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FASB ASC Guide > FASB ASC 430

The Financial Accounting Standards Board (FASB) released the 400 section of the Accounting Standards Codification for the purpose of discussing the braod topic of Liabilities. Accounting Standards Codification 430 (ASC 430) was released to address the more specific topic of when to defer revenue rather than recognize it immediately.

We have included information to explain what deferred revenue is, also referred to as unearned income.

Ultimately, until revenue is earned, it must be recorded (deferred) as a liability on the balance sheet. As this revenue is earned and the company begins to have the claim against it, the liability is then removed to recognize this being earned.

Can Deferred Revenue be recorded when no cash is received?
Deferred revenue can be recorded at the point that cash is received in advance of services. It may also be recognized in the circumstance that a customer is pre-billed for services that are yet to be performed. The offsetting accounting entry to record this as deferred revenue would be to debit Accounts Receivable.

Check out more high level explanations of the FASB ASC in our Guide to the Accounting Standards Codification!

For more in depth information on this and other FASB ASC topics, check out the following books.