The New Revenue Standard - ASC 606 - Post-Implementation Issues - Guidance for Private Companies (Course Id 1536)

Accounting - Accounting for Course Id 1536

The objective of this course is to address the new revenue standard in ASC 606, Revenue from Contracts with Customers, and its related updates, and provide guidance to nonpublic (private) entities who  implemented the standard in 2020 and are continuing to experience post-implementation issues.

Topics include and overview of the new standard and its core principle, an analysis of each of the five steps required in the revenue model, selected issues encompassing principal versus agent considerations, dealing with warranties, bill-and-hold arrangements, and consignment transaction. The course also addresses how to account for contract costs, financial statement presentation of revenue-related accounts, disclosures, and transition methods and guidance.

NASBA QAS - Text - Technical - NASBA Registry - 1536

Course Learning Objectives

• Identify an example of recognition of revenue prematurely
• Identify one of the five steps to apply the new revenue standard
• Recall a condition that must be met to identify a separate performance obligation
• Identify methods authorized to estimate variable consideration in a contract
• Recognize information that can be used to allocate the transaction price to performance obligations
• Identify two methods that are used to record revenue in Step 5 of the revenue standard
• Recognize how to account for the transfer of a product with a right to return
• Recognize the requirement that must be met for a company be considered a principal in a revenue transaction
• Recall the general rule that determines whether an entity should record revenue gross or net
• Identify several types of warranties accounted for under the revenue standard
• Identify different types of intellectual property subject to the licensing rules in the revenue standard
• Recognize an example of a prepaid stored-value product
• Recall how an entity should account for breakage related to prepaid stored-value products
• Recall how certain contract costs are accounted for under the revenue standard
• Recognize certain disclosures required by the revenue standard for nonpublic entities, and
• Recall an applicable financial statement (AFS).

Chapter 1 - Implementing the New Revenue Standard - ASC 606: Guidance for Private Companies

I.  Objective

II.  Background

III.  Scope of Revenue Standard

IV.  Definitions used in ASC 606

V.  Core Principle

Review Questions

VI.  Five Steps to the ASC 606 Revenue Model

Step 1: Identify the Contract(s) With a Customer

Review Questions

Step 2: Identify the Performance Obligations in the Contract

Step 3: Determine the Transaction Price

Step 4:  Allocate the Transaction Price to the Performance Obligations in the Contract

Review Questions

Step 5: Recognize Revenue -  Entity Satisfies a Performance Obligation

Review Questions

VII.  Selected Issues in Applying the Five Steps of the Revenue Model

A.  Sale with a Right of Return

B.  Sale with a Refund Liability

C.  Principal versus Agent Considerations

D.  Non-Refundable Upfront Fees Received

E.  Warranties

F.   Bill-and-Hold Arrangements

G.  Consignment Arrangements

Review Questions

H.  Licensing

I.   Presentation of Sales Taxes and Other Similar Taxes Collected from Customers

J.  Shipping and Handling Activities- Step 2 Identifying Performance Obligations

Review Questions

K.  Breakage in Prepaid Gift Cards

Review Questions

VIII.  Contract Costs

IX.  Presentation- General Rules in ASC 606

Review Questions

X.  Disclosures

XI.  Transition and Effective Date

Review Questions

XII.  Applicable Financial Statement (AFS) and Impact of Tax Act on ASC 606

Review Questions

Glossary