Question

Within ASC 606-10 (the revised revenue model), where can a researcher find:

a. The core principle?

b. The five steps for applying the core principle?

c. The objective of the guidance in this topic?

d. Guidance on the incremental costs of obtaining a contract with a customer?

Answer 1

A. The core principle as per the ASC 606-10 is as follows:

"The core principle of the guidance in Topic 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services."

B. The 5 principles for applying the core principle as per ASC 606-10 are as follows:

1. Identify the contract(s) with a customer.

2. Identify the performance obligations in the contract.

3. Determine the transaction price.

4. Allocate the transaction price to the performance obligations in the contract.

5. Recognize revenue when (or as) the entity satisfies a performance obligation.

C. Objective of the guidance

To inform about the likely issues on impleting the model

D. Guidance on the incremental costs of obtaining a contract with a customer is covered under ASC 340-40-25-1.

The researcher will not be able to find it in ASC 606-10.