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Revenue recognition

Revenue, recognized by the rule.

A contract becomes a schedule. Eternify Ledger recognizes revenue under ASPE 3400, IFRS 15 or ASC 606, moves each month from deferred to recognized, and recalculates the waterfall when a contract changes.

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Revenue recognition, in motion
  • Deferred schedulesStraight-line schedules generated from contract terms.
  • Multi-element allocationPrice allocated across elements by stand-alone selling price.
  • Usage-based revenueRecognized as the meter records it.
  • Milestone triggersRevenue and invoice follow the same acceptance.

What you get

Contracts are objects

Terms, pricing, elements and milestones live on the contract, not in a spreadsheet beside it. The schedule is generated from them.

The rule picks the entry

Straight-line, usage, milestone and multi-element allocation each have their own recognition rule, and each month's entry posts for approval.

Three frameworks, one set of books

ASPE 3400 first, with IFRS 15 and ASC 606 views for groups that report under another standard.

How it works

From contract to recognized revenue.

Pick a step to see it. The panel stays beside you while you read.

Enter or import the contract and the schedule is generated. Each month, a slice moves from deferred revenue to recognized revenue, and the entry waits for a person to approve it.

Annual subscription, 12,000.00

MonthRecognizedDeferred balance
January1,000.0011,000.00
February1,000.0010,000.00
March1,000.009,000.00
To date3,000.009,000.00

When one contract sells several things, the price is allocated across them in proportion to their stand-alone selling prices, and each element follows its own rule.

Bundle price 15,000.00

ElementStand-alone priceAllocated
Software licence12,000.0011,250.00
Implementation4,000.003,750.00
Total16,000.0015,000.00

Usage-based revenue is recognized as the meter records it. Milestone revenue is recognized when the milestone is accepted, and the same acceptance can trigger the invoice.

Implementation, three milestones

  1. Design accepted3,750.00 x 1 of 3 = 1,250.00 recognizedDone
  2. Build accepted1,250.00 recognizedDone
  3. Go-live accepted1,250.00 waiting for acceptanceWaiting

When a contract is upgraded or cut short, the waterfall is recalculated and the catch-up or prospective adjustment is proposed as an entry for a person to approve.

Upgrade at month 6, prospective

Deferred before the amendment
6,000.00
Added by the upgrade
6,000.00
Deferred after the amendment
12,000.00
Recognized each month for 6 months
2,000.00

Recognition runs under ASPE 3400 by default. Turn on an IFRS 15 or ASC 606 view and the five-step model is applied to the same contracts, with the differences listed.

Standards

  1. ASPE 3400Default for private companiesDone
  2. IFRS 15Five-step model on the same contractsInfo
  3. ASC 606For a US parentInfo

The month's recognition entries are proposed as a batch, with the contract and the rule behind each line. A named approver posts them, and the entry traces back to the contract.

March recognition

Annual subscriptionStraight-line, month 3 of 121,000.00Awaiting approver
Software licenceBundle element, month 3 of 12937.50Awaiting approver
ImplementationMilestone, design accepted1,250.00Posted

Annual subscription, 12,000.00

MonthRecognizedDeferred balance
January1,000.0011,000.00
February1,000.0010,000.00
March1,000.009,000.00
To date3,000.009,000.00

Under the hood

A contract in, a journal out.

The schedule is derived from the contract and never typed in. Change the contract and the forward months change, with the adjustment shown.

Capabilities

What revenue recognition handles

  • Deferred schedules

    Straight-line schedules generated from contract terms.

  • Multi-element allocation

    Price allocated across elements by stand-alone selling price.

  • Usage-based revenue

    Recognized as the meter records it.

  • Milestone triggers

    Revenue and invoice follow the same acceptance.

  • Contract amendments

    Forward waterfalls recalculated, with catch-up proposed.

  • ASPE 3400

    The default for Canadian private companies.

  • IFRS 15 and ASC 606

    Views for groups that report under another standard.

  • SaaS metrics

    ARR, MRR, net revenue retention and churn computed from contract records.

Keep going with the rest.

  • Billing

    Usage, milestones, retainers, time and materials.

    Learn more

  • General ledger

    Always current, with every entry traced to its source.

    Learn more

  • Reporting and FP&A

    Live statements, board packs and forecasts.

    Learn more

Questions

Questions, answered.

What does ASPE 3400 require for revenue?

ASPE 3400 asks a private enterprise to recognize revenue when it has performed, the amount can be measured and collection is reasonably assured. Eternify Ledger generates the schedule from the contract and posts each period's recognition for approval.

Can the same contracts show IFRS 15 and ASC 606 results?

Yes. Recognition runs on the contract records, so a parent that reports under IFRS 15 or ASC 606 turns on that view and the five-step model is applied to the same contracts.

How is a bundled contract split?

By stand-alone selling price. A 15,000.00 bundle of a 12,000.00 licence and 4,000.00 of implementation allocates 11,250.00 and 3,750.00, and each element follows its own rule.

What happens when a customer upgrades mid-term?

The waterfall is recalculated from the amendment date and the adjustment is proposed as an entry, either as a catch-up or prospectively. A named person approves it before it posts.

See the schedule behind a contract.

Bring one of your contracts and we show the waterfall it produces.

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