Revenue for power and utilities companies
Industry Supplement | March 2018
KPMG’s insights on ASC 606 implementation. With the new revenue recognition standard’s effective date approaching, KPMG reports on the most significant industry issues.
Applicability
- Companies in the power and utilities industry
Relevant dates
Mandatory effective dates and early adoption provisions:
Annual periods:
For public business entities and certain not-for-profit entities the effective date for annual periods is the fiscal years beginning after Dec. 15, 2017.
For all other entites the effective date for annual periods is the fiscal years beginning after Dec. 15, 2018.
Interim periods:
For public business entities and certain not-for-profit entities the effective date for interim periods is the fiscal years beginning after Dec. 15, 2017.
For all other entites the effective date for interim periods is the fiscal years beginning after Dec. 15, 2019.
Early adoption:
For public business entities and certain not-for-profit entities the effective date for early adoption is the fiscal years beginning after Dec. 15, 2016.
For all other entites the effective date for early adoption is the fiscal years beginning after Dec. 15, 2016.
Key impacts
- Identifying the customer and the contract under the new standard may require significant judgment and impact the timing of revenue recognition and the accounting for certain contract costs.
- Accounting for variable consideration requires a different contract analysis and may require the estimation of fees.
- Power and utilities companies will need to determine whether promised goods or services should be accounted for as a single performance obligation (i.e. a ‘series’), as well as the effect of the new standard on alternative revenue programs, requirements contracts, renewable engery credits and capacity sales.
Report contents
- Specific issues for power and utilities companies
- Expanded disclosures
- Effective dates and transition
- Impact on the organization
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Resource
Handbook: Revenue recognition
Latest edition: Our in-depth guide to the revenue standard, ASC 606.
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