We continue our revenue accounting podcast miniseries with a discussion on payments to customers—an area that can raise complex accounting questions, especially when those payments come in the form of equity. We examine when these payments reduce revenue versus when they represent consideration for a distinct good or service. We also highlight updates from the FASB’s new guidance on share-based consideration payable to a customer.

In this episode, we discuss:

• 0:56 – Overview of consideration payable to a customer
• 5:41 – When to recognize payments to a customer
• 15:15 – Applying ASC 718 to equity-based payments to a customer
• 23:41 – Key provisions in FASB’s new guidance on equity consideration
• 29:49 – Classifying, measuring, and recognizing equity payments
• 36:41 – Accounting for payments to settle litigation claims or other disputes

For more information, see chapter 4 of our Revenue guide, chapter 7 of our Stock-based compensation guide, and our In brief, FASB issues guidance on share-based consideration payable to a customer. Listen to the other episodes in this series:

• Revenue accounting reset – Recognizing revenue
• Revenue accounting reset – Variable consideration

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About our guests

Ken Stoler is a partner in PwC’s National Office who specializes in financial reporting and plan design issues related to equity compensation arrangements, retirement and healthcare plans, and other benefits. He has helped companies navigate their employee compensation issues during IPOs, spinoffs, acquisitions, and other major transactions or events.

Angela Fergason is a partner and standard setting leader in PwC's National Office who specializes in accounting for revenue and employee compensation arrangements. She also consults on a range of financial reporting issues impacting technology companies.

About our host

Heather Horn is the PwC National Office Sustainability and Thought Leader, responsible for developing our communications strategy and conveying firm positions on accounting, financial reporting, and sustainability matters. In addition, she is part of PwC’s global sustainability leadership team, developing interpretive guidance and consulting with companies as they transition from voluntary to mandatory sustainability reporting. She is also the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series.

Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.

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We continue our revenue accounting miniseries with an episode taking a closer look at variable consideration—an essential and sometimes complex element in determining transaction price. From performance bonuses to volume-based rebates, we explore how to estimate and constrain variable amounts as well as when key exceptions apply.

In this episode, we discuss:

• 0:58 – Why variable consideration is a critical element of the ASC 606 model
• 7:00 – The general model for estimating variable consideration
• 9:02 – Applying the constraint on the amount of variable consideration
• 18:25 – Common types of arrangements that include variable consideration, such as volume-based rebates and discounts
• 20:59 – Key exceptions to the general model:
  • 21:10 – Sales- or usage-based royalty exception
  • 26:04 – Variable consideration allocation exception
  • 30:24 – Right-to-invoice measure of progress exception

For more information, see chapter 4 of our Revenue from contracts with customers guide. You can also listen to the first episode in this series, Revenue accounting reset – Recognizing revenue.

Be sure to follow this podcast on your favorite podcast app and subscribe to our weekly newsletter for the latest thought leadership.

About our guests

Angela Fergason is a partner and standard setting leader in PwC's National Office who specializes in accounting for revenue and employee compensation arrangements. She also consults on a range of financial reporting issues impacting technology companies.

Chris Bourdon is a partner in PwC's National Office who specializes in accounting for revenue, inventory, and employee compensation arrangements. He also consults on a range of financial reporting issues impacting technology, media, and entertainment companies.

About our host

Heather Horn is the PwC National Office Sustainability and Thought Leader, responsible for developing our communications strategy and conveying firm positions on accounting, financial reporting, and sustainability matters. In addition, she is part of PwC’s global sustainability leadership team, developing interpretive guidance and consulting with companies as they transition from voluntary to mandatory sustainability reporting. She is also the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series.

Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com.

Did you enjoy this episode? Text us your thoughts and be sure to include the episode name.

We kick off our latest accounting podcast miniseries on revenue accounting with a foundational discussion on revenue recognition. In this episode, we tackle recognizing revenue —the final step of the ASC 606 model—and examine how to determine whether performance obligations are satisfied over time or at a point in time.

In this episode, we discuss:

• 0:54 – Overview of the ASC 606 revenue model
• 5:30 – Identifying performance obligations satisfied over time
• 11:15 – Identifying performance obligations satisfied at a point in time
• 21:19 – Measures of progress to determine the timing of revenue recognition
• 33:45 – Exceptions to over-time revenue recognition

For more information, see chapter 6 of our Revenue from contracts with customers guide.

Be sure to follow this podcast on your favorite podcast app and subscribe to our weekly newsletter to stay in the loop.

About our guests

Pat Durbin is a PwC National Office Deputy Chief Accountant. He has over 30 years of experience consulting with our clients and engagement teams on complex accounting matters, including issues related to revenue, compensation, income taxes, and inventory under both US GAAP and IFRS.

Mike Coleman is a partner in PwC's National Office who specializes in accounting for revenue and software arrangements and has served technology clients for much of his career. In addition, Mike has represented the firm on the AICPA Software Task Force.

About our guest host

Guest host Diana Stoltzfus is a partner in the National Office who helps to shape PwC’s perspectives on regulatory matters, responses to rulemakings and policy development, and implementation related to significant new rules and regulations. Prior to rejoining PwC, Diana was the Deputy Chief Accountant in the Office of the Chief Accountant (OCA) at the SEC where she led the activities of the OCA’s Professional Practices Group.

Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com

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