ASC 606

What is ASC 606?

ASC 606 is the revenue recognition standard issued by the FASB and IASB that provides a five step framework for recognizing revenue from contracts with customers. It replaced previous industry specific guidance with a single, unified model.

Why It Matters

• It improves the comparability of revenue across different industries and capital markets.

• The five step model requires companies to identify performance obligations and allocate the transaction price accurately.

• It provides more detailed disclosures about the nature, amount, and timing of revenue and cash flows.