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Revenue toolkit: Step one—Identify the contract
Publication date: 01 Mar 2022
us Podcast
This week we start our Revenue toolkit series with a focus on step one of the revenue recognition model: Identifying the contract.
In our Toolkit podcast series, we are taking a deep dive into one accounting topic each month that goes beyond the basics and into areas that require judgment. This month, we are covering each of the five steps in the revenue recognition model.
In this episode, Heather Horn was joined by Angela Fergason and Pat Durbin, partners in PwC’s National Office, to discuss step one of revenue recognition: identifying the contract. While it may appear straightforward, there are some judgments to be made and getting it right is critical for the rest of the revenue recognition process.
In this episode, you will find:
- 03:10 - Determining the applicability of accounting guidance for each arrangement
- 12:19 - The five criteria that determine whether a contract exists for accounting purposes
- 15:28 - Collectibility considerations
- 22:10 - What to do if the criteria for contract existence are met after the initial assessment
- 24:38 - How enforceable rights and obligations, rather than a stated term, dictate the contract term
- 29:49 - Key takeaway: the importance of not taking shortcuts through the step one assessment.
About our guests
Angela Fergason is a partner in PwC's National Office with over 20 years of experience who specializes in accounting for revenue and employee compensation arrangements. She also consults on a range of financial reporting issues impacting technology companies. Angela is a frequent speaker on accounting and financial reporting topics and is a contributor to many PwC National Office publications, including our accounting guides on revenue and stock-based compensation.
Pat Durbin is a partner in PwC’s National Office and has over 30 years of experience. He has expertise in financial reporting and extensive experience serving board, C-suite, and senior management level executives across a variety of industries and geographies both in the US and internationally.
About our host
Heather Horn is PwC’s National Office thought leader, responsible for developing our communications strategy and conveying firm positions on accounting and financial reporting matters. She is the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series, as well as periodic webcasts for the power and utilities industry. With over 30 years of experience, Heather’s accounting and auditing expertise includes financial instruments and rate-regulated accounting.
Transcripts available upon request. Please send requests to us_podcast@pwc.com.
PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
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