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| Author : | Jae K. Shim, Ph.D., CPA |
| Status : | Production |
| 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 1306 |
| 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, the new revenue standard, 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 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. In light of the new revenue standard, organizations need to reassess their current revenue accounting processes and systems and implement changes required to maintain compliance with the new guidance. This 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, identify the implications of it, and prepare for implementation. It also shares insights to help you evaluate the effect of required changes to the internal control environment. It provides a working knowledge of the fundamentals of revenue standard that can be applied, regardless of the company size, in the real world. |
| Usage Rank : | 0 |
| Release : | 2019 |
| Version : | 1.0 |
| Prerequisites : | General Accounting. |
| Experience Level : | Overview |
| Additional Contents : | Complete, no additional material needed. |
| Additional Links : |
REVENUE RECOGNITION
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| Advance Preparation : | None. |
| Delivery Method : | QAS Self Study |
| Intended Participants : | Anyone needing Continuing Professional Education (CPE). |
| Revision Date : | 15-Jan-2020 |
| 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 - 1306 |
| Keywords : | Accounting, Revenue, Recognition, New, Guidelines, v09, cpe, cpa, online course |
| Learning Objectives : |
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| Course Contents : | Table of ContentsPart I: The Fundamentals of the Revenue Standard Rising to the Challenge The Need to Issue the New Guidance The Significant Improvement for Revenue Accounting Key Changes of Revenue Recognition Practice Applicability In Scope Out of Scope Collaborative Arrangements Practical Expedients Transition Guidance Effective Date Transition Methods Full Retrospective Adoption Modified Retrospective Adoption The Impact of Each Transition Method Consideration for SEC Registrants Exhibit A: Ford Motor Company Quarterly Report - Notes to the Financial Statements Key Concepts of the Standard Attributes of a Contract Essence of a Performance Obligation Determination of the Transaction Price Allocation of the Transaction Price Recognition of Revenue Transfer of Control Satisfaction of Performance Obligation Measures of Progress Significant Impacts More Efforts to Determine the Contract Existence Differing Revenue Streams and Related Activities The Revenue Transactions Tax Implications General Considerations Additional Estimates and Judgment More Comprehensive Presentation and Disclosure Requirements Practices of Certain Industries Real Estate Entertainment and Media U.S. GAAP vs. IFRS Section 1 - Review Questions Part II: The Application of the Revenue Recognition Model Step 1: Identify the Contract with a Customer Required Criteria - Contracts with Customers Approval and Commitment Rights Payment Terms Commercial Substance Collectibility of the Consideration Reassessment of Criteria Combining Contracts Modifying Contracts Definition of a Contract Modification Types of Contract Modifications Modification Accounted for as a Separate Contract Modification Accounted for Prospectively Modification Accounted for as Part of the Original Contract Step 2: Identify the Performance Obligations Identification of Promises in a Contract Determination of Distinct Goods or Services Section 2 - Review Questions Step 3: Determine the Transaction Price Components of the Transaction Price Variable Consideration Forms of Variable Consideration Estimating Variable Consideration Constraint on Variable Consideration Significant Financing Component Noncash Consideration Consideration Payable to a Customer Step 4: Allocate the Transaction Price to the Performance Obligations Definition of Standalone Selling Prices Estimating Standalone Selling Prices Adjusted Market Assessment Approach Expected Cost Plus a Margin Approach Residual approach Allocating Discounts Allocating Variable Consideration Changes to the Transaction Price Step 5: Recognize Revenue Transfer of Control Satisfaction of Performance Obligations Performance Obligations Satisfied Over Time Measures of Progress over Time Performance Obligations Satisfied at a Point in Time If control is not transferred over time for performance obligations, it is transferred at a point in time. ASC 606 provides the following five indicators that a customer has obtained control of an asset Section 3 - Review Questions Part III: Other Revenue Topics Contract Costs Costs to Obtain a Contract Costs to Fulfill a Contract Sale with a Right of Return Accounting for Warranties Principal versus Agent Considerations Definitions of Principal and Agent Principal and Agent Indications Indicators of Principal Indicators of Agent Section 4 Review Questions Licensing Scope of the