Stand Ready Obligations - Viewpoint For example, in a typical health club contract, the entity’s promise is to stand ready for a period of time (that is, by making the health club available), rather than providing a service only when the customer requires it
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What Is a Stand-Ready Obligation in Revenue Recognition? A stand-ready obligation under ASC 606 requires a company to recognize revenue over time, not when cash arrives, because the customer’s benefit is the continuous availability of a service rather than any single delivery
5. 1 Introduction to Step 2 | DART – Deloitte Accounting Research Tool This chapter also addresses topics such as stand-ready obligations, options for additional goods and services, warranties, and nonrefundable up-front fees because these topics are integral to the proper identification of performance obligations
Stand-Ready Obligations - RevenueHub If a company determines that a contract contains a stand-ready obligation as opposed to a promise to deliver a good or service, and that stand-ready obligation represents a distinct performance obligation, revenue should be recognized over time as the stand-ready obligation is satisfied
REVENUE RECOGNITION FOR BUSINESS AND PROFESSIONAL SERVICES If one of the promised goods or services in a contract is a stand-ready obligation, the BPS entity would need to evaluate that stand-ready obligation to determine whether it is a performance obligation that should be accounted for separately
Handbook: Revenue recognition The stand-alone selling price is the price at which an entity would sell a promised good or service separately to a customer Observable stand-alone prices are used when they are available
3. 3 Identifying performance obligations - Viewpoint Management will need to apply judgment to determine whether the nature of a reporting entity’s promise is to stand ready to provide goods or services or a promise to provide specified goods or services
AP16: Stand ready obligations - IFRS Those stakeholders question whether the nature of the good or service underlying promises such as Types A through D is the act of “standing ready” or whether it is the actual delivery of the underlying goods or services that the entity stands ready to provide to the customer
Revenue: IFRS 15 handbook 2025 - assets. kpmg. com We hope you find this handbook a helpful resource as you interpret and apply the standard to your business in this fast-changing world This handbook provides a detailed analysis of the revenue standard, including insights and examples to help entities to navigate the revenue recognition requirements