Disaggregation of revenue
Disaggregation of revenue is the required disclosure splitting revenue into categories that show how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors, for example by product line, geography, customer type, contract duration or timing of transfer.
Standard references
- ASC 606606-10-50-5 to 50-7 and 606-10-55-89 to 55-91
- IFRS 15paragraphs 114–115 and B87–B89
- Ind AS 115paragraphs 114–115 and B87–B89
Worked example
Illustrative: a SaaS company with $10.0 million of revenue.
- By type and timing: subscriptions over time $8.2m; professional services over time $1.3m; hardware at a point in time $0.5m.
- By geography: United States $7.0m; India $3.0m.
- Check: both views total $10.0m, and each category is explained against reportable segments.
Result: Two disaggregation views that tie to total revenue and to segment reporting.
Illustrative figures for explanation only, not taken from a real contract.
Common mistakes
- Giving a single category when investor materials already use several.
- Categories that do not match those used in earnings releases or segment reporting.
- Not explaining the relationship between disaggregated revenue and segments.