Series guidance
The series guidance treats a series of distinct goods or services that are substantially the same and transfer with the same pattern as a single performance obligation. It applies when each distinct period would be satisfied over time and progress is measured the same way, which is typical for daily or monthly SaaS access.
Standard references
- ASC 606606-10-25-14(b) and 25-15
- ASC 606606-10-32-39 to 32-41 (allocating variable consideration to distinct periods)
- IFRS 15paragraphs 22(b), 23 and 84–86
Worked example
Illustrative: a 12-month platform contract at $5,000 per month plus $0.02 per transaction above 1,000,000 transactions in a month. March volume is 1,400,000.
- The service is a series of distinct months of platform access: one performance obligation.
- March overage: (1,400,000 − 1,000,000) × $0.02 = $8,000.
- The overage relates only to March's service and is consistent with the allocation objective, so it is allocated entirely to March.
Result: March revenue: $5,000 fixed + $8,000 overage = $13,000. No annual usage forecast is needed.
Illustrative figures for explanation only, not taken from a real contract.
Common mistakes
- Treating the series guidance as optional; it applies when the criteria are met.
- Estimating a full year of usage at inception instead of allocating usage to the period it relates to.
- Applying it to services whose periods are not substantially the same.