Under ASC 606, revenue for a contract with a single performance obligation that is satisfied at a point in time is recognized when what occurs?

• A. The contract is signed
• B. Control of the good or service transfers to the customer
• C. The customer pays the consideration
• D. The asset is delivered but payment is unknown

Answer: (B)

Revenue is recognized when control of the promised good or service transfers to the customer. For a single performance obligation that is satisfied at a point in time, that moment is when the customer gains control—meaning they have the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset, and the seller no longer has control. Payment timing or signing the contract do not determine when revenue is recognized; it’s the transfer of control, typically evidenced by delivery or other contract terms that indicate the customer has obtained control. If control hasn’t transferred, revenue isn’t recognized, even if delivery has occurred or payment is received.