ASC 606 (Accounting Standards Codification)

ASC 606 is an accounting standard that guides companies on how to recognize revenue from customer contracts consistently and transparently. It emphasizes that revenue should be recognized when a company transfers control of goods or services to the customer, reflecting the amount expected to be earned. The standard provides a five-step process: identify contracts, identify performance obligations, determine transaction prices, allocate those prices to obligations, and recognize revenue as obligations are fulfilled. Overall, ASC 606 aims to improve comparability and clarity in financial statements by standardizing revenue recognition across different industries.