Table of Contents

Chapter 1 - Revenue Recognition. 1

Topic 606, Revenue from Contracts with Customers. 1

The Nature of a Customer 1

Steps in Revenue Recognition. 2

Step One: Link Contract to Customer 2

Step Two: Note Performance Obligations. 4

Step Three: Determine Prices. 6

Variable Consideration. 7

Possibility of Reversal 8

Time Value of Money. 9

Noncash Consideration. 11

Payments to Customers. 12

Refund Liabilities. 13

Step Four: Allocate Prices to Obligations. 13

Allocation of Price Discounts. 14

Allocation of Variable Consideration. 15

Subsequent Price Changes. 15

Step Five: Recognize Revenue. 16

Measurement of Progress Completion. 18

Output Methods. 18

Input Methods. 18

Change in Estimate. 19

Progress Measurement 20

Right of Return. 20

Consistency. 21

Contract Modifications. 21

Treatment as Separate Contract 21

Treatment as Continuing Contract 22

Entitlement to Payment 23

Contract-Related Costs. 24

Costs to Obtain a Contract 24

Costs to Fulfill a Contract 25

Amortization of Costs. 26

Impairment of Costs. 26

Exclusions. 26

Applicability. 27

Chapter 2 - Other Revenue Topics. 29

Bill-and-Hold Arrangements. 29

Consideration Received from a Supplier 30

Consignment Arrangements. 31

Customer Acceptance. 32

Customer Options for Additional Purchases. 32

Donations. 34

Gains and Losses from Nonfinancial Asset Derecognition. 35

Licensing. 36

Nonrefundable Upfront Fees. 37

Principal versus Agent 38

Repurchase Agreements. 39

Unexercised Rights of Customers. 40

Warranties. 41

Chapter 3 - Revenue Presentation and Disclosure. 44

Presentation. 44

Disclosures. 44

Chapter 4 - Management of Revenue Recognition. 50

Identification of Customers. 50

Contractual Consistency. 50

Contract Aggregation. 51

Performance Clarification. 51

Variable Consideration Analysis. 51

Time Value of Money Analysis. 52

Standalone Selling Prices. 52

Measurement of Progress Completion. 53

Costs to Obtain a Contract 53

Bill-and-Hold Arrangements. 53

Breakage. 53

Answers to Chapter Questions. 56

Glossary. 61

Index. 62