Revenue Recognition ASC 606 Explained via Example

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Videos mentioned here:
1) Various ways to analyze financial statements

2) How to develop month-end close checklist

Chapters:
00:00 Intro
01:04 The Accounting Error
01:21 The Wrong Approach
03:44 The Correct Approach
08:39 Recap

What we cover in this video:
The example we are showing today involves an accounting error in revenue recognition. We will look at how a bad/clueless accountant deals with the situation and then we will see how a good accountant managed the same issue….

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All views expressed on my channel are mine alone. Not intended as financial or professional advice

[CPATuttle]

This was good and straight to the point. I've been out of financial accounting for a while. I always need to be refreshed on these topics.

[deonjaycpa]

Excellent video! As for the close checklist, I’d even say the check for new contracts should be performed throughout the month especially for companies with higher volumes of major contracts. Also need to ensure business unit leaders always send copies of new contracts to accounting once executed. Then, accounting can review throughout the month and maybe have a weekly or monthly meeting to ensure revenue schedules, etc are being set up properly. This way, everything doesn’t pile up during close week.

[michellemedeiros]

I appreciate your thoughtful approach. Demonstrating with a T account makes things so much clearer. .

[WIZCO]

Been following you since u were under 100k subscribers and have learned so much. Graduating next month with my bachelors in accounting and very excited to see how far i can go in the field! Thanks Bill!

[basheerahmad]

I love your videos and your way of explaining bill.. thanks from Bangalore, first viewer always

[mdroshan]

Amazing content Bill. I already work as an Accounting analyst. Your videos are helping me understand complicated topics with practical examples. You are literally helping me take my career ahead by helping me build this knowledge base. I rarely ever comment on youtube but i felt obligated to let you know how your effort is helping rookies like me grow in our careers. Thank you !

[bfree]

Accounting aside, that company needs to be praising their Sales and Marketing department that apparently brought them a pure profit contract because the cost of sales stayed in line with the original revenue figures. 😃 Just having a little fun with ya! Keep up the great work. I do enjoy your videos and content.

[aparnacharteredaccountantf]

Excellent way of explaining the concept… thank you!!

[rohitvautre]

Excellent explanation of ACS 606. It’s really very informative video with practical scenario.

[larahporter]

Hey this was an excellent video with a very comprehensive example. I really enjoyed it. Your a real good teacher.

[RA-kdne]

Today I leaned flux accounting..thanks

[maryadetayo]

Hi thanks for this information, very helpful, however, can you help explain how to treat a third party transaction and also how to recognise the revenue from the principal party?

[dsmitha]

Hi…your video is very informative…I would want you to do more videos on different complexities arising in revenue recognition….from Bangalore, India

[Maya-ouhs]

Awesome video! WOW. So easy to understand and funny!:) Thank you for your great work!

[jeremypage]

:) I had no idea that both accountants were the same. It must have been the glasses. Thank you Bill, there would be no accountants without a good Bill.

[christianschultz]

Would you say there's a financing component to the delayed payment, as well? What would the accounting treatment be, if so? Thank you for this video!

[prasanthak]

I would like to more example to explain, in nExt videos can you show IT INDUSTRY HOW TO RECOGNISE

[larrylitmanen]

Hey i got this question on the test - Company A enters into a 10-year lease with company B that commences on 1/1/2024, at which point the
space on that tower is reserved for Company A. Company A installs equipment on the
tower on 1/1/2025, however, the customer will not begin paying rent until 1/1/2028 and will
continue to pay for 10 years. Monthly rent begins at $2, 000 and escalates 2.5% annually
upon cash receipt. When should TI start and stop recognizing GAAP revenue from this contract? Is it from 2024 thru 2033 (10 years after comm date) or is it 2024 thru 2037 when cash payments stop?

[meghakamra]

Hello, your videos are really helpful …I have a question not related to this video….not sure where to ask…sorry.We introduced cash in form of capital and booked cash to capital entry. We spend the entire cash and plan not to use the account again and inactived that account. Now our equity account show that cash balance, I think our equity is inflated….am I correct or what treatment is required.Thanks

[jeffrey]

Shouldn't the contract state "monthly delivery" instead of having to confirm with the supply team?