Free calculator
Revenue recognition calculator
Allocate a contract's price across its performance obligations, recognize each over time or at a point in time, and see revenue, deferred revenue and journal entries month by month.
Contract
What the customer pays for the whole contract (step 3).
Blank: the contract length.
Performance obligations
Step 4: allocate the transaction price
| Obligation | SSP | Allocated |
|---|---|---|
| Software subscription | 90,000.00 | |
| Implementation services | 30,000.00 | |
| Total | 120,000.00 | 100,000.00 |
Revenue and deferred revenue by month
| Month | Billed | Software subscription | Implementation services | Revenue | Deferred revenue |
|---|---|---|---|---|---|
| Jul 2026 | 100,000.00 | 6,250.00 | – | 6,250.00 | 93,750.00 |
| Aug 2026 | – | 6,250.00 | – | 6,250.00 | 87,500.00 |
| Sep 2026 | – | 6,250.00 | 25,000.00 | 31,250.00 | 56,250.00 |
| Oct 2026 | – | 6,250.00 | – | 6,250.00 | 50,000.00 |
| Nov 2026 | – | 6,250.00 | – | 6,250.00 | 43,750.00 |
| Dec 2026 | – | 6,250.00 | – | 6,250.00 | 37,500.00 |
| Jan 2027 | – | 6,250.00 | – | 6,250.00 | 31,250.00 |
| Feb 2027 | – | 6,250.00 | – | 6,250.00 | 25,000.00 |
| Mar 2027 | – | 6,250.00 | – | 6,250.00 | 18,750.00 |
| Apr 2027 | – | 6,250.00 | – | 6,250.00 | 12,500.00 |
| May 2027 | – | 6,250.00 | – | 6,250.00 | 6,250.00 |
| Jun 2027 | – | 6,250.00 | – | 6,250.00 | – |
| Total | 100,000.00 | 75,000.00 | 25,000.00 | 100,000.00 |
How the calculation works
ASC 606 sets out five steps (ASC 606-10-05-4). The calculator does the last two:
- Step 1: Identify the contract(s) with a customer
- Step 2: Identify the performance obligations in the contract
- Step 3: Determine the transaction price
- Step 4: Allocate the transaction price to the performance obligations in the contract
- Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation
Allocation
The starting example is a $100,000 contract with a 12-month software subscription (standalone price $90,000) and implementation services ($30,000) delivered in month 3. The subscription gets $75,000 and implementation $25,000.
Recognition and deferred revenue
The subscription is recognized at $6,250 a month; implementation is recognized in full in month 3. Billed up front, the contract starts with $93,750 of deferred revenue after month 1, which reaches zero when the subscription ends.
For software that runs this across a whole contract base, see revenue recognition software with AI.
Revenue recognition: questions
- How do you allocate the transaction price under ASC 606?
- In proportion to each performance obligation's standalone selling price: the price the entity would charge for it separately. In the example, standalone prices total $120,000 against a $100,000 contract, so the subscription gets $100,000 × 90,000 ÷ 120,000 = $75,000 and implementation $25,000. The $20,000 discount is spread across both.
- What is deferred revenue?
- Amounts billed or received before the related revenue is recognized. ASC 606 calls it a contract liability. It falls as you deliver and recognize revenue. When revenue is recognized before billing, the balance is a contract asset (or a receivable once the right to payment is unconditional).
- When is revenue recognized over time instead of at a point in time?
- When a performance obligation is satisfied over time, for example a subscription the customer uses as it's provided. Otherwise revenue is recognized at the point control transfers. The calculator spreads over-time obligations evenly across their months; if your measure of progress isn't straight-line, adjust the schedule.
- What does the calculator leave out?
- The judgments in steps 1 to 3: whether contracts combine, which promises are distinct, and how to estimate variable consideration or a financing component. It also assumes straight-line progress, billing in equal installments in advance, and no contract modifications.
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Sources
Official documents read on October 30, 2026. Vendor facts are sourced on each listing.