5 Ways To Simplify Asc 606 With Excel Template

Quick Links :

In today's complex business landscape, revenue recognition can be a daunting task. The Accounting Standards Codification (ASC) 606, also known as Revenue from Contracts with Customers, has brought about significant changes in the way companies recognize revenue. While the new standard aims to provide a more comprehensive framework for revenue recognition, it can be overwhelming for many businesses. Fortunately, using an Excel template can simplify the process and make it more manageable.

Why ASC 606 Matters

ASC 606 is a converged standard that replaces the previous revenue recognition guidance in U.S. Generally Accepted Accounting Principles (GAAP). The new standard provides a single, comprehensive model for revenue recognition that applies to all contracts with customers, except for those within the scope of other standards. The core principle of ASC 606 is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled.

Challenges of ASC 606

While ASC 606 provides a clear framework for revenue recognition, its implementation can be challenging. Some of the common challenges businesses face include:

• Identifying performance obligations and determining the transaction price
• Allocating the transaction price to separate performance obligations
• Recognizing revenue over time or at a point in time
• Disclosing revenue recognition policies and significant judgments

5 Ways to Simplify ASC 606 with Excel Template

To overcome these challenges, using an Excel template can be a game-changer. Here are five ways an Excel template can simplify ASC 606:

1. Simplify Contract Review and Data Collection

An Excel template can help you streamline the contract review and data collection process. By creating a template with relevant fields and formulas, you can quickly gather and organize data from contracts, including:

• Contract dates and duration
• Transaction prices and payment terms
• Performance obligations and delivery dates
• Customer information and contact details

2. Automate Transaction Price Allocation

One of the most complex aspects of ASC 606 is allocating the transaction price to separate performance obligations. An Excel template can help you automate this process using formulas and macros. By inputting the contract data, the template can:

• Calculate the standalone selling price (SSP) of each performance obligation
• Allocate the transaction price to each performance obligation
• Determine the revenue recognition pattern for each performance obligation

3. Track Revenue Recognition Over Time

For contracts with multiple performance obligations, recognizing revenue over time can be challenging. An Excel template can help you track revenue recognition over time using:

• Schedules and timelines to track performance obligations
• Formulas to calculate revenue recognition based on the input data
• Charts and graphs to visualize revenue recognition patterns

4. Disclose Revenue Recognition Policies

ASC 606 requires businesses to disclose their revenue recognition policies and significant judgments. An Excel template can help you create a disclosure report that includes:

• A summary of revenue recognition policies
• A description of significant judgments and estimates
• A reconciliation of revenue recognition and deferred revenue

5. Facilitate Audit and Compliance

Finally, an Excel template can help you facilitate audit and compliance by:

• Creating a centralized repository for contract data and revenue recognition information
• Providing a clear audit trail of changes and updates
• Enabling easy reporting and analysis of revenue recognition data

Gallery of ASC 606 Excel Templates

Here is a gallery of ASC 606 Excel templates that you can use to simplify revenue recognition:

FAQs

Here are some frequently asked questions about ASC 606 and Excel templates:

By using an Excel template, you can simplify the ASC 606 process and make revenue recognition more manageable. Whether you're a small business or a large corporation, an Excel template can help you navigate the complexities of ASC 606 and ensure compliance with the new standard.