Licensing Guidance Determining Whether a License Is Distinct Determining the Nature of a Distinct License Symbolic Intellectual Property (Right to Access) Functional Intellectual Property (Right to Use) Determining Whether Contractual Provisions Represent Attributes of a License or Additional Rights Sales- or Usage-Based Royalties Other Considerations Customer Options for Additional Goods or Services Nonrefundable Upfront Fees Repurchase Agreements Forward or Call Option A Put Option Consignment Arrangements Bill-and-Hold Arrangements Presentation and Disclosure Presentation Statement of Financial Position Contract Asset vs. Receivable Disclosure General Considerations Disclosure for Public Entities Contract with Customers Disaggregation of Revenue Contract Balances Performance Obligations Exhibit B: Disaggregation of Revenue - Quantitative Disclosure Significant Judgments Assets Recognized from the Costs to Obtain or Fulfill a Contract with a Customer Practical Expedients Disclosure for Nonpublic Entities Contracts with Customers Disaggregation of Revenue Contract Balances Performance Obligations Significant Judgements Assets Recognized from the Costs to Obtain or Fulfill a Contract with a Customer Part IV: Implication to Internal Controls Responsibilities of SEC Registrants The Role of Internal Control over Financial Reporting Regulatory Compliance SOX Section 404 SOX Section 302 Considerations Exhibit C: Ford Motor Company Quarterly Report - Item 4. Controls and Procedures Section 5 Review Questions Design and Implementation of Controls Control Environment Risk Assessment Control Activities Revenue Recognition Process Identify the Contract with a Customer Identify the Performance Obligations Determine the Transaction Price Allocate the Transaction Price Recognize Revenue Estimation Process Information and Communication Monitoring Section 6 Review Questions Glossary Table of ExamplesApplicability Example 1: Identifying the Customer – Collaborative Arrangement Transition Guidance Example 2: Apply the Modified Retrospective Method Significant Impacts Example 3: Sales of Real Estate Step 1: Identify the Contract with a Customer Example 4: Assessing the Existence of a Contract - No Written Sales Agreement Example 5: Collectibility of the Consideration Example 6: Consideration Is Not the Stated Price - Implicit Price Concession Example 7: Reassessing the Criteria for Identifying a Contract Example 8: Contract Modifications - Unpriced Change Order Example 9: Modification of a Contract for Goods Example 10: Modification of a Services Contract Example 11: Modification Resulting in a Cumulative Catch-Up Adjustment to Revenue Step 2: Identify the Performance Obligations in the Contract Example 12 A: Determining Whether Goods or Services Are Distinct Example 12 B: Goods and Services Are Not Distinct Step 3: Determine the Transaction Price Example 13: Variable Consideration - Price Concessions Example 14: Estimating Variable Consideration - Performance Bonus with Multiple Outcomes Example 15: Constraining Estimates of Variable Consideration Example 16: Significant Financing Component Example 17: Entitlement to Noncash Consideration Example 18: Consideration Payable to a Customer Step 4: Allocate the Transaction Price to the Performance Obligations Example 19: Estimating Standalone Selling Price - Residual Approach Example 20: Allocating a Discount Example 21: Allocating Variable Consideration Example 22: Allocating Transaction Price - Change in Transaction Price Step 5: Recognize Revenue Example 23: Customer Simultaneously Receives and Consumes the Benefits Example 24: Customer Controls the Work in Progress Example 25: Assessing Alternative Use Example 26: Assessing Whether a Performance Obligation Is Satisfied at a Point in Time or Over Time Example 27: Selecting the Measures of Progress Example 28: Customer Has Physical Possession with No Control of an Asset Contract Costs Example 29: Incremental Costs of Obtaining a Contract Example 30: Costs to Fulfill a Contract Sale with a Right of Return Example 31: Right of Return Accounting for Warranties Example 32: Warranties Principal versus Agent Considerations Example 33: Determining Whether an Entity is the Principal or an Agent Licensing Example 34: Determining Whether Goods or Services Are Distinct Example 35: Right to Access Intellectual Property Example 36: Right to Use Intellectual Property Example 37: Determining Whether Contractual Provisions Represent Attributes of a License or Additional Rights Example 38: Sales-Based Royalty Table of IllustrationsIllustration 1 When Contract Criteria is Not Met Illustration 2: Accounting for Contract Modification Illustration 3: Determining Standalone Selling Price Illustration 4: Satisfaction of Performance Obligations Illustration 5: Accounting for Incremental Costs Illustration 6: Accounting for Contract Fulfill Costs Illustration 7: Determination of Types of Warranties Illustration 8: Determination of Right to Access or Right to Use |
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