As companies assess their implementations of the ASC 606 standard, many are looking to the first adopters and in particular, their initial disclosures and subsequent comment letters from the SEC. In this special-topic blog series from SOFTRAX, we take a look at what can be learned from your peers related to ASC 606. We’ll round up what’s noteworthy and point you to it with our commentary so that you can focus your time on using these takeaways to help your own organization navigate the components of ASC 606.
This week’s roundup focuses on half a dozen 10-Q filings that had solid ASC 606 information.
(Note: To quickly identify ASC 606 information in the SEC links, click on the link, hit Control + F, enter the text “606”, and click the down arrow button.)
Biotelemetry, Inc. 10-Q
- Example of a company electing to use the portfolio approach as a practical expedient.
- Additional details regarding how the company chose to calculate and present disaggregation of revenue, contract assets, and contract liabilities are provided in a clear, summarized, format.
- ASC 606 practical expedient elections section with short descriptions for each item.
Our thoughts: The value of this filing is its reference to the portfolio’s practical expedient approach which has not been prevalent in other filings to date. What’s especially interesting is the company leveraged this practical expedient for only a specific area of its revenues, while other areas were handled outside of the portfolio approach.
Idex Corporation 10-Q
- Top of page 7, the “NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS” provides a narrative on the process the company took to review and apply ASC 606.
- Top of page 10, the “NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS” also discusses how the company chose to disaggregate revenue for ASC 606.
Our thoughts: The narrative regarding the company’s approach to evaluating and implementing ASC 606 is worth a review. Additional information regarding how the company disaggregated revenue by business unit provides a representation of this model to handle the requirement.
JETBLUE AIRWAYS CORPORATION 10-Q
- On pages 9 and 10 the “Note 2 – Revenue Recognition” section provides a solid picture of the company’s approach to disaggregate revenue and handle its loyalty rewards program under ASC 606. Additionally, a Contract Liabilities section is presented.
Our thoughts: The information as to how the company will handle its Loyalty Rewards program under ASC 606 is informative. Additionally, it will be interesting to compare this airline’s approach to its loyalty programs under ASC 606 to other major carriers.
Dover Corporation 10-Q
- The bottom of Page 6 through the middle of page 10 provides details on disaggregation of revenue, performance obligations, how transaction prices were allocated to remaining performance obligations, presentation of contract assets and liabilities, discussion on how the variable consideration requirement was applied to the company’s volume rebates, and then a good summary of ASC 606’s impact on its financial statements.
Our thoughts: This is a well-rounded presentation of how the company handled ASC 606 with narratives to explain the reasons for its implementation decisions and results.
Vertex Pharmaceuticals Incorporated 10-Q
- ASC 606 details are represented throughout the document with over 28 references and detail following each reference.
- Very detailed presentation of quantitative and qualitative impacts of ASC 606 with narratives to support each area.
- Side-by-side comparisons of results “As Reports under ASC 606″, “Balances without Adoptions of ASC 606”, and “Effect of Change Higher/(Lower).”
Our thoughts: The high level of detail in this filing allows it to hit all many major areas of ASC 606. Additionally, the three-column format of ASC 606, ASC 605, and the differences between the two columns represent one of the cleaner presentations of such information to date.
Schneider National, Inc 10-Q
- Pages 7 through the top of page 10 provide a qualitative and quantitative picture of how the company implemented ASC 606. This includes a clear picture of the information under ASC 605 side-by-side with ASC 606 in terms of financial results.
- Additionally, there is a solid description of how the company chose to present disaggregation of revenue information.
- Finally, the company outlines ASC 606 practical expedients it implemented.
Our thoughts: Another well-rounded presentation, along with detailed descriptions, demonstrating how a company evaluated and applied ASC 606.
We place a high value on and greatly appreciate any input regarding the above or any other revenue recognition/ASC 606 topics. Achieve and automate full ASC 606 compliance with SOFTRAX Revenue Recognition software. Contact us today.