# ASC 606-10-10: Revenue from Contracts with Customers — Overall — 10 Objectives

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/606/10/#10-objectives)

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## ASC 606-10-10: 10 Objectives

[Read section](https://asc.understandingaccounting.org/asc/606/10/#10-objectives)

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##### [606-10-10-1](https://asc.understandingaccounting.org/asc/606/10/#606-10-10-1)

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**The objective of the guidance in this Topic is to establish the principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing, and uncertainty of [revenue](https://asc.understandingaccounting.org/glossary/r/#revenue "Inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations.") and cash flows arising from a [contract](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") with a [customer](https://asc.understandingaccounting.org/glossary/c/#customer "A party that has contracted with an entity to obtain goods or services that are an output of the entity's ordinary activities in exchange for consideration.").**

#### Meeting the Objective

##### [606-10-10-2](https://asc.understandingaccounting.org/asc/606/10/#606-10-10-2)

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To meet the objective in paragraph [606-10-10-1](https://asc.understandingaccounting.org/asc/606/10/#606-10-10-1), the core principle of the guidance in this Topic is that an entity shall recognize [revenue](https://asc.understandingaccounting.org/glossary/r/#revenue "Inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations.") to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

##### [606-10-10-3](https://asc.understandingaccounting.org/asc/606/10/#606-10-10-3)

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An entity shall consider the terms of the [contract](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") and all relevant facts and circumstances when applying this guidance. An entity shall apply this guidance, including the use of any practical expedients, consistently to contracts with similar characteristics and in similar circumstances.

##### [606-10-10-4](https://asc.understandingaccounting.org/asc/606/10/#606-10-10-4)

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This guidance specifies the accounting for an individual contract with a customer. However, as a practical expedient, an entity may apply this guidance to a portfolio of contracts (or [performance obligations](https://asc.understandingaccounting.org/glossary/p/#performance-obligation "A promise in a contract with a customer to transfer to the customer either: A good or service (or a bundle of goods or services) that is distinct A series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer.")) with similar characteristics if the entity reasonably expects that the effects on the financial statements of applying this guidance to the portfolio would not differ materially from applying this guidance to the individual contracts (or performance obligations) within that portfolio. When accounting for a portfolio, an entity shall use estimates and assumptions that reflect the size and composition of the portfolio.