Schedule deferred revenue recognition entries compliant with ASC 606 using a revenue recognition schedule

Steps

1. Identify the performance obligations from the customer contract and allocate the transaction price to each obligation based on standalone selling price
2. Create a deferred revenue liability entry when cash is received or the invoice is raised, crediting the deferred revenue account and debiting cash or accounts receivable
3. Build a recognition schedule by dividing the allocated transaction price across the periods in which each performance obligation is satisfied
4. Post a revenue recognition journal entry in each period by debiting deferred revenue and crediting revenue for the scheduled amount
5. Reconcile the remaining deferred revenue balance on the balance sheet to the sum of unrecognized amounts across all open schedules at each period end
6. For modifications to contracts, reassess the remaining performance obligations and update the recognition schedule prospectively or with a cumulative catch-up adjustment as required by ASC 606