This week’s edition covers both relevant news articles as well as a recent comment letter/company’s response on ASC 606.
Are you reading these weekly rev rec blogs? If so, please let us know what you think as we will tailor future weekly roundups to the most relevant, timely, content based on feedback from you, and as always, feel free to reach us at: http://www.softrax.com/about/contact-us to learn more about SOFTRAX and the value we can provide for your company’s ASC 606 adoption!
To quickly identify ASC 606 information in the below links, click on the link, hit Control + F, enter the text “606” or “2014-09”, and click the down arrow button.
Varian Medical Systems Inc., SEC Comment Letter Response:
Our thoughts: This SEC comment letter response by the company focuses on the significant financing component of ASC 606. The SEC's comment letter focused on why the company's extended payment terms on contracts did not contain a significant financing component. Specifically, the SEC's question explicitly asks, "Address how you concluded that the difference between the promised amount of consideration and the cash selling price is proportional to the reasons for that difference".
Due to the direct nature of the SEC's questions, and the details included in the company's responses, this is a must-read for any company that offers extended payment terms yet does not consider such terms to meet the significant financing component of ASC 606.
MarketWatch, "SEC says companies should brace for comment letters on new revenue rule":
Our thoughts: This article details comments that a senior SEC official put forward during an event in May 2018 regarding what companies should expect in terms of timing and focus of upcoming ASC 606 comment letters. The article discusses how the SEC might handle companies' ASC 606 filing information for this first year and then reviews how companies such as Ford, Google, Tesla, and others were impacted by ASC 606 in recent filings. A quick, informative, read.
Accounting Today, "BlackBerry falls as all-important software revenue plunges after accounting change":
The Motley Fool, "BlackBerry (BB) Q1 2019 Earnings Conference Call Transcript":
Our thoughts: Blackberry's recent filing, in tandem with recent articles and its earnings call transcript, offer high value information on how ASC 606 impacted the company, how external parties interpreted the information, and how the company presented its financial and operational picture in its first earnings call under ASC 606.
While the 6-K filing and Accounting Today article are solid reads, the earnings call transcript is full of ASC 606 references and impacts spanning financial indicators/metrics such as EBITDA, gross margin, revenues by product line, etc. to operational questions such as how its sales team is now incentivized to structure and sell deals under ASC 606.
The CPA Journal, “The Impact of the New Revenue Recognition Guidance on Cloud Computing Arrangements”:
Our thoughts: The value of this article is its timing and how its content was aligned with current activities/trends 6 months after ASC 606's public company adoption date took effect. While this is approximately a 10 to 15-minute read, it's well worth the time even if your company is not in the cloud computing space as it covers key areas of ASC 606 that all companies must face.
ASC 606 is not a challenge your company has to face settling for limited functionality in existing systems or through high risk manual efforts. SOFTRAX provides superior experience, knowledge, products, and services to address your company’s ASC 606 needs. We encourage you to visit http://www.softrax.com/about/contact-us to learn more about SOFTRAX and the value we can provide for your company’s ASC 606 adoption.