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Revenue Recognition

ASC 605 Revenue Recognition

This Topic provides guidance for transaction-specific revenue recognition and certain matters related to revenue-generating activities, such as the sale of products, the rendering of services, and the gain or loss on involuntary conversions of nonmonetary assets to monetary assets, that are not addressed specifically in other Topics.

Overview

ASC 605 provides industry-specific guidance for entities in the software industry, entities that enter into construction-type or production-type contracts, and entities in the entertainment and financial services industries, among others. Revenue is recognized when it is realized or realizable and earned. In addition, the Topic provides guidance for (1) arrangements under which a vendor will provide multiple deliverables to a customer, (2) reporting revenue gross or net of certain amounts paid to others, (3) accounting for consideration given by a vendor to a customer, and (4) the use of the milestone method in arrangements that include research or development deliverables.