× Course by Subject Webinars Self-Study eBooks Certificates Compliance Manager Subscriptions Firm CPE Blog CCHCPELink.com

ASC 606 Revenue Recognition: Determining Transaction Price (Currently Unavailable)

Author: Lynn Fountain

CPE Credit:  2 hours for CPAs

Determining transaction price is more difficult than it may first appear. Transaction price is the basis for measuring revenue. It is the amount of consideration the entity expects to be entitled to in exchange for transferring promised goods or services. Determining transaction price requires election of policies and significant use of judgment. Completing this step for fixed price contracts can be straightforward. However, the path becomes convoluted for variable priced contracts. The new revenue recognition standard identifies three areas that affect the estimate of transaction price, which we will review: • Nature of consideration • Timing of consideration • Amount of consideration In addition, there are many variables that must be considered and evaluated when determining transaction price. This segment will review these variables with applied examples.

Publication Date: November 2020

Designed For
Accountants and Finance professionals, Internal auditors/Professionals considering the role of internal audit, and Legal and Compliance professionals.

Topics Covered

  • Determine The Transaction Price
  • Consideration in Determining TP
  • Constrained Example
  • Implied Variability
  • Implied Example
  • Example VC Constrained
  • Rights of Return
  • Significant Financing Component
  • Consideration Payable to the Customer
  • Sales Based or Usage Based Royalties

Learning Objectives

  • Identify concepts and considerations that contribute to the transaction price (TP)
  • Identify the concept of variable consideration
  • Identify methods to determine variable consideration along with elements of variability constraints and implied variability
  • Recognize how rights of return impact transaction price
  • Identify the concepts of variability constraints
  • Recognize how rights of return impact TP
  • Identify how refund liabilities should be handled.
  • Recognize how provisions that include a significant financing component (SFC) impact TP.
  • Recognize how sales based or usage royalties impact transaction price
  • Recognize how consideration payable to a customer impacts TP
  • Identify how sales based or usage royalties impact TP
  • Identify the steps in the new revenue recognition model

Level
Basic

Instructional Method
Self-Study

NASBA Field of Study
Accounting (2 hours)

Program Prerequisites
None

Advance Preparation
None

 Chat — Books Support  
 Offline — CPE Support