Avoiding Common ASC 606 Mistakes
Revenue recognition under ASC 606 continues to challenge accounting teams. Here are the five most common pitfalls we see:
1. Contract Identification Issues
Not properly identifying contracts or failing to combine contracts that should be treated as one.
2. Performance Obligation Errors
Incorrectly identifying distinct performance obligations within a contract.
3. Variable Consideration Misapplication
Failing to properly estimate and constrain variable consideration.
4. Allocation Methodology Mistakes
Using incorrect methods to allocate transaction price to performance obligations.
5. Timing Recognition Issues
Recognizing revenue at the wrong point in time or over the wrong period.