Topic

Topic 606 refers to a set of accounting rules established by the Financial Accounting Standards Board (FASB) that standardizes how companies recognize revenue from contracts with customers. It aims to provide clearer financial statements by requiring businesses to report revenue when it is earned, regardless of when payment is received. Under this framework, companies must identify their contracts and the obligations within them, determine the transaction price, and allocate revenue to each obligation based on its value. This ensures consistency and transparency in financial reporting, helping investors and stakeholders better understand a company's financial health.