Federal Register / Vol. 82, No. 166 / Tuesday, August 29, 2017 / Rules and Regulations 41147 

1See In the Matter of Stewart Parness, AAER 108 

(Aug. 5, 1986). 

2Rule 4–01(a)(1) of Regulation S–X, 17 CFR 

210.4–01(a)(1). See Accounting Series Release 

(‘‘ASR’’) No. 150 (Dec. 20, 1973) and ASR No. 4 

(Apr. 25, 1938). 

3Policy Statement: Reaffirming the Status of the 

FASB as a Designated Private-Sector Standard 

Setter, Release Nos. 33–8221; 34–47743; IC–26028; 

FR–70 (Apr. 25, 2003) (‘‘FR–70’’); 68 FR 23333 (May 

1, 2003). 

4 15 U.S.C. 77s(b). 

or as an agent (on a net basis) as well 

as presentation of the effects of 

financing in the statement of 

comprehensive income, which 

eliminates the need for the guidance in 

Topic 8. Prior to adoption of ASC Topic 

606, registrants should continue to refer 

to prior Commission and staff guidance 

on revenue recognition topics. 

3. Topic 11: Miscellaneous Disclosure 

a. Topic 11.A is modified to clarify 

that revenues from operating-differential 

subsidies presented under a revenue 

caption should be presented separately 

from revenue from contracts with 

customers accounted for under ASC 

Topic 606. Previously, Topic 11.A 

provided the staff’s view that revenues 

from operating-differential subsidies be 

presented as a separate line item in the 

income statement either under a 

revenue caption or as credit in the costs 

and expenses section. 

Accordingly, the staff hereby amends 

the Staff Accounting Bulletin Series as 

follows: 

* * * * * 

Topic 13: Revenue Recognition 

* * * * * 

C. Impact of a Registrant’s Adoption of 

FASB ASC Topic 606, Revenue From 

Contracts With Customers 

Topic 13 is no longer applicable upon 

a registrant’s adoption of ASC Topic 

606. Topic 13 provides the staff’s views 

regarding the general revenue 

recognition guidance codified in ASC 

Topic 605. ASC Topic 606 provides a 

single set of revenue recognition 

principles governing all contracts with 

customers and supersedes the revenue 

recognition framework in ASC Topic 

605, which eliminates the need for 

Topic 13. Prior to adoption of ASC 

Topic 606, registrants should continue 

to refer to prior Commission and staff 

guidance on revenue recognition topics. 

* * * * * 

Topic 8: Retail Companies 

* * * * * 

C. Impact of a Registrant’s Adoption of 

FASB ASC Topic 606, Revenue From 

Contracts With Customers 

Topic 8 is no longer applicable upon 

a registrant’s adoption of ASC Topic 

606. Topic 8 provides the staff’s views 

regarding (i) the prohibition of 

presenting sales of a leased or licensed 

department within a retailer’s statement 

of comprehensive income consistent 

with the principles codified within ASC 

Subtopic 605–45 and (ii) the disclosure 

of finance charges imposed by retailers 

on credit sales. ASC Topic 606 provides 

guidance regarding the identification of 

performance obligations in a contract 

with a customer, presentation of 

revenue as a principal (on a gross basis) 

or as an agent (on a net basis) as well 

as presentation of the effects of 

financing in the statement of 

comprehensive income, which 

eliminates the need for the guidance in 

Topic 8. Prior to adoption of ASC Topic 

606, registrants should continue to refer 

to prior Commission and staff guidance 

on revenue recognition topics. 

* * * * * 

Topic 11.A. Operating-Differential 

Subsidies 

Facts: Company A has received an 

operating-differential subsidy pursuant 

to the Merchant Marine Act of 1936, as 

amended. 

Question: How should such subsidies 

be displayed in the statement of 

comprehensive income? 

Interpretive Response: Revenue 

representing an operating-differential 

subsidy under the Merchant Marine Act 

of 1936, as amended, must be set forth 

as a separate line item in the statement 

of comprehensive income either under a 

revenue caption presented separately 

from revenue from contracts with 

customers accounted for under ASC 

Topic 606 or as a credit in the costs and 

expenses section. 

* * * * * 

[FR Doc. 2017–17912 Filed 8–28–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

17 CFR Parts 231, 241, and 271 

[Release Nos. 33–10402; 34–81428; IC– 

32784] 

Commission Guidance Regarding 

Revenue Recognition for Bill-and-Hold 

Arrangements 

AGENCY: Securities and Exchange 

Commission. 

ACTION: Interpretation. 

SUMMARY: The Commission is 

publishing this interpretive release in 

order to bring existing guidance into 

conformity with Financial Accounting 

Standards Board Accounting Standards 

Codification Topic 606, Revenue from 

Contracts with Customers. Upon 

adoption of Accounting Standards 

Codification Topic 606, registrants 

should no longer rely on the guidance 

in Securities Exchange Act Release No. 

23507 and Accounting and Auditing 

Enforcement Release No. 108, In the 

Matter of Stewart Parness, which set 

forth the criteria to be met in order to 

recognize revenue when delivery has 

not occurred. 

