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By Deepa Bhat
•
November 29, 2017

Revenue Recognition Update – Step 4: Allocating Transaction Price to Performance Obligations

If you have been following Steps 1 (Identify the Contract with the Customer) through 3 (Determining a Transaction Price), of the revenue recognition update as eagerly as I have, then I am sure that you keenly await the discussion on Step 4 about the allocation of the transaction price to the performance obligations in a contract. The wait is over as we explore Step 4 in this blog post. A couple key concepts that we need to understand in this process: the allocation objective and standalone selling price. (more…)

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Categories: Revenue Recognition, The Musings of our Authors, Updates & Alerts
Tags: Deepa Bhat, Revenue Recognition, transaction price,
By ASL Guest
•
November 8, 2017

Revenue Recognition Update – Step 3: Determine a Transaction Price

By Josh Cross, CPA, Principal

Now that all of the performance obligations (Step 2) of the contract have been separately identified, it’s time to determine a transaction price. Seems easy, right?

ASC 606 defines the transaction price as “the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties (for example, some sales taxes).” On the surface this sounds like an easy step for your entity to identify the price you are selling a product for, but in practice we know that not all transaction prices are fixed at the onset of the contract. When calculating the transaction price, an entity needs to consider all of the following: (more…)

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Categories: Revenue Recognition, The Musings of our Authors, Updates & Alerts
Tags: ASC 606, FASB, josh cross, Revenue Recognition, transaction price, variable consideration,

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