ASC 606 In Practice: Applying Performance Obligation requirements 2 CPE

Note: This course title has been enhanced from what you will see on the first screen of the recording.  The enhancement was for purposes of allowing the audience to have a better understanding of the content.  The course information did not change only the course name updated.

This course is dedicated to Step Two of the revenue recognition model “Identify Performance Obligations”.  Previous courses have outlined each of the individual five steps of the model and provided case examples.  We have also developed two broad case study courses that cover scenario examples for each of the five steps.

In order to focus directly on aspects within each step, we are creating individual courses with multiple case scenarios that apply to the individual given steps.  This course applies to Step Two – Identify Performance Obligations.  The course includes the many considerations companies must take into account when identifying how many performance obligations may exist.  We review the concepts of distinct vs. non-distinct goods and services as well as goods and services that are distinct within the context of the contract.  We also discuss the concept of a performance obligation representing a material offer and how that should be accounted for. 

After taking this course, you should be able to effectively apply your understanding of Step Two of the revenue recognition model to specific scenarios within your business.  Each learning objective listed utilizes multiple examples from various industries to help interpret and practice the concept.

Note: Information within this course comes from readily available public domain documents and is utilized by the trainer as a supplement for relaying the course content.

Resources Consulted: • ASC 606-10-32-15 to 32-20, 55-244 to 55-246. • ASU 2014-09: “Revenue from Contracts with Customers.” BC229-BC247. • Croner-I, “A14 Revenue from Contracts with Customers.” (2019). Section 7.4.2-2 and 7.4.2-2. • FASB, ”Revenue Recognition Implementation Q&As.” January 2020). Questions 31-37. • FASB TRG Memo 20: “Significant Financing Components.” 26 January 2015. • FASB TRG Memo 30: “Significant Financing Components.” 30 March 2015. • EY, Financial Reporting Developments: “Revenue from contracts with customers.”January 2020. Section 5.5. • KPMG, Handbook: “Revenue Recognition.”December 2019. Section 5.5. • PWC, “Revenue from contracts with customers”March 2020. Section 4.4. • https://www.revenuehub.org/

Prerequisites

No Advanced Preparation or Prerequisites are needed for this course. However, it is recommended to take the other courses in the series prior to completing this one.

Learning Objective

• Explore requirements behind step two of the revenue recognition standard “Identify Performance Obligations".
• Identify differentiation between distinct and non-distinct goods/ services.
• Explore examples of both distinct and non-distinct goods/services.
• Identify performance obligations (PO) for the following scenarios:
  • Distinct goods/services
  • Non-distinct goods/services
  • Intellectual property
  • Bundled goods/services  

Last updated/reviewed: March 11, 2024