ASC 606 (Revenue from Contracts with Customers)

ASC 606 is a set of accounting rules that guides how companies recognize revenue from their contracts with customers. It ensures revenue is reported consistently and accurately, reflecting the actual transfer of goods or services. The standard outlines a five-step process: identify the contract, determine performance obligations, set transaction prices, allocate those prices, and recognize revenue when obligations are satisfied. This approach helps provide clear financial information about a company's earnings, making it easier for investors, regulators, and other stakeholders to understand the company’s financial health and performance.