Revenue Recognition Services

Revenue Recognition Based on T’s & C’s
Today, there are numerous requirements for recognizing revenue. Under the proposed revenue recognition standard, all entities would recognize revenue in accordance with the framework set forth in the proposed revenue recognition standard regardless of industry and/or geography.
Revenue Allocation
Today, many goods or services promised in a contract with a customer are deemed not to be revenue-generating transactions when in fact those promises might represent separate obligations of the entity to the customer. Under the proposed revenue recognition standard, entities would be required to identify each of the separate goods or services they promise to a customer in a contract and recognize revenue for those promises when or as each is satisfied.

Today, the consideration received from a customer generally is allocated entirely to one promised good or service in the contract. Under the proposed revenue recognition standard, entities would be required to allocate the total transaction price to each of the separate promises in the contract on the basis of the estimated price at which the entity could sell the promised good or service on a standalone basis to a similar customer.

Today, revenue is generally recognized only up to the amount an entity is reasonably assured will be collected and bad debt expense is presented as part of SG&A expenses. Under the proposed revenue recognition standard, entities would recognize revenue based on the amount to which they expect to be entitled and bad debt expense would be presented as a prominent expense in the statement of comprehensive income. The intent of this presentation is to give users greater clarity about the entity’s willingness to enter into contracts with customers that might not ultimately be converted into cash.

Today, the accounting for variable consideration differs greatly across industries. Under the proposed revenue recognition standard, the amount of revenue recognized in relation to promised variable consideration would be limited to the minimum amount of revenue that the entity concludes with a high degree of certainty that it would not subsequently have to reverse. The promised consideration would be considered variable, for example, when sales include a right of return or when the amount of the consideration is dependent on the performance of the entity.

Fair Value Analysis
VSOE & BESP Analysis

VSOE analyzer can be used to perform real time VSOE and BESP comparing with Fair Value maintained in the system. This tool can accommodate by Contract, Quote, Sales Order by customer / SKU whether they are in compliant with BESP & VSOE.

FMV tables can be setup for multiple business stratifications and the system automatically matches the segments based on the data fields defined on the order to perform revenue allocations. Post and pre allocationscan be performed automatically by the system for comparison.

The Tool generates results on data in multiple business stratifications defined in the system such as business units, industry segments, geography, etc.

The analysis can be done on Selling Price or Discount on List Price comparing with Fair Value

The tool can perform sensitivity analysis within the system for better analysis.

Users can continuously monitor variances between FMV, Selling Price and Discounted list price for every product SKU.