Revenue Recognition — ASC 606 vs IFRS 15

The accounting-standard reference for revenue recognition: what ASC 606 (US GAAP) and IFRS 15 (IFRS) require. The two share a single five-step model (developed jointly), so the recognition logic is largely converged; the differences that matter are in the table below. How this standard is implemented in SAP is a separate write-up — see Related.

1. Identify the contract — enforceable rights and obligations, commercial substance, identified payment terms, and collectibility probable (the one notable US/IFRS threshold difference — see below).
2. Identify the performance obligations (POBs) — each distinct good or service (capable of being distinct, and distinct in the context of the contract). A series of substantially-the-same goods/services with the same pattern of transfer is treated as a single POB.
3. Determine the transaction price — the consideration expected, including variable consideration (expected value or most-likely-amount, subject to the constraint), significant financing components, non-cash consideration, and consideration payable to a customer.
4. Allocate the transaction price — to each POB in proportion to its standalone selling price (SSP); estimate SSP where it is not observable (adjusted market assessment, expected-cost-plus-margin, or the residual approach in limited cases). Discounts and variable consideration are allocated to the POB(s) they relate to.
5. Recognize revenue as each POB is satisfied — when control transfers, either over time (one of three criteria met) measured by a method that depicts progress, or at a point in time (indicators: present right to payment, legal title, physical possession, risks and rewards, acceptance).

Area	US GAAP (ASC 606)	IFRS 15
Collectibility (Step 1)	“Probable” = ~75–80% likely	”More likely than not” (> 50%) — a contract can qualify earlier
Contract-asset impairment	ASC 326 (CECL)	IFRS 9 expected credit loss
Licensing / IP, shipping & handling	Detailed elections differ	Detailed elections differ
Effective dates (non-public)	Differed historically	Differed historically

The standards are otherwise ~95% converged — the same five steps, the same control-transfer principle.

• Distinct determination (Step 2) — the most consequential and contested call.
• Variable consideration and the constraint (Step 3) — estimate, then cap.
• SSP estimation (Step 4) — observable vs estimated; method selection.
• Over-time vs point-in-time (Step 5) — the three over-time criteria and the measure-of-progress method.
• Contract modifications — prospective, cumulative catch-up, or a separate contract, depending on whether the added goods are distinct and priced at SSP.

A bundle sold for $120k: a one-time implementation, a 12-month subscription, and 36 months of premium support.

• Step 2: three POBs — implementation (point-in-time, on acceptance), subscription (over-time, 12 months), support (over-time, 36 months).
• Step 4: allocate by relative SSP. With SSPs of $20k / $60k / $20k (total $100k), allocate $120k × each ÷ $100k → $24k / $72k / $24k.
• Step 5: recognize implementation on acceptance; subscription ratably over 12 months; support ratably over 36 months.

• SAP implementation: SAP Revenue Accounting (RAR) — how this standard is configured and executed in SAP (contract combination, performance obligations, SSP allocation, fulfillment-based recognition, parallel ledgers). Read both together to assess whether a RAR configuration correctly applies ASC 606 / IFRS 15.

An educational reference and original synthesis — not investment advice, and not a substitute for the standard or for professional accounting guidance. For authoritative measurement detail, consult ASC 606 / IFRS 15 directly.