ASC 606 Compliance
ASC 606 Overview
Accounting Standard Codification 606 is the FASB’s standard that seeks to standardize revenue recognition, improve comparability, and reduce complexity.
What does ASC 606 mean for my business?
ASC 606 states that revenue should be recognized to show the promised transfer of goods and services to customers (at the amount that the entity expects to receive for such a transfer). Under ASC 606, almost every company has to adopt a new approach to revenue recognition—with expanded disclosure requirements that require more meticulous records.
What is ASC 606 compliance?
To stay compliant with ASC 606 and within the rules and regulations, finance and audit teams require software that helps them include five key things in their financial reports. If that’s you, you’ll need to:
- Identify contracts with customers
- Identify performance obligations
- Determine the transaction price
- Allocate the transaction price to the performance obligations
- Recognize revenue as an entity satisfies the performance obligations