Determining the Transfer of Control

Keywords

revenue recognition timing, transfer of control, point-in-time revenue

Abstract

In the final step of the Accounting Standards Codification (ASC) 606 five-step revenue standard, an entity recognizes revenue when control of a promised asset or service is transferred to the customer. The entity can transfer control either at a point in time (as with point-of-sale transactions) or over a period of time (as with many service contracts). Entities must determine whether each performance obligations are satisfied over time or at a point in time, and then recognize revenue in a way that best represents the transfer of control to the customer.

This article addresses the guidance for revenue that is recognized at a point in time and briefly summarizes topics related to transfer of control that are discussed in depth in other articles. Issues related to performance obligations satisfied over time are discussed in Input vs. Output methods and Revenue Recognition over Time.

Original Publication Citation

Determining the Transfer of Control (B. Riley and T. J. Wilks), RevenueHub, March 17, 2016. (19,618 unique views as of Jan. 13, 2023)

Document Type

Peer-Reviewed Article

Publication Date

2016

Publisher

RevenueHub

Language

English

College

Marriott School of Business

Department

Accountancy

University Standing at Time of Publication

Full Professor

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