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Revenue Recognition - ASC 606 Roundup: 07/30/2018

Posted by Graham Hulme on Jul 31, 2018 9:00:00 AM

This week’s edition covers both relevant news articles as well as a recent comment letter/company’s response on ASC 606.

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.

Are you reading these weekly rev rec blogs?  If so, please let us know what you think in the comments section; 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!

 

News

The CPA Journal, “Characteristics of Financial Restatements and Frauds”, by Fatima Alali, PhD and Sophia I-Ling Wang, PhD: 

https://www.cpajournal.com/2017/11/20/characteristics-financial-restatements-frauds/

Our thoughts:  This article focuses on the details of financial statement restatements and frauds from the years 2000 through 2014. In the context of this review, the article looks at how regulatory and economic changes influenced each area.  With the advent of ASC 606, as well as the new lease standard, this article is timely as it offers multiple exhibits to support its analysis and findings.

 

Filings

IMAX Corporation, 10-Q: 

https://www.sec.gov/Archives/edgar/data/921582/000119312518226023/d503863d10q.htm

  • Variable consideration is discussed throughout the document. Page 11 gives a primer on the company's assessment on why variable consideration is applicable to its business.
  • Pages 15 and 16 offer a highly unique presentation, relative other filings reviewed to date, whereby reportable revenue streams are presented, broken down by fixed consideration, variable consideration, and then those subject to new lease standard. 

Our thoughts:   This filing covers several key topics that are highly valuable for review, including its presentation of reportable revenue streams by fixed and variable considerations, respectively, and revenue streams subject to the new lease standard. It is one of the first filings we've seen that incorporates this level of ASC 606 and ASC 842 information side-by-side.  Additionally, there are 56 references to ASC 606 throughout the document so it's laden with information across the spectrum of ASC 606 topics.

 

SPOK HOLDINGS, INC., 10-Q:

https://www.sec.gov/Archives/edgar/data/1289945/000128994518000028/a2q1810q.htm

  • Pages 7 through 12 give a thorough presentation of overall ASC 606 impacts.
  • Pages 21 through 23 go a level deeper with a focus on revenue under 606 and then an interesting supplemental 605 presentation of revenue, without a side-by-side 606 comparison, on page 24.

Our thoughts:   This is a well-rounded, informative filing, overall.  Its "grab" is on page 24 in terms of its unique approach to spelling out the deltas between 606 and 605 results.

 

NORTHROP GRUMMAN CORPORATION, 10-Q:

https://www.sec.gov/Archives/edgar/data/1133421/000113342118000038/noc-06302018x10q.htm

Our thoughts:  With over 28 references to ASC 606 throughout the filing, there's plenty of value in reading through these areas.  From our standpoint, the "Recast 2017 Financial Information" section that starts on page 26 offers the reader value from both quantitative and qualitative standpoints.  Furthermore, it's another solid example of how this information can be presented pre- and post- ASC 606.  

 

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. 

Topics: Revenue Recognition, ASC 606, IFRS15, SEC Comments

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