RaR eBook: Understanding Data Requirements in the Five Step Model for Revenue Recognition
Removes inconsistencies and weaknesses in existing revenue requirements
Provides a more robust framework for addressing revenue issues
Improves comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets
Provides more useful information to users of financial statements through improved disclosure requirements, and
Simplifies the preparation of financial statements by reducing the number of requirements to which an organization
A core concept in the new revenue recognition approach is the five-step model for identifying contracts, performance obligations, transaction prices, allocations and timing for revenue recognition. as mentioned below;
Step 1: Identify the Contract(s) with the 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
Step 5: Recognize Revenue when (or as) the Performance Obligation is Satisfied
The keys to a successful implementation necessitate a clear understanding the details and nuances within each of these five steps because they drive the data collection requirements and processes.
This eBook also carries detailed walk through these 5-steps and items to consider for each step.
Read eBook Now