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:

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