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Connor Group has released the latest study on trends in SEC Comment Letters, SAB 74 disclosures and early adopters related to ASC 606 adoption.
SEC Comment Letters: As of March 31, 2018, the study finds that the SEC has issued ASC 606-related comment letters to a total of 38 companies, 8 of which are early adopters of the standard. 36% of the comments request companies to expand disclosure of their evaluation and implementation status. These comments were all issued prior to the end of November 2017. Over 50% of comments were issued to early adopters. These comments include inquiries about the rationale in reaching certain technical conclusions (e.g. amortization period for capitalized origination costs, principal vs. agent, use of residual method in establishing SSP, etc.) and requests to expand disclosures (e.g. disaggregated revenue, significant payment terms, the relation between payment timing and satisfaction of performance obligation and contract balances, etc.). The study includes links to companies’ response letters on the SEC website.
SAB 74 Disclosures: This is Connor Group’s sixth disclosure study and is based on periodic reports filed between November 10, 2017 and March 1, 2018 by over 400 companies with a market capitalization of at least $10 billion. The study finds that over 80% of the companies that have elected an adoption method chose the modified retrospective method. Over 80% of the companies do not anticipate a material adoption impact. We continue to see some companies switching from full to modified retrospective method at the last minute. One company changed its initial plan of early adoption to standard adoption. Most companies are yet to disclose the quantitative impact on the financial statements. The study includes early adopter examples and common adoption impacts for technology and life sciences industries.
Early Adopters: The study finds a total of 44 early adopters as of March 31, 2018. The study includes a list of those early adopters and links to their most recent SEC filings.
Download the study here!