Wiley GAAP 2019

38ASC 606 REVENUE FROM CONTRACTS WITH CUSTOMERS*

OVERVIEW

What Is Revenue?

Revenue. Influx or other enhancement of assets of an entity or settlements of liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity’s ongoing major or central operations. (ASC 606-10-20)

Revenue versus Gains. The FASB distinguishes revenues from gains. Gains are defined in Statement of Financial Accounting Concept 6 (CON 6), Elements of Financial Statements, as:

Increases in equity (net assets) from peripheral or incidental transactions of an entity and from all other transactions and other events and circumstances affecting the entity except those that result from revenues or investments by owners.

Revenues are commonly distinguished in GAAP from gains for the three reasons listed in the chart below.

Exhibit—Distinguishing Between Revenue and Gains in GAAP

Development of Revenue Guidance

Revenue recognition guidance was initially found in:

• CON 5, which specifies that an entity should recognize revenue when realized or realizable and earned, and
• CON 6, which defines revenues as inflows or other enhancements of assets and/or settlements of liabilities from delivering goods or services as a result of the entity’s ongoing major or central operations.

GAAP related to revenue developed piecemeal, with specific, ...