Company: PACB
Filing Date: 2025-03-17
Form Type: 10-K
Source: 0001299130-25-000061
Chunk: 495

Company: PACIFIC BIOSCIENCES OF CALIFORNIA, INC.
Filing Date: 2025-03-17
Form: 10-K
Item: Item 1A
Chunk 495
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 10-K82

Revenue recognition - Identification and evaluation of performance obligationsDescription of the Matter For the year ended December 31, 2024, the Company recognized revenue of $154.0 million, including $136.1 million of product revenue, which consists primarily of instrument sales and related consumables. As described in Note 1 to the consolidated financial statements, the Company may enter into, or periodically modify, contracts with customers that include a combination of promised products and services, resulting in arrangements containing multiple performance obligations. The Company identifies performance obligations for promises to transfer distinct products or services to a customer. Contracts with customers may contain non-standard terms, requiring management to evaluate if there are additional performance obligations. For example, certain customer contracts provide options to customers which can be exercised at a future date, such as the option to purchase products at discounted prices. The Company assesses whether the specified discounts constitute material rights and, therefore, are performance obligations that are included in the allocation of the transaction price.Auditing management’s identification and evaluation of certain performance obligations was challenging and involved a higher degree of judgment due to their non-standard nature.How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s internal controls addressing management’s identification and evaluation of performance obligations. Our audit procedures included, among others, reading executed contracts for a sample of arrangements and evaluating whether all performance obligations were appropriately identified and accounted for based on terms of the contracts (including specified discounts on current and future purchase options).

Fiscal 2024 Form 10-K83

Impairment assessment of goodwill and indefinite-lived intangible assetsDescription of the Matter As of December 31, 2024, the Company’s goodwill and indefinite-lived intangible assets balances were $317.8 million and $15.0 million, respectively. As discussed in Note 1 to the consolidated financial statements, goodwill and indefinite-lived intangible assets are tested for impairment at least annually at the reporting unit level and asset level, respectively, or more frequently if indicators of impairment exist.  The Company is comprised of one reporting unit.As described in Note 4 to the consolidated financial statements, the Company identified interim indicators of impairment in 2024, resulting in total impairment charges of $184.5 million for the year ended December 31, 2024.Auditing the Company's interim impairment assessments was more complex due to the higher estimation uncertainty in determining the fair value of the reporting unit and the indefinite-lived intangible asset under the income