COVID-19: Revenue contract modification questions, answered

05/12/20

Different revenue contract changes require different accounting. As companies provide concessions to their customers, PwC discusses the resulting accounting.

If you’re unsure about how COVID-19 might impact your accounting, you're not alone. This podcast is the next episode in a series that will address questions surrounding the financial impact of certain transactions. Heather Horn is joined by PwC partners Pat Durbin and Angela Fergason to look at the accounting for revenue contract modifications.

Topics include:

1:17 - Current environment. Pat provides examples of the types of contract modifications we’re seeing and challenges companies are facing.
4:30 - Contract assessment. If a company changes the terms to a contract, what is the first step to evaluate whether it is a contract modification? Angela explains.
8:31 - Modification model. What is the accounting for a contract modification? Angela gives a refresher of the model under the revenue standard.
14:39 - Concessions. Price reductions and extended payment terms are common concessions. Pat and Angela discuss the accounting for these types of concessions.
21:09 - Disclosures. What should companies be thinking about regarding disclosures? We give a heads up on disclosures related to modifications.

View full podcast series

About our guests

Pat Durbin is the leader of the revenue and liabilities division in PwC’s National Office. He leads a team of partners and directors responsible for consulting with our clients and engagement teams on complex accounting matters relating to revenue, compensation, income taxes, inventory, and several other topics under both US GAAP and IFRS.

Angela Fergason is a partner in PwC's National Office with 20 years of experience specializing in accounting for revenue and employee compensation arrangements. She is a frequent speaker on accounting and financial reporting topics and is a contributor to many PwC National Office publications, including our accounting guides on Revenue and Stock-based compensation.

About our host

Heather Horn is PwC's National office thought leader, responsible for developing our communications strategy and conveying firm positions on accounting and financial reporting matters. She is the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series, as well as periodic webcasts for the power and utilities industry. With over 25 years of experience, Heather’s accounting and auditing expertise includes financial instruments and rate-regulated accounting.