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Page | 49 606 (2019) the entity will not need to retrospectively restate the contract for contract modifi cations. The entity can instead refl ect the aggregate eff ect of all contract modifi cations that occur prior to the start of the earliest period presented in accordance with ASC 606 (2019) for the following: a. Identifying the satisfi ed and unsatisfi ed performance obligations. b. Determining the transaction price. c. Allocating the transaction price to the satisfi ed and unsatisfi ed performance obligations. If the practical expedient is used, the fi nancial statements must disclose that the expedient has been used and also disclose "to the extent reasonably possible, a qualitative assessment of the estimated eff ect of applying each of those expedients." 1. What are the issues at hand in regards to implementation? a. For the year of adoption (typically 2019), the fi nancial statements will have to disclose the diff erences for each line on the fi nancial statements, causing revenue (i.e. the contract schedule) to be calculated under legacy GAAP and ASC 606 resulting in a duplicative eff ort. This would not be required for the full retrospective accounting method. b. There are four (4) practical expedients available to entities that are doing the full retrospective adoption, while there is only one (1) for entities that are doing the modifi ed retrospective. c. Entities will need to determine if they are going to apply the guidance to all contracts at the date of initial adoption or only to contracts that are not completed at the date of the initial adoption. d. If the practical expedient is used, a qualitative assessment of their estimated eff ects is needed. e. The legacy uncompleted contract schedule that was presented with the 2018 fi nancial statements will need to be rolled forward to include the revisions based on the new GAAP application. The roll forward schedule will then be used to reconcile contracts in the 2019 contract schedules. f. Since the modifi ed retrospective transition results in a cumulative catch- up adjustment, the entity will have either revenue that is never reported on the income statement or revenue that is duplicated in the income statement. 2. What is CICPAC's interpretation as to what the accounting needs to be? See recommendations on page 54. 3. What does the entity need to do (internally) to comply? If an entity chooses the modifi ed retrospective method, is non-public, and adopts for calendar year 2019, they need Transition Method (continued) >

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