Revenue recognition as defined in ASC 606.

Modified on: Tue, 13 Jul, 2021 at 4:44 PM

Chargebee's built-in revenue recognition is ASC 605 compliant, not ASC 606. Chargebee integrates with RevLock to automate the revenue recognition process with ASC 606 and IFRS 15 regulations. 


Below are the steps for Revenue Recognition as per ASC 606

1) Identify the contract: Identify the criteria that must be met when establishing a contract with the customer.

2) Identify the performance obligations: Identify the items to be recognized in the contract.

3) Determine the transaction price: Elaborate on what must be considered when establishing the transaction price, the amount that the business expects to receive for transferring the goods or services to the customer if sold separately.

4) Allocate the transaction price: Determine how the transaction price is allocated across the contract's separate performance obligations (proportionately across the performance obligations in the contract).

5) Recognize revenue: Revenue is to be recognized as the business meets each performance obligation. This can be referred to in the revenue forecast schedule for the entire term.

M
Monica is the author of this solution article.

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