Implementing the New Revenue Standard

Exam Questions: 40
Course Level: Basic
Pages: 258 | Content: 250, Supplemental: 8
NASBA Area of Study: Accounting
Not Acceptable for: Enrolled Agents
Version: 7750C

The objective of this course is to address the new revenue standard in ASC 606, Revenue from Contracts with Customers, and its related updates, and provide guidance to nonpublic (private) entities who implemented the standard in 2019 or 2020 and are addressing post-implementation issues in 2021 and 2022.

Topics include an overview of the new standard and its core principle, an analysis of each of the five steps required in the revenue model, selected issues encompassing principal versus agent considerations, dealing with warranties, bill-and-hold arrangements, and consignment transactions. The course also addresses how to account for contract costs, financial statement presentation of revenue-related accounts, disclosures, and transition methods and guidance. PLEASE NOTE: Not accepted for Enrolled Agents. All course material provided. No prerequisites. Course level: Basic.

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Course Information

Table of Contents
  • Implementing the New Revenue Standard
  • Objective
  • Background
  • Scope of Revenue Standard
  • Definitions Used in ASC 606
  • Core Principal
  • Five Steps to the ASC 606 Revenue Model
  • Step 1: Identify the Contract(s) with a Customer
  • Step 2: Identify the Performance Obligations in the Contract
  • Step 3: Determine the Transaction Price
  • Step 4: Allocate the Transaction Price to the Performance Obligations in the Contract
  • Step 5: Recognize Revenue - Entity Satisfies a Performance Obligation
  • General Rules in Applying Step 5
  • Control Transfers Over Time - Step 5
  • Control Transfers at a Point in Time - Step 5
  • Special Right-to-Invoice Practical Expedient- Step 5
  • Onerous Contract Rules
  • Selected Issues in Applying the Five Steps of the Revenue Model
  • Sale with a Right of Return
  • Sale with a Refund Liability
  • Principal versus Agent Considerations
  • Non-Refundable Upfront Fees Received
  • Warranties
  • Bill-and-Hold Arrangements
  • Consignment Arrangements
  • Licensing
  • Presentation of Sales Taxes and Other Similar Taxes Collected from Customers
  • Shipping and Handling Activities - Step 2 Identifying Performance Obligations
  • Breakage in Prepaid Gift Cards
  • Contract Costs
  • Presentation - General Rules in ASC 606
  • Disclosures
  • Transition and Effective Date
  • Applicable Financial Statement (AFS) and Impact of Tax Act on ASC 606
  • To identify an example of premature recognition of revenue
  • To identify one of the five steps to apply the new revenue standard
  • To recall a condition that must be met to identify a separate performance obligation
  • To identify methods authorized to estimate variable consideration in a contract
  • To recognize information that can be used to allocate the transaction price to performance obligations
  • To identify two methods that are used to record revenue in Step 5 of the revenue standard
  • To recognize how to account for the transfer of a product with a right to return
  • To recognize the requirement that must be met for a company to be considered a principal in a revenue transaction
  • To recall the general rule that determines whether an entity should record revenue gross or net
  • To identify different types of warranties accounted for under the revenue standard
  • To identify different types of intellectual property subject to the licensing rules in the revenue standard
  • To recognize an example of a prepaid stored-value product
  • To recall how an entity should account for breakage related to prepaid stored-value products
  • To recall how certain contract costs are accounted for under the revenue standard
  • To recognize certain disclosures required by the revenue standard for nonpublic entities
  • To recall an applicable financial statement (AFS)

PLEASE NOTE: CPE credit measurement is based on NASBA Registry and QAS guidelines of one credit for every 50 minutes. Credit calculation may vary in different states — check with your State Board of Accountancy. Unless otherwise noted in the specific course description, no advanced preparation is required in order to register or complete any PES CPE course. Use of materials or services provided by Professional Education Services, LP ("PES") are governed by the Terms and Conditions stated on PES' website www.mypescpe.com. PES provides these courses with the understanding that it is not providing any accounting, legal, or other professional advice and assumes no liability whatsoever in connection with its use. PES has used diligent efforts to provide quality information and material to its customers, but does not warrant or guarantee the accuracy, timeliness, completeness, or currency of the information contained herein. Ultimately, the responsibility to comply with applicable legal requirements falls solely upon the individual licensee, not PES. PES encourages you to contact your state Board for the latest information and to confirm or clarify any questions or concerns you have regarding your duties or obligations as a licensed professional.