FASB Releases Proposed ASU on Consideration Payable to a Customer

The FASB has released a proposed Accounting Standards Update (ASU) that would amend ASC 606 to “clarify when payments made on behalf of a customer, or to a customer of an entity’s customer, should be accounted for as consideration payable to a customer.” Specifically, the proposal indicates that such payments would constitute consideration payable to a customer when either (1) “the entity has explicitly promised to make the payment” or (2) the customer reasonably expects that the payment will be made because “the entity has implicitly promised to do so or the payment represents an in-substance price concession.” The proposal, which is based on an EITF Issue, is being released in response to stakeholder feedback indicating that diversity in practice has arisen because of the lack of explicit U.S. GAAP guidance on this topic, as a result of which entities have often accounted for “economically similar transactions” in different ways.

Comments on the proposed ASU are due by November 23, 2026. For more information, see the press release on the FASB’s Web site.