Technical Accounting

A public multinational SaaS Company with over $150 million in annual revenue and 400 employees needed assistance identifying and evaluating the impact of the new revenue recognition standard, ASC 606

Challenge: 

  • Although the Company’s arrangements had multiple elements, the elements were accounted for as a single combined unit of accounting because they did not exhibit standalone value
  • As a SaaS Company, the Company’s historical revenue recognition fell under SAB Topic 13 and ASC 605-25
  • Up-front fees were deferred and recognized over an estimated customer life of 5 years
  • The Company had not elected to capitalize direct and incremental costs to obtain and fulfill contracts
  • The Company’s ERP accounting system had limited capability to capture additional information or perform automated allocations

Solution:

  • WilliamsMarston analyzed the company’s existing revenue recognition model and identified the anticipated impact of the new revenue standard
  • All permutations of customer arrangements were identified and the existing revenue policy was mapped to the new standard to identify additional potential impacts
  • A comprehensive new revenue recognition policy was written using recently published Big 4 guides as a comprehensive checklist for impact areas including costs to obtain and fulfill contracts
  • Coordinated with the company’s management and their external auditors to reach an agreed upon revenue model under the new standard
  • Evaluated the extra disclosures required under the new standard and evaluated the existing systems to identify necessary system changes

Results: 

WilliamsMarston developed the proposed revenue recognition and cost models under the new standard, created a comprehensive new revenue recognition policy, and began developing a cross functional work-plan to implement the new standard.   WilliamsMarston also assisted management with communicating the proposed approach to all stakeholders including the Board and investors.

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Technical Accounting

A $150 million public SAAS company needed assistance evaluating the impact of the new revenue standard.

By | 2017-02-25T09:30:45+00:00 December 28th, 2016|Impact Stories, Technical Accounting|0 Comments