"If we perform repairs on a customer's device, when would revenue be recognized under topic 606 rev rec? When the repair is complete or when the customer comes in and pays for the repair?"
This question was asked at a recent webinar, now available on-demand:
"Topic 606 Revenue Recognition: A Deep Dive into the 5 Steps to Recognition"
Please add your thoughts about it below. Thanks!
Today I frequently see those charges as not fixed or determinable until it is actually paid because the customer is often also arguing for a break and to get it covered under warranty somehow. Under the new standard, provided the rights and obligations around repairs are detailed in the contract, there is probably no reason to defer recognition until payment. However, if you have a history of price concessions for such repairs, for example, then that would reduce the amount of consideration you would recognize.
Your revenue should be recognised as soon as the customer has duly sign of your work completion advice with work done satisfactorily except otherwise stated in your contract of agreement that such will not take effect until further advise from the customer.
