ASC 605
Active
Revenue Recognition
Legacy revenue recognition Topic, largely superseded by ASC 606 for virtually all transactions; retained as a historical placeholder in the Codification.
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Overview
What ASC 605 used to govern
Before the 2014 revenue recognition overhaul, ASC 605 and its predecessor pronouncements–including SAB 101/104 and industry-specific guidance such as SOP 97-2 for software–provided the framework for revenue recognition under US GAAP. This framework was considerably less unified than the model that replaced it, consisting of dozens of industry-specific and transaction-specific pieces of guidance that often produced inconsistent results for economically similar transactions across different industries.
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Supersession by ASC 606
Replaced by a single, principle-based model
The FASB and IASB undertook a joint project beginning in the early 2000s and finalised in 2014 to replace ASC 605's fragmented, industry-specific patchwork with a single, principle-based, converged model–resulting in ASC 606 (US GAAP) and IFRS 15 (IFRS), issued simultaneously with substantively identical wording. ASC 606 became effective for public entities in 2018 and private entities in 2019, at which point it superseded ASC 605 for essentially all revenue transactions.
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IfRS Comparison
Predecessor of IFRS 15
IAS 18 (Revenue) and IAS 11 (Construction Contracts) played the analogous predecessor role under IFRS, similarly superseded by IFRS 15 as part of the same joint convergence project. Both frameworks retired their old, less unified revenue models at the same time, for the same converged replacement.
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Related Topics
Cross-reference map
TopicConnection
ASC 606Current revenue recognition guidance–superseded ASC 605 for virtually all transactions
IFRS 15IFRS counterpart to ASC 606, issued simultaneously as part of the same convergence project
Financial statement key
BS Balance sheet
IS Income statement
SE Statement of changes in equity
OCI Other comprehensive income
SCF Statement of cash flows