Revenue is defined in the revenue standard as:

Definition from ASC 606-10-20

Revenue: Inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations.

Refer to FSP 33.2.2 for discussion of the distinction between revenue and other types of income, such as gains.
Many revenue transactions are straightforward, but some can be highly complex. For example, software arrangements, licenses of intellectual property, outsourcing contracts, barter transactions, contracts with multiple elements, and contracts with milestone payments can be challenging to understand. It might be difficult to determine what the reporting entity has committed to deliver, how much and when revenue should be recognized.
Contracts often provide strong evidence of the economic substance, as parties to a transaction generally protect their interests through the contract. Amendments, side letters, and oral agreements, if any, can provide additional relevant information. Other factors, such as local legal frameworks and business practices, should also be considered to fully understand the economics of the arrangement. A reporting entity should consider the substance, not only the form, of a transaction to determine when revenue should be recognized.
The revenue standard provides principles that a reporting entity applies to report useful information about the amount, timing, and uncertainty of revenue and cash flows arising from its contracts to provide goods or services to customers. The core principle requires a reporting entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to in exchange for those goods or services.

1.2.1 The five-step model for recognizing revenue

Figure RR 1-2 illustrates the five-step model the boards developed for recognizing revenue from contracts with customers:
Figure RR 1-2
Five-step model
Certain criteria must be met for a contract to be accounted for using the five-step model in the revenue standard. A reporting entity must assess, for example, whether it is “probable” it will collect the amounts it will be entitled to before the guidance in the revenue standard is applied.
A contract contains a promise (or promises) to transfer goods or services to a customer. A performance obligation is a promise (or a group of promises) that is distinct, as defined in the revenue standard. Identifying performance obligations can be relatively straightforward, such as an electronics store’s promise to provide a television. But it can also be more complex, such as a contract to provide a new computer system with a three-year software license, a right to upgrades, and technical support. Reporting entities must determine whether to account for performance obligations separately, or as a group.
The transaction price is the amount of consideration a reporting entity expects to be entitled to from a customer in exchange for providing the goods or services. A number of factors should be considered to determine the transaction price, including whether there is variable consideration, a significant financing component, noncash consideration, or amounts payable to the customer.
The transaction price is allocated to the separate performance obligations in the contract based on relative standalone selling prices. Determining the relative standalone selling price can be challenging when goods or services are not sold on a standalone basis. The revenue standard sets out several methods that can be used to estimate a standalone selling price when one is not directly observable. Allocating discounts and variable consideration must also be considered.
Revenue is recognized when (or as) the performance obligations are satisfied. The revenue standard provides guidance to help determine if a performance obligation is satisfied at a point in time or over time. Where a performance obligation is satisfied over time, the related revenue is also recognized over time.

1.2.2 Portfolio approach for applying the revenue standard

A reporting entity generally applies the model to a single contract with a customer. A portfolio approach might be acceptable if a reporting entity reasonably expects that the effect of applying a portfolio approach to a group of contracts or group of performance obligations would not differ materially from considering each contract or performance obligation separately. A reporting entity should use estimates and assumptions that reflect the size and composition of the portfolio when using a portfolio approach. Determining when the use of a portfolio approach is appropriate will require judgment and a consideration of all of the facts and circumstances.
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