Close & reporting
Revenue recognition (ASC 606 / IFRS 15)
Revenue recorded when it is actually earned rather than when cash lands, using IFRS 15's five-step model for a Canadian company reporting under IFRS, or the simpler recognition guidance in ASPE section 3400 for one that is not, so multi-part and recurring contracts are booked correctly either way.
Management report
Illustrative client · August 2026
CAD
| Line | Aug | Jul | |
|---|---|---|---|
| Revenue | 142,380 | 131,904 | +10,476 |
| Cost of sales | (51,260) | (48,115) | (3,145) |
| Gross profit | 91,120 | 83,789 | +7,331 |
| Payroll | (46,300) | (45,900) | (400) |
| SoftwareNoted | (6,480) | (5,490) | (990) |
| Rent | (8,000) | (8,000) | 0 |
| Other operating | (9,215) | (9,870) | +655 |
| Net income | 21,125 | 14,529 | +6,596 |
Reviewer's note
Software is up on last month after two seats were added mid-month. Revenue includes one milestone invoice that will not repeat next month.
Illustrative. An example of the document, not a client's figures.
Two different rulebooks, depending on your standard
A Canadian company reporting under ASPE follows section 3400, which recognises revenue on a more straightforward basis and does not require the five-step performance-obligation model. A company reporting under IFRS, whether by choice, by parent requirement or ahead of a transaction, follows IFRS 15's five-step model instead. Getting the two mixed up is a common error found in a first review of a Canadian company's books.
What the IFRS 15 work covers
Contracts are reviewed and separated into distinct performance obligations, the transaction price is allocated across each one, and a recognition schedule shows revenue by month against each contract's term. Deferred and unbilled revenue are tracked and reconciled to that schedule, with a memo documenting the judgment behind any contract that is not straightforward.
Where this shows up in practice
Any Canadian business with multi-year contracts, bundled products and services, or upfront fees tied to ongoing delivery needs a recognition schedule, not only software companies. A SaaS company billing annually up front, a professional services firm with milestone billing, and an agency with retainer-plus-project contracts all need the same underlying discipline.
Deferred versus unbilled
Deferred revenue is cash collected before it is earned. Unbilled revenue is the reverse: work delivered before an invoice goes out. Both get tracked and reconciled separately as part of this work.
Questions
Frequently asked questions: Revenue recognition (ASC 606 / IFRS 15)
Does my company use ASPE section 3400 or IFRS 15?
Whichever standard your company reports under. ASPE (section 3400) uses a simpler recognition approach; IFRS 15 requires the five-step performance-obligation model. We confirm which applies before building the schedule.
Does this apply outside software subscriptions?
Yes. Any business with multi-year contracts, bundled products and services, or upfront fees tied to ongoing delivery needs a recognition schedule, not only SaaS companies.
What is the difference between deferred and unbilled revenue?
Deferred revenue is cash collected before it is earned. Unbilled revenue is the reverse: work delivered before an invoice goes out.
Why does the standard matter so much here?
Applying IFRS 15's five-step model to a company that actually reports under ASPE, or the reverse, is one of the most common errors found in a first review of a Canadian company's books.
What exactly is included in revenue recognition (ASC 606 / IFRS 15)?
Contracts reviewed and separated into distinct performance obligations, and transaction price allocated across each obligation. This work runs inside QuickBooks Online or NetSuite, whichever your business already has in place, and it rolls into your regular monthly close rather than sitting off to the side as a separate, unreconciled process.
Does this apply outside of software subscriptions?
Yes. Any business with multi-year contracts, bundled products and services, or upfront fees tied to ongoing delivery needs a recognition schedule, not only SaaS companies.
What is the difference between deferred revenue and unbilled revenue?
Deferred revenue is cash collected before it is earned. Unbilled revenue is the reverse: work delivered before an invoice goes out.
How do we get started with revenue recognition (ASC 606 / IFRS 15)?
Getting started with revenue recognition (ASC 606 / IFRS 15) begins with a short review of your current records and software access. Once that is done we confirm scope and timing in writing, and ongoing work begins on the schedule agreed with you.
What if our records for revenue recognition (ASC 606 / IFRS 15) are not up to date?
If your records are behind, we scope a catch-up first so revenue recognition (ASC 606 / IFRS 15) starts from a clean, reconciled base. That catch-up is priced and timed separately from the ongoing engagement, so you always know what each part costs.
Related services
- Close & reportingDeferred revenueCash collected before it is earned tracked separately from revenue and released to the profit and loss on the schedule that matches when the work is actually delivered.
- Close & reportingUS GAAP conversionBooks moved from cash basis or another framework onto US GAAP accrual accounting, with every adjustment documented so a lender, investor or auditor can follow the trail.
Industries
- SaaSBookkeeping and reporting for subscription software businesses tracking recurring revenue, deferred revenue and burn.
- Startups and VC-backed companiesBookkeeping and reporting for early-stage, venture-backed companies watching burn, runway and investor reporting closely.
- Agencies and consultanciesBookkeeping for marketing agencies, design studios and consulting firms billing clients on retainers and project fees.
Next step
Talk to the team that would run your books
A short call covers your setup, your software and what a first month would look like. You get a written scope and price after it.