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FASB Discusses Topic 606 Pre-Agenda Research

At its meeting earlier this month, the Financial Accounting Standards Board (“FASB”) reviewed pre-agenda research for updates to Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606). In particular, the discussion focused on certain disclosure requirements for remaining performance obligations. The FASB agreed to add a practical expedient to the requirement for disclosing remaining performance obligations for certain types of variable consideration. Also agreed upon were improvements to the qualitative disclosure requirement for remaining performance obligations in paragraph 606-10-50-15.

The following types of variable consideration would not be required in an entity’s disclosure of its remaining performance obligations (paragraph 606-10-50-13):

  • Sales-based or usage-based royalties pledged in exchange for a license of intellectual property.
  • Any variable consideration completely allocated to an exclusively unsatisfied performance obligation, or to a distinctive good or service that is part of a single performance obligation and meets the criteria under paragraph 606-10-32-40.

As part of its next steps, the FASB directed staff members to draft a proposed Update regarding technical corrections and improvements related to ASU No. 2014-09. Staff members were instructed to include the aforementioned proposed amendments in the proposed Update.

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