Table of Contents
Objective9
Background10
Scope of Revenue Standard16
Definitions used in ASC 60617
Core Principle18
REVIEW QUESTIONS19
SUGGESTED SOLUTIONS20
Five Steps to the ASC 606 Revenue Model21
| Step 1: Identify the Contract(s) With a Customer | 21 |
| REVIEW QUESTIONS | 34 |
| SUGGESTED SOLUTIONS | 35 |
| Step 2: Identify the Performance Obligations in the Contract | 36 |
| Step 3: Determine the Transaction Price | 40 |
| Step 4: Allocate the Transaction Price to the Performance Obligations in the Contract | 55 |
| REVIEW QUESTIONS | 62 |
| SUGGESTED SOLUTIONS | 64 |
| Step 5: Recognize Revenue - Entity Satisfies a Performance Obligation | 66 |
| REVIEW QUESTIONS | 103 |
| SUGGESTED SOLUTIONS | 105 |
Selected Issues in Applying the Five Steps of the Revenue Model107
| Sale with a Right of Return | 107 |
| Sale with a Refund Liability | 109 |
| Principal versus Agent Considerations | 111 |
| Non-Refundable Upfront Fees Received | 121 |
| Warranties | 126 |
| Bill-and-Hold Arrangements | 128 |
| Consignment Arrangements | 130 |
| REVIEW QUESTIONS | 132 |
| SUGGESTED SOLUTIONS | 134 |
| Licensing | 137 |
| Presentation of Sales Taxes and Other Similar Taxes Collected from Customers | 146 |
| Shipping and Handling Activities- Step 2 Identifying Performance Obligations | 148 |
| REVIEW QUESTIONS | 150 |
| SUGGESTED SOLUTIONS | 152 |
| Breakage in Prepaid Gift Cards | 154 |
| REVIEW QUESTIONS | 162 |
| SUGGESTED SOLUTIONS | 163 |
Contract Costs164
Presentation- General Rules in ASC 606170
| REVIEW QUESTIONS | 181 |
| SUGGESTED SOLUTIONS | 182 |
Disclosures183
Transition and Effective Date208
| REVIEW QUESTIONS | 215 |
| SUGGESTED SOLUTIONS | 216 |
Applicable Financial Statement (AFS) and Impact of Tax Act on ASC 606217
| REVIEW QUESTIONS | 224 |
| SUGGESTED SOLUTIONS | 225 |
Glossary226
Index228
Course Details
Author: Steven C. Fustolo, CPA
Mr. Fustolo is a partner with the Boston CPA firm of James J. Fox & Company and Director of the National Tax Institute, Inc. He is a frequent lecturer and author of numerous tax and accounting issues affecting closely held businesses. An AICPA author, Mr. Fustolo’s articles are regularly featured in The Practical Accountant and other publications. He is the author of Practice Issues: Compilation and Review, Accounting and Auditing Reference Guide, Everything You Never Wanted to Know About GAAP, Enron: Fraud, Deception and the Aftermath, FASB Review for Industry, and FASB, SSARS and SAS Update and Review and numerous other books and manuals that have been published by Practitioners Publishing Company (PPC) and Commerce Clearing House (CCH). He is the recipient of several Outstanding Discussion Leader awards from many professional organizations including the New York and Florida Societies of CPAs. Mr. Fustolo’s course entitled FASB, SSARS and SAS Update and Review continues to receive accolades and is regarded as one of the top live CPE programs in the country today with ratings that average 4.91 on a scale of 5.0. He speaks regularly for professional groups including being a guest lecturer at the AICPA Advanced Accounting and Auditing Technical Symposium. Mr. Fustolo is the recipient of the Elijah Watts Sells Award (AICPA) and Silver Medal (Massachusetts) for scores received on the CPA Examination.
Publication/Revision Date: 1/20/2026
Course Exam Questions (online): 40 (multiple-choice)
Program Delivery Method: NASBA QAS Self-Study
Available Formats of Course Text: PDF only or PDF plus printed copy sent in the mail
Course Level, Prerequisites, and Advance Preparation Requirements
| License | Course Level | Prerequisites | Advance Preparation Requirements |
|---|
| CPA | Overview | None | None |
* This program is appropriate for professionals at all organizational levels.
Sponsor ID Numbers
National Registry of CPE Sponsors ID: 107615
State CPA Board Sponsor ID Numbers (where applicable)
Florida Division of Certified Public Accounting: 0004761
Hawaii Board of Public Accountancy: 14003
New York State Board for Public Accountancy: 002146
Ohio Accountancy Board: CPE .51 PSR
Pennsylvania State Board of Accountancy: PX178025
Texas State Board of Public Accountancy: 009349
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Identify an example of recognition of revenue prematurely
- Identify one of the five steps to apply the new revenue standard
- Recall a condition that must be met to identify a separate performance obligation
- Identify methods authorized to estimate variable consideration in a contract
- Recognize information that can be used to allocate the transaction price to performance obligations
- Identify two methods that are used to record revenue in Step 5 of the revenue standard
- Recognize how to account for the transfer of a product with a right to return
- Recognize the requirement that must be met for a company be considered a principal in a revenue transaction
- Recall the general rule that determines whether an entity should record revenue gross or net
- Identify several types of warranties accounted for under the revenue standard
- Identify different types of intellectual property subject to the licensing rules in the revenue standard
- Recognize an example of a prepaid stored-value product
- Recall how an entity should account for breakage related to prepaid stored-value products
- Recall how certain contract costs are accounted for under the revenue standard
- Recognize certain disclosures required by the revenue standard for nonpublic entities, and
- Recall an applicable financial statement (AFS).
