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.
Biotelemetry, Inc. 10-Q:
Our thoughts: The value of this filing is its reference to the portfolio practical expedient approach which has not 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.
- 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, contract liabilities are provided in a clear, summarized, format.
- ASC 606 practical expedient elections section with short descriptions for each item.
(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.)
Idex Corporation 10-Q:
Our thoughts: The narrative regarding the company’s approach to evaluate and implement 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.
- 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.
JETBLUE AIRWAYS CORPORATION 10-Q:
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 for its loyalty programs under ASC 606 to other major carriers.
- On pages 9 and 10 the “Note 2 – Revenue Recognition” section provides a solid picture of the company’s approach to disaggregate revenue and to handle its loyalty rewards program under ASC 606. Additionally, a Contract Liabilities section is presented.
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Dover Corporation 10-Q:
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.
- Bottom of Page 6 through 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.
Vertex Pharmaceuticals Incorporated 10-Q:
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 differences between the two columns represents one of the cleaner presentations of such information to date.
- 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).”
Schneider National, Inc 10-Q:
Our thoughts: Another well-rounded presentation, along with detailed descriptions, demonstrating how a company evaluated and applied ASC 606.
- Pages 7 through top of page 10 provides a qualitative and quantitative picture of how the company implemented ASC 606. This includes a clean picture of 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.
Which of the above filings provided the most value? What specific details of those filings were most relevant to your needs? Let us know in the comments!
We place high value and greatly appreciate any input regarding the above or any other revenue recognition/ASC 606 topics.
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Topics: Revenue Recognition, ASC 606, Rev Rec, SEC Comments
