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ASC 606, Revenue from contracts with customers, requires more quantitative and qualitative disclosure than prior guidance. The following areas have been addressed in the SEC staff's comments:
  • Performance obligations – the nature of performance obligations, why goods or services are distinct, and disclosure of remaining performance obligations. Also, comments related to information provided in other parts of the filing that appear inconsistent with the number of performance obligations in a contract
  • Transaction price - the determination of standalone selling price, including methods, inputs, and assumptions that are used in estimating transaction price and allocation to performance obligations
  • Variable consideration – the determination of the transaction price and how a company estimates variable consideration
  • Recognizing revenue – the timing of when control transfers, the method of recognizing revenue over time, and accounting for licensing arrangements
  • Gross versus net presentation – judgments related to gross versus net presentation of revenue, including an assessment of whether the company controls the good or service being provided to the end customer
  • Disaggregated revenue – disaggregation disclosures that appear inconsistent with information provided in other parts of the filing or in other forums, such as investor presentations
Comment Examples
Guidance references
  • Expand the disclosure in the notes to your financial statements to more clearly describe the circumstances under which, and the reasons why, you record revenue net of certain costs associated with the generation of revenue, including transportation, gathering, compression, and processing fees. Additionally, explain to us your support for this presentation under ASC 606, including how it corresponds to the satisfaction of your performance obligations under the terms of the contracts with your customers.
  • Please tell us why you have not disaggregated revenue further by major product groups in light of ASC 606-10-55-91(c) and consideration of the guidance in ASC 606-10-55-90(a) since you disclose this disaggregation in your earnings slides supporting your earnings calls.
  • Please tell us your consideration of disclosing any obligations for returns, refunds, and other similar obligations pursuant to ASC 606-10-50-20(d).

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