ASC 606 Compliance with Aspire

Understanding ASC 606

Disclaimer: This white paper provides general information and does not constitute accounting advice. Consult with professional accountants for specific guidance on ASC 606 implementation within Aspire.

Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers, represents a significant change in how revenue recognition is treated for many businesses. This white paper explores how ASC 606 impacts commercial landscaping, cleaning, and snow companies and how Aspire software users can leverage the software's functionalities to achieve ASC 606 compliance.

ASC 606 establishes a five-step model for recognizing revenue:

1. Identify the contract
2. Identify performance obligations
3. Determine the transaction price
4. Allocate the transaction price
5. Recognize revenue when performance is complete

Impact on landscaping, cleaning, and snow businesses

These businesses typically enter into contracts for ongoing services with variable pricing based on factors like time and materials. ASC 606 requires them to identify performance obligations at the contract level and potentially allocate the transaction price across multiple performance obligations.

For instance, a landscaping contract might include trimming, mowing, and edging services performed weekly throughout the year. Under ASC 606, each service could be considered a separate performance obligation, necessitating revenue recognition to be allocated proportionally based on the estimated value of each service.

How Aspire can help

Aspire software offers functionalities to streamline ASC 606 compliance for landscaping, cleaning, and snow companies:

• Contract Management: Aspire can facilitate the creation and management of contracts, detailing performance obligations and associated pricing.
• Service Quoting and Scheduling: Aspire can assist in generating quotes that itemize specific services and their corresponding prices. Scheduling functionalities can track the completion of performance obligations.
• Time and Material Tracking: Aspire can track labor hours and materials used for each service, providing data for allocation of the transaction price across performance obligations.
• Revenue Recognition: Aspire allows you to recognize revenue when work is performed, completed, and invoiced. This ensures revenue recognition is based on your performance obligations, providing alignment with ASC 606 requirements.

Conclusion

ASC 606 presents adjustments for revenue recognition in landscaping, cleaning, and snow companies. Aspire offers valuable tools to facilitate compliance by managing contracts, services, and revenue recognition processes. Companies can navigate ASC 606 requirements and maintain accurate financial reporting by effectively using Aspire. However, it's crucial for users to recognize their responsibility in ensuring compliance with ASC 606 and to use Aspire as a tool to support their compliance efforts.