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Handbook: Revenue recognition

Handbooks | March 2024

Latest edition: Our in-depth guide to the revenue standard, ASC 606, with Q&As. interpretive guidance and examples.

This March 2024 edition includes new examples on determining the term of contracts with termination penalties, determining if promises are distinct in the context of the contract, when the bill-and-hold criteria are not met in a contract, and accounting for the exercise of a material right.


  • ASC 606, ASC 340-10, ASC 340-40 and ASC 610-20
  • All companies

Relevant dates

  • Effective immediately

Key impacts

The application of ASC 606 is not a simple exercise – it requires significant judgment, estimation and disclosures. Changes in business practices and the economic environment continue to create new challenges to the accounting for revenue.

In response to these challenges, companies evaluate and may need to revisit a number of estimates and judgments to account for their revenue arrangements and related costs. Companies may also apply certain aspects of the guidance that they had not, or less frequently, applied in the past.

In this publication, we focus on the accounting and disclosure aspects of ASC 606. Questions continue to arise as companies enter into new or modified revenue arrangements or respond to a changing economic environment. The interpretation of the principles in ASC 606 continues to be informed by evolving practice issues and regulator views.

Our purpose in this updated publication is to assist you in gaining an in-depth understanding of the five-step revenue model by answering the questions that we are encountering in practice and providing examples to explain key concepts.

Report contents


  • Step 1: identify the contract(s) with a customer
  • Step 2: identify the performance obligations in the contract
  • Step 3: determine the transaction price
  • Step 4: allocate the transaction price to performance obligations
  • Step 5: recognize revenue when (or as) the entity satisfies a performance obligation
  • Customer options for additional goods or services
  • Principal vs. agent
  • Licensing of intellectual property
  • Contract modifications
  • Contract costs
  • Loss contracts
  • Presentation
  • Disclosure
  • Derecognition of nonfinancial assets

Download the document:

Revenue recognition

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Executive summary

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Mike Breen
Partner, Department of Professional Practice, KPMG US
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Meredith Canady
Partner, Dept. of Professional Practice, KPMG US

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