Читать книгу Revenue Recognition - Renee Rampulla - Страница 63

It is not uncommon for entities to transfer control of a good to a customer prior to that good shipping. This is generally referred to as free on board (FOB) shipping point. Entities are required to assess whether shipping and handling activities associated with these FOB shipping point transactions represent a separate performance obligation to a customer. Keep in mind that control of that good has already transferred to the customer and therefore the shipping and handling activities are not part of the entity’s promise to transfer the good to the customer.

Prior to FASB ASC 606, entities entering into FOB shipping point transactions with customers did not generally assess whether the associated shipping and handling was considered to be a separate deliverable (deliverable is a term used in superseded FASB ASC 605, Revenue Recognition). Given this, some entities may fail to realize that they must make an accounting election to not evaluate whether the shipping and handling are promised services to customers, meaning possible separate performance obligations. Note this election will need to be applied consistently to similar transaction types.