Preceding ASC 605 general industry practice for revenue recognition was directed by the AICPA Revenue Recognition ASC Topic 606 Tuesday, December 17, 2019 Presented by: Dan Shea, CPA –Quality Control Partner Chris Noble, CPA –Technology Industry Group Leader. Each distinct good or service should be accounted for separately. However, investment income and some other forms of revenue outside the scope of ASC 606 are also included in the revised definition of output in the new guidance. Over Time Revenue Recognition. However, the Basis for Conclusions of ASU 2014-09 indicates that transactions with participants in a collaborative arrangement can be within the scope of ASC 606 if the counterparty meets the definition of a customer under some or all of an arrangement’s terms. While many entities have adopted the standard, implementation issues may continue to arise. A follow-up set of amendments to ASC 606 in ASU 2016-11 eliminated this SEC guidance. Midstream oil and gas entities should also keep in mind that, when they adopt the new credit … The identification of a sale … Therefore, the Board decided to incorporate into the definition of output other types of revenues. for any shortfall. ASC section 606-10-32-29 states that an entity should allocate the transaction price to each performance obligation identified in the contract on the relative basis of the obligations’ stand-alone selling prices. Section C—Background Information and Basis for Conclusions. Since the issuance of the original standards in 2014, both the FASB and IASB issued amendments. This change narrows the definition to be consistent with ASC 606, which, as noted in the ASU’s Basis for Conclusions, “describes goods or services that are an output of the entity’s ordinary activities.” However, not every entity has revenues within the scope of ASC 606. Any advice or information provided by Anchin, Block & Anchin LLP (“Anchin”)in the course of the presentation is based on a … ASC 606 applies to all customer contracts, except for those within the scope of other standards, e.g., insurance contracts, financing arrangements and financial instruments. (Topic 606 or ASC 606). (ASC 606-10-55-91) The FASB noted in the Basis for Conclusions (BC) that “the most useful disaggregation of revenue depends on various entity-specific or industry-specific factors,” and decided each entity must determine which characteristics best meet the goal of disaggregating revenues (BC336). (ASC) section 606, which are normally referred to simply as ASC 606. The nature of our promise depends on whether we control the content prior to transferring it as explained in ASC 606-10-55-36A and paragraph BC 11 of the Basis for Conclusions to ASU 2016-08, Revenue from Contracts with Customers — Principal versus Agent Considerations. Assume an entity manufactures a custom machine that qualifies for over time revenue recognition under ASC Topic 606. In its basis for conclusions, the FASB acknowledged the adverse effect the COVID-19 pandemic is having on … This Basis for Conclusions has been prepared by staff of the International Auditing and Assurance Standards Board (IAASB). ... but these conclusions should be analyzed under the new framework; Companies can elect to present sales taxes on a net basis or they can perform a jurisdictional analysis, which may result in some taxes being presented gross and others net ; Report contents. These new standards replaced ASC 605 which had been in effect since 2009. 2020-05, which grants a one-year effective date delay for certain companies and organizations applying the revenue recognition (ASC 606) and leases (ASC 842) guidance. 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