This week’s edition covers recent news articles and SEC filings with ASC 606 references.
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.
The CPA Journal, “Current Developments at the SEC”, by Norman Strauss, Wesley Bricker, Kyle Moffatt and Charles Wright:
This article is authored by and has direct quotes on ASC 606, its impacts, and how the SEC will be reviewing companies’ filings from the following top-level SEC officials:
- Wesley Bricker is chief accountant at the SEC’s Office of the Chief Accountant
- Kyle Moffatt is chief accountant at the SEC’s Division of Corporation Finance
- Charles Wright is the senior legal advisor at the SEC’s Division of Enforcement
Our thoughts: This article’s authors, and their respective titles, convey the importance of reading it. The key members of the SEC provide direct input on the specific areas the SEC will focus on related to ASC 606 when working through companies’ filings. It essentially provides answers to the test for companies’ accounting and finance teams regarding ASC 606. This is a must read.
Seeking Alpha, “The Latest Ticking Time Bomb(S) Hiding Within Under Armour”, by JP Research:
Our thoughts: This article focuses on how ASC 606 impacted the company’s accounting for customer refund liabilities. It dives into how the accounting impacts of ASC 606 for customer refund liabilities leads to questions regarding the company’s potential inventory – demand mismatch.
JetPay® Corporation, Second Quarter Results :
- The company notes that ASC 606 “had several significant impacts on JetPay financial statements and results…”. The company then identifies that revenues net of certain fees, timing of certain revenue streams, and certain incremental costs of obtaining a contract are areas impacted by ASC 606.
Our thoughts: This article is a quick-hitter that offers value as the company bullets out ASC 606’s impacts with 8 references throughout it. It gets to the point offering quantitative and qualitative data points to support the results and conclusions.
Avid Technology, Inc., 10-Q:
Our thoughts: There are 24 references to ASC 606 in this filing. The most valuable section of the filing is the “Recently Adopted Accounting Pronouncements” section on the bottom of page 6 and top of page 7. The financial impacts are displayed in before and after ASC 606 pictures with a solid listing of notes beneath this section detailing the company’s assessments and analysis regarding ASC 606. This format, and the narrative offered in each note, are good working examples to reference.
HARTE HANKS, INC., 10-Q:
Our thoughts: This filing has a clean presentation of ASC 606 impacts from both quantitative and qualitative standpoints. Qualitative descriptions are to-the-point, married with financial impacts as needed. Furthermore, the company’s disaggregation of revenue sections on pages 10 and 11 are solid working examples to reference. Overall, a filing worth a read.
PAR TECHNOLOGY CORPORATION, 10-Q:
Our thoughts: The “Note 2: Revenue Recognition” section starting on page 7 through the top of page 10 offers a solid presentation of the company’s assessment, adoption, and impact due to ASC 606. In this section is a detailed narration of the qualitative impacts followed by quantitative impacts in text and tabular format.
Of note is the level of detail the company provides to explain how it determines standalone selling prices for its performance obligations on page 8 in a tabular format. This is unique compared to other filings reviewed to date.
Additionally, the company provides clarity on how it handled the disaggregation of revenue, practical expedients, and performance obligations outstanding requirements of ASC 606. This is very well-rounded and information filing that we recommend you review.
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