Issues & Trends | September 2016
Revenue: Telecoms
KPMG provides ASC 606 telecoms guidance. KPMG provides a comprehensive and illustrated understanding of applying the new revenue standard for the telecommunications industry based on our experience helping clients around the world.
Applicability
- Telecommunications industry
- Company that is currently assessing the impact of the new requirements of ASC Topic 606
- Company that is at an advanced stage of its ASC Topic 606 implementation
- Company that is comparing US GAAP to IFRS
Relevant dates
Mandatory effective dates and early adoption provisions:
Effective date: |
Public business entities and certain not-for-profit entities |
All other entities |
Annual periods – Fiscal years beginning after |
Dec. 15, 2017 |
Dec. 15, 2018 |
Interim periods – In fiscal years beginning after |
Dec. 15, 2017 |
Dec. 15, 2019 |
Early adoption allowed in fiscal years beginning after |
Dec. 15, 2016 |
Dec. 15, 2016 |
Key impacts
- Revenue recognition for handsets may be accelerated
- Customer options (material rights) require careful analysis
- Accounting for costs to obtain or fulfil a contract may change
- Revisions may be needed to tax planning, covenant compliance and sales incentive plans
- Sales and contracting processes may need to be reconsidered
- IT systems will need to be changed
- New estimates and judgments will be required
- Accounting processes and internal controls will need to be revised
- Extensive new disclosures are required
- Companies will need to communicate with stakeholders
Report contents
- Identify the contract with a customer
- Identify the performance obligations in the contract
- Determine the transaction price
- Allocate the transaction price to the performance obligations in the contract
- Recognize revenue when or as the entity satisfies a performance obligation
- Contract costs
- Customer options for additional goods or services
- Nonrefundable up-front fees
- Indirect channel sales
- Repurchase agreements