AICPA Revenue Recognition Task Forces are charged with developing revenue recognition implementation issues that will provide helpful hints and illustrative examples for how to apply the new Revenue Recognition Standard.
Task Force Members:
- Nicole Zabinski, Ernst & Young LLP (Chair)
- Cheryl Alford, Windstream Communications
- Gregg Amend, Moss Adams
- Bryan Anderson, Deloitte LLP
- Doug Chambers, Telephone and Data Systems (TDS)
- Martin Fuhs, T-Mobile
- Monty Garrett, Verizon
- Lyle Hippen, CenturyLink
- Tom Leonard, PricewaterhouseCoopers LLP
- Chris Morgan, Grant Thornton LLP
- John Mutrie, Sprint
- Bill Schneider, AT&T
- Jason Waldron, KPMG LLP
- Brian Zook, Liberty Global
Staff Contact: Desire Carroll, email@example.com
News and Resources
In this audio podcast, Bill Schneider, CPA, CGMA, AT&T Director of Accounting discusses significant changes and challenges those in the telecommunications industry will encounter as a result of the new revenue recognition standard.
IDENTIFIED REVENUE RECOGNITION IMPLEMENTATION ISSUES
Below is a list of potential revenue recognition implementation issues identified by the Telecommunications Entities Revenue Recognition Task Force. The list will be updated as the task force continues it discussions. Full revenue recognition implementation issues will be posted below for informal comments after review by the AICPA Financial Reporting Executive Committee (FinREC).
||Description of Implementation Issue
||Portfolio Accounting. This implementation issue discuses considerations for telecommunication entities in determining when it is appropriate to apply ASC 606 on a portfolio or individual contract level.
||Identification of separate performance obligations in the contract
||Accounting for contract modifications (in general as well as combined with the mechanics of portfolio accounting)
||Accounting for contract costs
||Considering the effect of the time value of money
- This implementation issue discusses how time value of money may impact the accounting for customer contracts in the telecommunication industry when there is a significant benefit of financing. In addition, financial statement presentation of the effects of financing will be discussed.
||Determining whether a contract exists. This implementation issue discuses considerations for telecommunication entities in applying the guidance of ASC 606 when evaluating the impact of present enforceable rights and obligations on the contract term.
||Contract Duration (Equipment Installment Plans with Month-to-Month Service Contracts). This implementation issue discusses consideration for telecommunication entities determining the contract duration of a month-to-month service contract when the customer also purchases equipment under an equipment installment plan (EIP).
||Determining the standalone selling price of Family Plan services
||Determining the contract period
||Considering if continued variability in pricing plans/bundles impacts the determinations for standard pricing to be used for allocation of transaction price
||Accounting for handsets, including: discounts and upfront loss on a handset
||Determining what approach to use to estimate variable revenue (‘most likely amount’ or ‘expected value’ method)
||Allocating transaction price by applying the relative selling price method
||Consideration of wireless device installment/financing plans
||Accounting for revenue contingent on a customer’s usage
||Considering the effect of non-cash consideration
||Considering the effect of consideration payable to a customer
||Accounting for credit risk
||Indirect channel sales
||Considering where to you book revenue from services that are not part of an entity’s ongoing/central operations
||Application of the ‘onerous test’
||Application of the criteria to determine whether a performance obligation is satisfied over time or at a point in time
Draft Revenue Recognition Implementation Issues included for informal comment, when available, will be listed below.
Respondents should submit any comments including the implementation issue number to firstname.lastname@example.org by the dates noted below:
The Telecommunications Entities Revenue Recognition Task Force recommends the following AICPA products for current revenue recognition issues: