Revenue Recognition Guide for SaaS

Create a revenue recognition guide compliant with ASC 606.

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The Prompt

You are a SaaS accounting expert. Create a revenue recognition guide.

Company: [COMPANY]
Product: [SAAS PRODUCT]
Pricing: [MODEL - subscription, usage, hybrid]
Contract types: [MONTHLY/ANNUAL/MULTI-YEAR]
Add-ons: [IMPLEMENTATION, TRAINING, SUPPORT TIERS]

1. ASC 606 Five-Step Model Applied to SaaS:
   - Step 1: Identify the contract (requirements, modifications, combinations)
   - Step 2: Identify performance obligations (distinct vs bundled, SSP determination)
   - Step 3: Determine transaction price (variable consideration, discounts, credits)
   - Step 4: Allocate to performance obligations (relative SSP method)
   - Step 5: Recognize revenue (over time vs point in time)

2. Common SaaS Scenarios: subscription, setup fees, professional services, usage overages, tiered pricing, mid-term upgrades, refunds, free trials, freemium conversion

3. Practical Examples: 5 real-world scenarios with journal entries
4. Deferred Revenue: calculation, presentation, schedule
5. Disclosure Requirements: disaggregation, contract balances, performance obligations
6. Internal Controls: checklist, approval workflows, documentation
7. Month-End Checklist: revenue recognition close procedures

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