DATES: Effective: August 29, 2017. 

FOR FURTHER INFORMATION CONTACT: 

Kevin L. Vaughn, Senior Associate Chief 

Accountant, or Joseph R. Epstein, 

Professional Accounting Fellow, Office 

of the Chief Accountant, at (202) 551– 

5300, U.S. Securities and Exchange 

Commission, 100 F Street NE., 

Washington, DC 20549–6561. Inquiries 

about this interpretive release also can 

be directed to oca@sec.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

In 1986, in Securities Exchange Act 

Release No. 23507 and Accounting and 

Auditing Enforcement Release No. 108, 

In the Matter of Stewart Parness 

(‘‘AAER 108’’), the Commission set forth 

criteria to be met in order to recognize 

revenue when delivery has not occurred 

(commonly referred to as ‘‘bill-andhold’’).1 The Commission staff reiterated 

this guidance in Staff Accounting 

Bulletin (‘‘SAB’’) Topic 13, Revenue 

Recognition. SAB Topic 13 expressed 

the staff’s views on the basic principles 

of revenue recognition in then-existing 

generally accepted accounting 

principles and summarized in one 

location the existing guidance on 

revenue recognition to make that 

guidance more accessible to registrants 

and their auditors. 

II. The Application of Generally 

Accepted Accounting Principles for 

Revenue Recognition Related to Billand-Hold Arrangements 

The Commission historically has 

recognized pronouncements of the 

Financial Accounting Standards Board 

(‘‘FASB’’) as authoritative in the absence 

of any contrary determination by the 

Commission.2 In Financial Reporting 

Release No. 70,3 the Commission stated 

its determination that the FASB and its 

parent organization, the Financial 

Accounting Foundation, satisfied the 

criteria in Section 19(b) of the Securities 

Act of 1933 4 and, accordingly, FASB’s 

financial accounting and reporting 

standards are recognized as ‘‘generally 

accepted’’ for purposes of the federal 


sradovich on DSK3GMQ082PROD with RULES3
41148 Federal Register / Vol. 82, No. 166 / Tuesday, August 29, 2017 / Rules and Regulations 

5See FR–70; Rule 4–01(a)(1) of Regulation S–X, 

17 CFR 210.4–01(a)(1). 

6See ASC paragraph 606–10–05–04. 

7See ASC paragraphs 606–10–25–23 through 25– 

30. 

8See ASC paragraphs 606–10–55–81 through 55– 

84. 

9See ASC paragraph 606–10–55–82. 

10See ASC paragraph 606–10–55–83. 

securities laws. As a result, registrants 

are required to comply with those 

standards in preparing financial 

statements filed with the Commission, 

unless the Commission provides 

otherwise.5

The FASB has issued comprehensive 

revenue recognition guidance in 

Accounting Standards Codification 

(‘‘ASC’’) Topic 606, Revenues from 

Contracts with Customers (‘‘ASC Topic 

606’’), which supersedes most previous 

revenue recognition guidance issued by 

the FASB. Under ASC Topic 606, the 

general criteria for revenue recognition 

includes identifying the contract(s) with 

a customer, identifying the performance 

obligations in the contract, determining 

the transaction price, allocating the 

transaction price to the performance 

obligations in the contract, and 

recognizing revenue when (or as) the 

entity satisfies a performance obligation 

by transferring a promised good or 

service to a customer.6 A good or service 

is transferred when (or as) the customer 

obtains control of that good or service, 

and ASC Topic 606 sets forth indicators 

of when control has been transferred.7

ASC Topic 606 also provides specific 

guidance on contracts under which an 

entity bills a customer for a product but 

the entity retains physical possession of 

the product until it is transferred to the 

customer at a point in time in the future 

(i.e., a bill-and-hold arrangement).8 ASC 

Topic 606 acknowledges that, for some 

contracts, a customer may obtain control 

of a product even though that product 

remains in an entity’s physical 

possession.9 In order to recognize 

revenue in a bill-and-hold arrangement, 

ASC Topic 606 requires consideration of 

the indicators of when control has been 

transferred and sets forth additional 

criteria to be met.10

III. Updated Commission Guidance 

In light of the FASB’s issuance of ASC 

Topic 606, upon a registrant’s adoption 

of ASC Topic 606, it should no longer 

refer to the guidance in AAER 108 

related to recognizing revenue in a billand-hold arrangement because ASC 

Topic 606 provides specific guidance on 

recognizing revenue for those 

arrangements. 

The updated Commission guidance 

set forth in this interpretation is 

applicable upon a registrant’s adoption 

of ASC Topic 606 and applies to all 

arrangements for which revenue is 

recognized in accordance with ASC 

Topic 606. Prior to a registrant’s 

adoption of ASC Topic 606, the 

guidance in Securities Exchange Act 

Release No. 23507 and AAER 108 is still 

applicable to all arrangements for which 

revenue is recognized. 

List of Subjects in 17 CFR Parts 231, 

241, and 271 

Accounting, Securities. 

