Identifying performance obligations requires having a detailed understanding of the contract, deliverables, promises and contract timing. It involves being able to distinguish between distinct and non-distinct goods and services to identify whether one or more performance obligations exist. This task involves significant judgment and requires specific considerations be applied to properly identify the performance obligations.
This course will delve into the concept of distinct and non-distinct goods and services as well as other aspects relating to performance obligations. This includes measuring progress over a period of time, identifying how to recognize revenue over a period of time, options to purchase additional goods and services, material rights, principal vs. agent status, warranties, up-front fees and stand ready fees. The course utilizes many examples from numerous industries to enhance learning of the various concepts.
Publication Date: October 2020
Designed For
Accountants and Finance professionals including CFO’s and Controllers, Internal auditors/Professionals considering the role of internal audit, and Legal and Compliance professionals Board Members.
Topics Covered
- Performance Obligations
- Example Performance Obligations
- Distinct Goods/Services
- Example of Distinct Services
- Determination of Distinct vs. Non”Distinct
- Revenue Recognition Over a Period of Time
- Test Your Knowledge
- Material Rights
- Example Material Right
- Shipping and Handling
- Factors Impacting Performance Obligations
- Warranties
- Stand”Ready Fee
- Appendix ” Additional Exercise
Learning Objectives
- Identify the requirements behind step two of the revenue recognition standard "performance obligations"
- Recognize the differences between distinct and non-distinct goods/services
- Identify how to measure progress over a period of time and how to recognize revenue over a period of time.
- Identify the concept of revenue recognition related to performance obligations that may involve components
- Options to purchase additional goods/services
- Identifying material rights
- Shipping and handling charges
- Principal vs. agent status
- Warranties
- Options for additional goods and services
- Non-refundable up-front fees
- Stand-ready obligations
- Rights of returns
- Identify which type of warranty only guarantees the good/service functions as promised
Level
Basic
Instructional Method
Self-Study
NASBA Field of Study
Accounting (2 hours)
Program Prerequisites
None
Advance Preparation
None
Instructor
Lynn Fountain
Lynn Fountain has over 38 years of experience spanning public accounting, corporate accounting and consulting. 20 years of her experience has been working in the areas of internal and external auditing and risk management. She is a subject matter expert in multiple fields including internal audit, ethics, fraud evaluations, Sarbanes-Oxley, enterprise risk management, governance, financial management and compliance. Lynn has held two Chief Audit Executive (CAE) positions for international companies. In one of her roles as CAE, she assisted in the investigation of a multi-million-dollar fraud scheme perpetrated by a vendor that spanned 7 years and implicated 20 employees. The fraud was formally investigation by the FBI and resulted in 5 indictments estimating a $13M fraud loss.
Ms. Fountain is currently engaged in her own consulting and training practice. She is a highly sought-after trainer and international speaker. In addition, Ms. Fountain has assisted numerous companies with enterprise risk management frameworks, internal audit processes and financial accounting. She also serves as a discussion leader for the AICPA for numerous classes finance, accounting and risk management topics.
Ms. Fountain is the author of three separate technical books. Her first book released in 2015 by the Institute of Internal Auditors Foundation is entitled “Raise the Red Flag – The Internal Auditors Guide to Fraud Evaluations”. Her second book “Leading the Internal Audit Function” was released in October 2015 by Taylor & Francis Publications. This book serves as the initial launch for a series of leading practice internal audit and information technology publications. Her third book “Ethics and the Internal Auditor’s Dilemma” was released in December 2016.
Ms. Fountain obtained her BSBA from Pittsburg State University and her MBA from Washburn University in Kansas. She has her CPA, CGMA, CRMA credentials.