ASC 606
In accounting, ASC 606 means topic 606, Revenue from Contracts with Customers — five steps: identify the contract, identify the performance obligations, determine the transaction price, allocate it, recognize revenue as each obligation is satisfied.
- Layer
- Lexicon
- Defined in
- Lexicon
- Nearby
- 4
Authority
This definition follows ASC 606-10-05-4.
Every citation in this system, with the text we read and the date we checked it, is in US GAAP and where these rules come from.
For founders
The same idea written for a founder: what it costs a startup that ignores it, and what to do in a real month.
- Revenue recognitionRevenue is recognized as you deliver what the customer is paying for, not when the invoice goes out or the cash lands.
- SaaS revenue recognition under ASC 606, step by stepASC 606’s five steps applied to a startup SaaS contract: annual prepay, implementation fees, usage and multi-year deals, with the entries.
- MRR vs GAAP revenue under ASC 606MRR and ARR are operating metrics; revenue under ASC 606 is earned over time. How annual prepayments and churn split them, and how to reconcile the two.
- Deferred revenue for SaaS startups, explainedAn annual prepayment is cash today and revenue over a year. How deferred revenue works under ASC 606, why it’s a liability, and the schedule behind it.
What it is not called
Each of these is a real word for a different thing. Using it here is what makes a product read as though it was built by someone who has not done the work.
- ASC 605 (superseded)
- the revenue rule
Nearby in the catalog
No component names this concept outright. These are the ones in its part of the system, which is a weaker claim — but a component nothing links to is a component nobody finds.
Terms this one depends on
- Transaction priceThe consideration an entity expects to be entitled to for the contract, including estimated variable consideration and excluding amounts collected for third parties such as sales tax
- TransactionA business event — a payment, a sale, a purchase
- RevenueInflows or other enhancements of assets, or settlements of liabilities, from delivering or producing goods, rendering services or carrying out other activities — recognized when control transfers, not when cash arrives
Also in Revenue recognition
Defined in Lexicon. This page is generated from that document, so the two cannot disagree.