Revenue Recognition (Topic 605)
Multiple-Deliverable Revenue Arrangements
A consensus of the FASB Emerging Issues Task Force
Presented by Richard A. Cleaveland CPA, Partner
Revenue Recognition for Multiple-Deliverable Arrangements (Topic 605-25) affects accounting and reporting for all vendors that enter into multiple-deliverable arrangements with their customers. An example is a company that sells a product bundled with a service. Revenue Recognition guidance for Multiple-Deliverables does not affect arrangements for which industry specific allocation and measurement guidance exists, such as software transactions and long term construction contracts. This update provides amendments to the criteria in subtopic 605-25 for separating consideration in multiple element arrangements and eliminates the fair value criteria for treating elements as separate units of accounting.
In this presentation, Revenue Recognition for Multiple-Deliverables (Topic 605-25), we review current and amended guidance for separation criteria and allocation of consideration, vendor specific objective evidence (VSOE) of selling price and best estimate of selling price, the disclosure requirements, effective dates and comparison to IFRS.