Home ASC 606 ASC 606 Roundup: Caesars Entertainment, Target Corp. & More!

ASC 606 Roundup: Caesars Entertainment, Target Corp. & More!

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Posted by Graham Hulme on Jun 1, 2018 11:00:00 AM

This week’s roundup focuses on SEC filings submitted during the week of 5/28/18.

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.

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!

 

CA Technologies Exhibit 99.1:

https://www.sec.gov/Archives/edgar/data/356028/000035602818000084/exhibit991analystdaypres.htm

  • Starting on page 50 of this document is a multi-page presentation of the company’s analysis, application, and expected impact of ASC 606.
  • The bottom of page 51 offers a high level “Impact to CA” list of bullets.
  • Page 52 offers a “What Does & Does Not Change” section that is a valuable component to the presentation to baseline the reader’s understanding.
  • Qualitative presentation of impacts of ASC 606 on the company is shown on page 53.
  • Pages 54 through 63 present deeper dives into ASC 606’s impacts on the company’s backlog, revenue composition, annual revenue, renewal expirations, ARR, and key metrics. Additionally, as a differentiating approach compared to other filings reviewed to date, the company presents a visual display of modeled bookings, revenue, and ARR under ASC 606 in a graphical format.  Within this format is a comparison to ASC 605 results.

Our thoughts:  The ASC 606 presentation provided in this company’s filing is one of the most valuable reviewed from a reader’s point-of-view.  It proactively addresses most key areas a reviewer of the company’s financial results needs.  Specifically, it balances the presentation between offering requisite details for ASC 606 readers as well as providing baseline, educational, information on ASC 606 for those new to the standard.  The totality of the presentation’s format, content, and overall approach makes this a must-read.

 

CAESARS ENTERTAINMENT CORP 8- K (Revenue Recognition Notes):

https://www.sec.gov/Archives/edgar/data/858339/000085833918000184/R21.htm

  • The company puts forward a comprehensive ASC 606 presentation.
  • The company adopted based on a full retrospective method.
  • Clear presentation of financials for 2015 – 2017 providing ASC 605 vs 606 numbers side-by-side.
  • Thorough qualitative descriptions offered on how ASC 606 impacted the company’s revenue recognition policies. The company goes so far as to explain how it allocated the transaction price for certain performance obligations under ASC 606 with working examples.
  • The company presents its revenues disaggregated by segment.
  • Detailed “Accounting Policy” section offers narratives on the company’s types of revenues and how these are handled under ASC 606.
  • the company provides an intuitive write-up of how it defined and handled Contract Liabilities. In filings reviewed to date, companies have not been transparent on the “Contract Asset” and “Contract Liability” topics.

Our thoughts:  Multiple high value areas were covered in this filing making it worth a review.  The filing appears to strike a solid balance between providing enough detail to address key points and questions while also “getting to the point” in terms of presenting its information.  The fact that the company did a full retrospective adoption also puts it in the minority with respect to other filings reviewed to date.    

 

SYNOPSYS, INC. 10-Q:

https://www.sec.gov/Archives/edgar/data/883241/000088324118000005/a043018snps10-q.htm

  • Page 25’s “Effect of New Accounting Pronouncements Not Yet Adopted” section puts forward the company’s overall ASC 606 status.
  • Of note is the company’s assessment that term licenses and IP licenses will be recognized differently in ASC 606 due to the fact it no longer requires VSOE for undelivered elements to separate revenue from delivered elements.
  • Additionally, the company identifies the reasons it will now need to capitalize costs for commissions and costs to obtaining customer contracts.

Our thoughts:  While short, the information provided in this filing regarding the expected impact of ASC 606 on the company is worth a review.  Due to the varied product types they sell in terms of licenses, it’s interesting to review how different license types will be impacted to align with the point-in-time versus over-time guidance in ASC 606.

 

TARGET CORPORATION 10-Q:

https://www.sec.gov/Archives/edgar/data/27419/000002741918000018/tgt-201855x10xq.htm

  • Page 6’s “Revenue Recognition” section explains the company’s assessment that ASC 606 will result in “minor changes to the timing of recognition of revenues for certain promotional gift card programs.”
  • Pages 7 through 9 provide a side-by-side presentation of the company’s financial position with asc 605 vs 606 numbers presented.
  • Additionally, footnotes at the bottom of pages 7 through 9 provide additional quantitative and qualitative information on key data points in the financials.

Our thoughts:  The company’s assessment and application of ASC 606 on its gift card and promotional programs aligns with what was seen in other retailers’ filings to date.  It’s worth a review to get another picture of this impact and how the company arrived at its approach.

  

TRIUMPH GROUP, INC. 10-K:

https://www.sec.gov/Archives/edgar/data/1021162/000102116218000018/tgi-2018331x10k.htm

  • Starting on the bottom of page 48 in the “Recently Issued Accounting Pronouncements” section, the company offers substantive quantitative and qualitative information on how ASC 606 impacts it.
  • The company’s assessment primarily indicates it has contracts that will fall into the over-time recognition category while other contracts will be point-in-time recognition.
  • The company offers details regarding its use of an input method to measure over-time contracts’ recognition.

Our thoughts:  This company’s description of its input method approach for over-time contracts offers value to review as it explains how the approach will be applied and its potential impact.

 

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 RecognitionASC 606IFRS15SEC Comments