What is ASC 606?

ASC 606, Revenue from Contracts with Customers, is an accounting standard issued by the Financial Accounting Standards Board (FASB). It provides a framework for recognizing revenue for all contracts with customers. It is commonly used by companies to determine when and how to recognize revenue, ensuring consistency and comparability across industries. The core principle is to recognize revenue when a company transfers goods or services to customers in an amount that reflects the consideration the company expects to be entitled to in exchange for those goods or services.