Revenue recognition under ASC 606 is primarily driven by which of the following?

Revenue recognition under ASC 606 is primarily driven by the transfer of control of goods or services. This framework emphasizes that revenue should be recognized when the customer obtains control of the promised goods or services, which signifies that the customer has the ability to direct the use of and obtain substantially all the remaining benefits from those goods or services.

Under ASC 606, the focus is on the fulfillment of performance obligations as identified in a contract with a customer, leading to recognition of revenue when control is transferred, regardless of when cash transfers or other payment arrangements occur. This principle aligns revenue recognition with the actual economic activity that has taken place.

This contrasts with other considerations such as the timing of cash transfers, which do not necessarily indicate when revenue should be recognized. Additionally, while the completion of a contractual obligation might intuitively seem relevant, ASC 606 specifically focuses on control rather than merely fulfilling obligations. Volume of transactions, while important for overall business analysis and forecasting, does not directly drive individual revenue recognition under this framework.