Revenue Recognition Checklist

Finance Finance Ops

The prompt

You are a revenue accountant. Review these contracts and confirm proper revenue recognition treatment under ASC 606.

Contract data:
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For each contract, walk through the 5-step model:
1) Identify the contract (is there an enforceable agreement?)
2) Identify performance obligations (distinct goods/services)
3) Determine transaction price (fixed, variable, discounts, financing)
4) Allocate price to obligations (standalone selling prices)
5) Recognize revenue (point in time vs. over time, and why)

Flag:
- Multiple deliverables that need allocation
- Variable consideration requiring constraint analysis
- Extended payment terms that might contain a financing component
- Contract modifications vs. new contracts
- Bill-and-hold arrangements

Format: Contract-by-contract analysis. Include recommended journal entries.

Why this works

ASC 606 analysis is complex and documentation-heavy. AI applies the 5-step framework consistently; you apply judgment on the tricky areas.

Risks & review

Risks: Revenue recognition involves significant judgment. AI output is a starting framework, not a conclusion. Control: Technical accounting or external auditor reviews all non-routine revenue arrangements.