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Revenue toolkit: Step two—Identify performance obligations
Publication date: 07 Mar 2022
us Podcast
This week we continue our Revenue toolkit series with a focus on step two of the revenue recognition model: Identifying the performance obligations.
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.
This week Heather Horn was joined by Angela Fergason and Mike Coleman, partners in PwC’s National Office, to discuss revenue step two: identifying the performance obligations. Angela and Mike share the key points to consider carefully, especially because this step dictates the units of account for the entire contract.
In this episode, you will hear:
- 4:57 - How to find all relevant promises to the customer, and how to treat implied promises
- 9:29 - The criteria utilized to assess whether a good or service is “distinct”
- 16:30 - How to account for promises to transfer a series of distinct goods or services
- 22:05 - How to treat a customer’s option to purchase additional goods or services
- 27:20 - How selling a “solution” may comprise multiple performance obligations, and other key final reminders
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.
Mike Coleman is a partner in PwC's National Office with over 30 years of experience. Mike specializes in accounting for revenue and software arrangements and has served technology clients for much of his career. In addition, Mike has represented the firm on the AICPA Software Task Force.
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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