Joined the company as 1st Finance person in house. Never dealt with 606rec. We had a contract+ SOW for 6 months (software dev). It calls for delivery in Jan 2024. It was delivered with mo issue. Payment received. What i am not confortable that my compnay recornized 5/6th of the rev in 2023 (straight line) and rest in Jan. The contract has a term for cancellation for any reason. I feel all 100% shoudl be recogn in 2024. The soft would be resalable if the cancelation happened. Whats your thoughtz?

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My thought is you should probably hire an advisor to help with this.

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Yea pwc usually better

If you mean ASC 606, that’s for contracts with customer over a year if I’m not mistaken? So wouldn’t really apply in that regard to a 6 month contract. Honestly not used to this coming up with contracts less than a year but I’d imagine you can still apply the 5 steps of rev rec, because end game there’s a contract, components of a contract, a price determined and allocated, etc.
Typically revenue is recognized by performing the obligations. It can be actions or time based (milestones in a lot of cases). If the contract stated that x amount will be recognized in month 5, while unusual, it can happen. But just recognizing straight line for the hell of it isn’t right, lol.

Also, looking back at your comment, delivery might be in Jan, but if performance of the obligations took place before that or again, time based, as long as they comply with all the component to earn 5/6, and deliver in 6 months, it shouldn’t be a problem.

So 3 months after contract fulfilled they added another 3 months for more work?

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