of Real Estate

Step 1: Identify the Contract with a Customer

Example 6: Reassessing the Criteria for Identifying a Contract

Example 7: Assessing the Existence of a Contract - No Written Sales Agreement

Example 8: Collectibility of the Consideration

Example 9: Consideration Is Not the Stated Price - Implicit Price Concession

Example 10: Contract Modifications - Unpriced Change Order

Example 11: Modification of a Contract for Goods

Example 12: Modification of a Services Contract

Example 13: Modification Resulting in a Cumulative Catch-Up Adjustment to Revenue

Step 2: Identify the Performance Obligations in the Contract

Example 14: Distinct or Not Distinct

Example 15: Principal vs. Agent Assessment

Example 16: Right of Return

Step 3: Determine the Transaction Price

Example 17: Price Concessions

Example 18: Estimate Variable Consideration - The Expected Value Method

Example 19: Constraining Estimates of Variable Consideration

Example 20: Significant Financing Component

Example 21: Entitlement to Noncash Consideration

Example 22: Consideration Payable to a Customer

Example 23: Common Forms of Consideration Paid to a Customer

Step 4: Allocate the Transaction Price to the Performance Obligations

Example 24: Estimating Standalone Selling Price - Residual Approach

Example 25: Allocating a Discount

Example 26: Allocating Variable Consideration

Example 27: Change in Transaction Price

Step 5: Recognize Revenue

Example 28: Customer Simultaneously Receives and Consumes the Benefits

Example 29: Customer Controls the Work in Progress

Example 30: Alternative Use Assessment

Example 31: Over Time Revenue Recognition

Example 32: Selecting the Measures of Progress

Example 33: Customer with Physical Possession (No Control of an Asset)

Example 34: Call Option - Leasing

Example 35: Put Option - Sale with a Right of Return

Example 36: Consignment Arrangement

Example 37: Bill-and-Hold Arrangement

Contract Costs

Example 38: Incremental Costs of Obtaining a Contract

Example 39: Costs to Fulfill a Contract

Accounting for Warranties

Example 40: Warranties

Licenses of Intellectual Property

Example 41: Software License and Services Are Distinct

Example 42: Contractual Provisions Represent Attributes of Additional Rights

Example 43: Right to Access Intellectual Property

Example 44: Right to Use Intellectual Property

Example 45: Sales-Based Royalty

Presentation and Disclosure 

Example 46: Disaggregation of Revenue - Quantitative Disclosure

Example 47: Significant Judgments

Example 48: SEC Staff Comment - Disaggregated Revenue Disclosures

Example 49: SEC Staff Comment: Performance Obligations

Implications to Internal Control

Example 50: Material Weakness: Revenue Related-Issues


Table of Illustrations


Illustration 1 Contract Existence Criteria Not Met  

Illustration 2: Accounting for Contract Modification

Illustration 3: Determination of Performance Obligations

Illustration 4: Assessment of Consideration Received (Fixed or Variable)

Illustration 5: Determining Standalone Selling Price

Illustration 6: Satisfaction of Performance Obligations

Illustration 7: Forwards and Call Options

Illustration 8: Put Options

Illustration 9: Accounting for Incremental Costs

Illustration 10: Accounting for Contract Fulfill Costs

Illustration 11: Determination of Types of Warranties

Illustration 12: Accounting for Licenses of Intellectual Property

Illustration 13: Right to Access or Right to Use

Illustration 14: Presentation - Receivable, Contract Asset or Contract Liability

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