This Contract Abstract Analysis Tool relates to ASC Topic 606 including certain criteria for an agreement to meet the definition of a contract. If all criteria are not met, the contract is not within the scope of ASC 606 and any consideration received would be recognized as a liability.
This tool was created to help companies understand more clearly the steps involved in implementing ASC Topic 606. The following information includes the steps relating to contracts:
- Defining the Contract (written, oral or implied)
- Identifying the Performance Obligations
- Determination of the Transaction Price
- Allocating the Transaction Price to the Performance Obligations
- Recognizing Revenue when or as the Company Satisfies a Performance Obligation