Revenue is a central measure of financial performance and a major area of accounting judgement. IFRS 15 Revenue from Contracts with Customers and the converged US GAAP framework in ASC 606 establish a principles-based model intended to improve consistency and comparability in revenue reporting. This manuscript reviews revenue recognition from an accounting perspective, focusing on the five-step model: identifying contracts with customers; identifying performance obligations; determining transaction price; allocating transaction price; and recognizing revenue when or as performance obligations are satisfied. The review also examines variable consideration, significant financing components, contract modifications, principal-versus-agent assessments, warranties, customer options, contract assets and liabilities, and disclosure requirements. Illustrative accounting examples show why revenue recognition differs from billing and cash collection. The analysis indicates that the central accounting question is when control of promised goods or services transfers to the customer and how consideration should be measured and allocated. Effective revenue accounting therefore requires disciplined contract analysis, reliable estimates, operational evidence, strong internal controls and transparent disclosures.
Keywords:revenue recognition; IFRS 15; ASC 606; accounting; performance obligations; transaction price; variable consideration