This segment is designed to evaluate Step Four of the new model dealing with allocating the transaction price.
The new revenue recognition standard outlines five steps for proper compliance. On the surface, these steps seem simplistic. However, there are many considerations that should be considered within each step based on your process and industry. Previous courses in this series have covered the standard at a high level and evaluated step one and two of the standard. They are:
• Understanding the Revenue Recognition Standard • Revenue Recognition: Considerations for Identify the Contract - Part One and Part Two • Revenue Recognition: Considerations for Performance Obligations – Part One and Part Two • Revenue Recognition: Considerations for Transaction Price – Part One and Part Two
This segment is designed to evaluate Step Four of the new model dealing with allocating the transaction price. Transaction price is the basis for measuring revenue. It is the amount of consideration the entity expects to be entitled to in exchange for transferring promised goods or services. Transaction price is allocated to performance obligations (PO’s) based on relative stand-alone selling price (SSP). The standard identifies three separate estimation methods that can be used to estimate stand-alone selling prices. These include: Market assessment approach; estimated cost-plus margin approach and residual approach. These approaches can also be utilized when considering how to allocate discounts and variable considerations.
Within this segment, we will cover the aspects of allocating the transaction price for revenue recognition.
Field of Study: Accounting
Lynn Fountain has over 45 years of experience spanning public accounting, corporate accounting and consulting. 24 years of her experience has been working in the areas of internal and external auditing. 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. Ms. Fountain has held two Chief Audit Executive positions for international companies. In 2011, as the Chief Audit Executive for an international construction/ engineering firm, she was involved in the active investigation of a joint venture fraud. The investigation included work with the FBI and ultimately led to indictment of the perpetrators and recovery of $13M. Ms. Fountain is currently engaged in her own training and consulting business and is a regular trainer for the AICPA. Ms. Fountain is the author of three separate technical books. “Raise the Red Flag – The Internal Auditors Guide to Fraud Evaluations” was published by the Institute of Internal Auditors Research Foundation. -“Leading The Internal Audit Function” and -“Ethics and The Internal Auditor Political Dilemma” were published by Taylor & Francis In addition Ms. Fountain was a contributing author to the certification program exam for the National Association of Accountants. She also has certificate programs on various on-line platforms. Ms. Fountain has performed as an adjunct instructor for the School of Business for Grantham University and developed the first internal audit curriculum for the School of Business at the University of Kansas. Ms. Fountain obtained her BSBA from Pittsburg State University and her MBA from Washburn University in Kansas. She has her CGMA, CRMA credentials and CPA certificate (non-active).
