{"id":2554,"date":"2019-06-27T12:01:15","date_gmt":"2019-06-27T19:01:15","guid":{"rendered":"http:\/\/www.projectp.com\/ppblog\/?p=2554"},"modified":"2022-11-18T10:00:28","modified_gmt":"2022-11-18T18:00:28","slug":"managing-performance-based-revenue-recognition-accounting-standards-codification-asc-606-current-updates-part-2-of-2","status":"publish","type":"post","link":"https:\/\/www.projectp.com\/ppblog\/2019\/06\/27\/managing-performance-based-revenue-recognition-accounting-standards-codification-asc-606-current-updates-part-2-of-2\/","title":{"rendered":"Accounting Standards Codification (ASC) 606 | updates – PART 2"},"content":{"rendered":"

\"\"<\/a><\/strong><\/span><\/h3>\n

<\/h3>\n

<\/h3>\n

<\/h3>\n

<\/h3>\n

<\/h3>\n

Part 2 of 2
\nLEVERAGING ORACLE PROJECTS TO MANAGE PERFORMANCE-BASED REVENUE<\/strong><\/span><\/h3>\n

As stated previously, the core principle in the new Standard requires that an entity recognize revenue to depict the transfer of goods or services to a customer in an amount that reflects the consideration given in exchange for those goods or services.<\/p>\n

Impact on Balance Sheet and Income Statement<\/u><\/strong><\/p>\n

When a contract is signed, an asset and a liability are created for the goods and services promised to the customer.<\/p>\n

Upon fulfilling an identifiable performance obligation (commonly referred to as a \u201cdeliverable\u201d), the liability is reduced, and revenue is recognized when the customer satisfies that performance obligation.<\/p>\n

The asset is reduced when payment is received for the goods and services.<\/p>\n

This new methodology differs from the previous generally accepted practice of recognizing revenue when the customer is billed and a receivable is created.\u00a0 No longer will a company track unbilled revenue streams.<\/em><\/strong>\u00a0 \"\"<\/a><\/em><\/strong>Oracle Projects allows you to configure your projects to meet the requirements of Step 5 of the new ASC 606 guideline with standard functionality.<\/p>\n

Step 5 of the Standard requires a two-step approach.\u00a0\u00a0 Using Oracle Projects, work is performed, and delivery is recorded.\u00a0 Then, a process to Generate Draft Revenue for the projects is run to complete the recognition process.<\/p>\n

The following is an example of how your company can leverage Oracle Projects to meet ASC 606 compliance.<\/p>\n

Service Contracts based on selling hours (T&E)<\/u><\/p>\n