I just joined a young SaaS startup as head of finance. We have recently signed a few multi-year enterprise contracts. I would like to book the full value of the 3 year contract to deferred revenue, A/R, and A/R Unbilled for the portion not yet billable. Revenues would be recognized per ASC 606 guidelines. However, the cancellation terms of the contract are pretty loose and only require a 120 day notice with cancellation for pretty much any reason (it's a very legit contract, but we're young and don't have the history/backing to make cancellation demands... yet). Because the cancellations terms are so soft, I hesitate to record any of the Y2 and Y3 deferred revenues for fear of generating a misleading balance sheet. Should we book the full 3years to the BS at contract execution, or should I book Y2 and Y3 when the cancellation provision passes? What are your opinions on this?
