Apply ASC 606 revenue recognition to my SaaS contracts
A worked revenue schedule for subscriptions, setup fees, and services, with performance obligations and journal entries explained.
The prompt
Help me apply ASC 606 (or IFRS 15) revenue recognition to my SaaS contracts.
Contract details: [subscription fee, term, billing frequency, start date]
Other items in the contract: [implementation or setup fees, training, professional services, usage overages, discounts, free months]
Payment terms: [e.g. annual upfront, net 30]
Standard I report under: [ASC 606 / IFRS 15]
What I'm stuck on: [e.g. "whether the setup fee is distinct", "multi-year discount", "mid-term upgrade"]
Work through the five steps:
1. Identify the contract (and whether any amendments create a new contract or modify the old one).
2. Identify performance obligations - say whether each item is distinct, and why. Note that setup fees in SaaS are often not distinct and get recognized over the subscription or customer life.
3. Determine the transaction price, including variable consideration (usage, credits, refund rights).
4. Allocate the price using standalone selling prices; tell me what SSP evidence I need.
5. Recognize revenue - ratably for the subscription, as delivered for distinct services.
Return:
- A month-by-month schedule: billed, recognized revenue, deferred revenue balance, contract asset if any.
- Sample journal entries for billing, cash receipt, and monthly recognition.
- Judgment calls I need to document in a policy memo.
- How this affects reported revenue versus ARR and bookings, in one paragraph.
Show your math. Use only the numbers I give you; mark assumptions as [ASSUMPTION]. This is general information - confirm treatment with my accountant or auditor.
Highlighted [brackets] are blanks to replace with your own details.
Fill in the blanks and use this promptMore Finance & Accounting prompts
What to fill in
- subscription fee, term, billing frequency, start date
- e.g. annual upfront, net 30
- ASC 606 / IFRS 15
- ASSUMPTION
How this prompt is built
This prompt follows the Few-Shot structure (Few-shot prompting). A few-shot prompt includes one or more worked examples of the input and the output you want, so the model can copy the pattern instead of guessing it.
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