Is ASC 605 still relevant?

NOTE: ASC 605 IS SUPERSEDED BY ASC 606, EXCEPT FOR CERTAIN SECTIONS OF ASC 605-35, Revenue Recognition—Provision for Losses on Construction-Type and Production-Type Contracts.

Table of Contents

What was ASC 605?

ASC 605 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies.

What is the difference between ASC 605 and 606?

One of the major differences between ASC 605 and 606 is the capitalization of sales commissions — whereas ASC 605 allowed companies to either expense or capitalize the sales commissions, ASC 606 dictates that they must be capitalized.

What is revenue recognition ASC 606?

ASC 606 is the new revenue recognition standard that affects all businesses that enter into contracts with customers to transfer goods or services – public, private and non-profit entities. Both public and privately held companies should be ASC 606 compliant now based on the 2017 and 2018 deadlines.

What are the 5 steps in the revenue recognition process?

The FASB has provided a five step process for recognizing revenue from contracts with customers:

Step 1 – Identify the Contract.
Step 2 – Identify Performance Obligations.
Step 3 – Determine the Transaction Price.
Step 4 – Allocate the Transaction Price.
Step 5 – Recognize Revenue.

What is the key change in revenue recognition accounting as compared to ASC 605?

The Financial Accounting Standards Board (FASB) recently amended the rules for revenue recognition in the Accounting Standards Codification (ASC) to add ASC 606: Revenue from Contracts with Customers. This addition will replace ASC 605: Revenue Recognition as well as most industry specific guidance.

What is ASC 606 summary?

What are the 5 steps of ASC 606?

The ASC 606 5 Step Model

Identify the contract with a customer.
Identify the performance obligations in the contract.
Determine the transaction price.
Allocate the transaction price.
Recognize revenue when or as the entity satisfies a performance obligation.

What is revenue recognition concept?

Revenue recognition is a generally accepted accounting principle (GAAP) that stipulates how and when revenue is to be recognized. 1. The revenue recognition principle using accrual accounting requires that revenues are recognized when realized and earned–not when cash is received.