{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/605/980/#25-recognition","source":"FASB Accounting Standards Codification, Basic View","usage":"Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.","topic":"605","topic_title":"Revenue Recognition","subtopic":"605-980","subtopic_title":"Regulated Operations","section":{"number":"25","label":"25 Recognition","anchor":"25-recognition","is_sec":false,"groups":[{"block":null,"heading":"Alternative Revenue Programs","paragraphs":[{"citation":"605-980-25-1","para":"25-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_47325E62-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Traditionally, regulated utilities whose rates are determined based on cost of service invoice their customers by applying approved base rates (designed to recover the utility's <a href=\"/glossary/a/#allowable-costs\" class=\"term\" title=\"All costs for which revenue is intended to provide recovery. Those costs can be actual or estimated. In that context, allowable costs include interest cost and amounts provided for earnings on shareholders' investments.\"><span>allowable costs</span></a> including a return on shareholders' investment) to usage. Some regulators of utilities have also authorized the use of additional, alternative revenue programs. The major alternative revenue programs currently used can generally be segregated into two categories, Type A and Type B. </span></span></div></div>","snippet":"Traditionally, regulated utilities whose rates are determined based on cost of service invoice their customers by applying approved base rates (designed to recover the utility's allowable costs including a return on shar…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:29bec02a77fd0881ed6a82768182eb30929ec2d455ed7bf6c58d34073c687cac","downloaded_from":"2026-09-10T00:53:55.847Z","last_downloaded_at":"2026-09-10T00:53:55.847Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477959","source_sha256":"291d53810121c7169b6bb42f11771dc838e76b2284fed0bf563e010f2f2f19cb"}},{"citation":"605-980-25-2","para":"25-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_47326022-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Type A programs adjust billings for the effects of weather abnormalities or broad external factors or to compensate the utility for demand-side management initiatives (for example, no-growth plans and similar conservation efforts). Type B programs provide for additional billings (incentive awards) if the utility achieves certain objectives, such as reducing costs, reaching specified milestones, or demonstratively improving customer service. </span></span></div></div>","snippet":"Type A programs adjust billings for the effects of weather abnormalities or broad external factors or to compensate the utility for demand-side management initiatives (for example, no-growth plans and similar conservatio…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3b99256b9a416bf60a65d8520ff0779873bfda0cbfe7b85f321184dc20f4e8f0","downloaded_from":"2026-09-10T00:53:55.847Z","last_downloaded_at":"2026-09-10T00:53:55.847Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477959","source_sha256":"291d53810121c7169b6bb42f11771dc838e76b2284fed0bf563e010f2f2f19cb"}},{"citation":"605-980-25-3","para":"25-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_47326186-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Both types of programs enable the utility to adjust rates in the future (usually as a surcharge applied to future billings) in response to past activities or completed events. </span></span></div></div>","snippet":"Both types of programs enable the utility to adjust rates in the future (usually as a surcharge applied to future billings) in response to past activities or completed events.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e3c2d43ab32f526c0af48c9ceed18c5bd8d9906b743d20413212e595a3da888b","downloaded_from":"2026-09-10T00:53:55.847Z","last_downloaded_at":"2026-09-10T00:53:55.847Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477959","source_sha256":"291d53810121c7169b6bb42f11771dc838e76b2284fed0bf563e010f2f2f19cb"}},{"citation":"605-980-25-4","para":"25-4","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_4732629D-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Once the specific events permitting billing of the additional revenues under Type A and Type B programs have been completed, the regulated utility shall recognize the additional revenues if all of the following conditions are met: </span></span><ol class=\"ol-norm\"><li class=\"li-norm\"><span class=\"linum\">a</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_47326393-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The program is established by an order from the utility's regulatory commission that allows for automatic adjustment of future rates. Verification of the adjustment to future rates by the regulator would not preclude the adjustment from being considered automatic. </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">b</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_47326489-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The amount of additional revenues for the period is objectively determinable and is probable of recovery. </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">c</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_473265D0-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The additional revenues will be collected within 24 months following the end of the annual period in which they are recognized. </span></span></div></li></ol></div></div>","snippet":"Once the specific events permitting billing of the additional revenues under Type A and Type B programs have been completed, the regulated utility shall recognize the additional revenues if all of the following condition…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4b7ff3f28c160d2651c81d8c030ac451387c804e6a66a1a65ff1f0160a1f0352","downloaded_from":"2026-09-10T00:53:55.847Z","last_downloaded_at":"2026-09-10T00:53:55.847Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477959","source_sha256":"291d53810121c7169b6bb42f11771dc838e76b2284fed0bf563e010f2f2f19cb"}},{"citation":"605-980-25-5","para":"25-5","html":"<div class=\"asc-body\"><div class=\"norm-text\"><a href=\"/updates/asu-2014-09/\" class=\"xref\">Paragraph superseded by Accounting Standards Update No. 2014-09</a>.</div></div>","snippet":"Paragraph superseded by Accounting Standards Update No. 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