About the project:
The client is a startup and into the e-commerce business. The client has a community-based app which various merchants and vendors partner with as their market tool and run several rewards programs to the end-users and merchants to enhance their revenue.
The client required our assistance to analyze their revenue contracts in line with the new Revenue Standard (ASC 606) and advise them how to account for revenue, rewards and other obligations.
Approach and solution offerings:
- Understand various rewards program – obligations of the client, cash flow in each type of contracts for each type of rewards
- Review each type of revenue contracts in the light of ASC 606 five-step model
- Advise the client as to the point of revenue recognition – when the performance obligation is fulfilled by the client
- Analyze if there are multiple performance obligations and if so, when each performance obligation is fulfilled
- Identify and document journal entries for each type of reward
- Advise client as to gaps identified in the revenue contracts for future consideration
