|
STANDARDS TRACKER |
STANDARDS TRACKER
FASB proposed ASU: consideration payable to a customer under Topic 606
FASB's proposal targets diversity in practice on third-party payments under ASC 606; comment deadline is Nov. 23, 2026.
FASB issued a proposed ASU to clarify when payments made on behalf of a customer, or to a customer of an entity's customer, are consideration payable to a customer under ASC 606. The Journal of Accountancy reports that FASB is seeking to reduce inconsistencies tied to how customer-related payments are treated, with those inconsistencies arising in connection with revenue recognition workflows during the monthly close.
BY THE NUMBERS
|
See below EFFECTIVE |
4 SOURCES TRACKED |
|
Oct 30 LAST UPDATED |
FASB ISSUER |
The proposal targets diversity in practice on third-party payments - situations where entities have reached different conclusions on economically similar transactions because current U.S. GAAP does not explicitly address all such payment arrangements. Details on the specific conditions proposed and any conforming amendments are not stated in the listed sources.
Under ASC 606, consideration payable to a customer generally reduces the transaction price and therefore revenue, unless the payment is in exchange for a distinct good or service the customer provides. How the proposal interacts with that existing framework, and whether any transition relief would apply, is not stated in the listed sources.
Comments are due by Nov. 23, 2026, per the Journal of Accountancy. No effective date has been stated in the listed sources. Close teams operating through multi-tier distribution arrangements - where payments flow to parties other than the direct contracting customer - are most directly in scope.
WHAT TO DO IN THE CLOSE
| Map every payment your entity makes on behalf of customers or to customers' customers and note how each is currently classified. | |
| Review whether any of those payments involve third-party arrangements that the proposed clarification could bring into consideration-payable treatment. | |
| Submit comment-letter feedback to FASB by Nov. 23, 2026, especially if your entity operates through multi-tier distribution arrangements. | |
| Flag the open proposal in your revenue recognition workpaper so reviewers know the guidance may change before finalization. | |
| Monitor FASB's project page for a finalized ASU, effective date, and any stated transition method. |
SPONSORED
QUESTIONS THIS ANSWERS
Does this proposed ASU change how consideration payable to a customer is accounted for once identified?
That detail is not stated in the listed sources. The Journal of Accountancy describes the proposal as targeting inconsistencies in how customer-related payments are treated, not as a wholesale revision of the existing framework.
Who does this proposal apply to?
Per the Journal of Accountancy, the proposal is aimed at entities that make customer-related payments in connection with revenue contracts under Topic 606, particularly where payments flow through multi-tier distribution arrangements.
When is the comment deadline for this proposed ASU?
Comments are due by Nov. 23, 2026, per the Journal of Accountancy.
SOURCES
Where this comes from
Every posting on the board is verified live.
GO DEEPER
Go deeper
IN THIS SERIES
Previously: FASB proposed ASU: targeted improvements to equity method investment accounting
A living page: it is re-read and updated as coverage arrives; last updated Friday October 30. Facts come from the linked sources; confirm against the issuer's own text before relying on it.
Audit Friendly's flagship weekly for the people who run the close: the tools, the workflows, what the roles pay and who is hiring.
Accounting Stack · Audit Friendly Data · Accounting & Finance Jobs
Audit Friendly · members.auditfriendly.co