Amendments to the Code of Federal 

Regulations 

For the reasons set out in the 

preamble, the Commission is amending 

title 17, chapter II of the Code of Federal 

Regulations as set forth below: 

PART 231—INTERPRETATIVE 

RELEASES RELATING TO THE 

SECURITIES ACT OF 1933 AND 

GENERAL RULES AND REGULATIONS 

THEREUNDER 

■ 1. Part 231 is amended by adding an 

entry for Release No. 33–10402 at the 

end of the table to read as follows: 

Subject Release No. Date Fed. Reg. vol. and page 

* * * * * * * 

Commission Guidance Regarding Revenue Recognition 

for Bill-and-Hold Arrangements.

33–10402 Aug. 18, 2017 ..................... [INSERT Federal Register CITATION]. 

PART 241—INTERPRETATIVE 

RELEASES RELATING TO THE 

SECURITIES EXCHANGE ACT OF 1934 

AND GENERAL RULES AND 

REGULATIONS THEREUNDER 

■ 2. Part 241 is amended by adding an 

entry for Release No. 34–81428 at the 

end of the table to read as follows: 

Subject Release No. Date Fed. Reg. vol. and page 

* * * * * * * 

Commission Guidance Regarding Revenue Recognition 

for Bill-and-Hold Arrangements.

34–81428 Aug. 18, 2017 ..................... [INSERT Federal Register CITATION]. 

PART 271—INTERPRETATIVE 

RELEASES RELATING TO THE 

INVESTMENT COMPANY ACT OF 1940 

AND GENERAL RULES AND 

REGULATIONS THEREUNDER 

■ 3. Part 271 is amended by adding an 

entry for Release No. IC–32784 at the 

end of the table to read as follows: 


sradovich on DSK3GMQ082PROD with RULES3
Federal Register / Vol. 82, No. 166 / Tuesday, August 29, 2017 / Rules and Regulations 41149 

1See Commission Guidance Regarding 

Accounting for Sales of Vaccines and Bioterror 

Countermeasures to the Federal Government for 

Placement into the Pediatric Vaccine Stockpile or 

the Strategic National Stockpile, Release No. 33– 

8642 (Dec. 5, 2005). 

2The International Accounting Standards Board 

(IASB) has also issued IFRS 15, Revenue from 

Contracts with Customers (IFRS 15). The issuance 

of ASC Topic 606 and IFRS 15 completes the joint 

effort by the FASB and IASB that was undertaken 

with the intent of improving financial reporting by 

creating converged comprehensive revenue 

recognition guidance for U.S. GAAP and IFRS. 

3Rule 4–01(a)(1) of Regulation S–X, 17 CFR 

210.4–01(a)(1). See Accounting Series Release 

(‘‘ASR’’) No. 150 (Dec. 20, 1973) and ASR No. 4 

(Apr. 25, 1938). 

4Policy Statement: Reaffirming the Status of the 

FASB as a Designated Private-Sector Standard 

Setter, Release Nos. 33–8221; 34–47743; IC–26028; 

FR–70 (Apr. 25, 2003) (‘‘FR–70’’); 68 FR 23333 (May 

1, 2003). 

5 15 U.S.C. 77s(b). 

6See FR–70; Rule 4–01(a)(1) of Regulation S–X, 

17 CFR 210.4–01(a)(1). 

7Commission Guidance Regarding Revenue 

Recognition for Bill-and-Hold Arrangements, 

Release No. 33–10402 (Aug. 18, 2017). 

Subject Release No. Date Fed. Reg. vol. and page 

* * * * * * * 

Commission Guidance Regarding Revenue Recognition 

for Bill-and-Hold Arrangements.

IC–32784 Aug. 18, 2017 ..................... [INSERT Federal Register CITATION]. 

By the Commission. 

Dated: August 18, 2017. 

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2017–17913 Filed 8–28–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

17 CFR Parts 231, 241, and 271 

[Release Nos. 33–10403; 34–81429; IC– 

32785] 

Updates to Commission Guidance 

Regarding Accounting for Sales of 

Vaccines and Bioterror 

Countermeasures to the Federal 

Government for Placement Into the 

Pediatric Vaccine Stockpile or the 

Strategic National Stockpile 

AGENCY: Securities and Exchange 

Commission. 

ACTION: Interpretation. 

SUMMARY: The Securities and Exchange 

Commission is publishing this 

interpretive release to update previously 

issued guidance with respect to 

accounting for sales of vaccines and 

bioterror countermeasures to the Federal 

Government for placement into 

stockpiles related to the Vaccines for 

Children Program or the Strategic 

National Stockpile. This update is being 

provided to bring existing guidance into 

conformity with Financial Accounting 

Standards Board’s Accounting 

Standards Codification Topic 606, 

Revenue from Contracts with 

Customers. This guidance is applicable 

upon a registrant’s adoption of 

Accounting Standards Codification 

Topic 606 and is applicable to all 

arrangements for which revenue is 

recognized in accordance with 

Accounting Standards Codification 

Topic 606. 

DATES: Effective: August 29, 2017. 

FOR FURTHER INFORMATION CONTACT: 

Kevin L. Vaughn, Senior Associate Chief 

Accountant, or Joseph R. Epstein, 

Professional Accounting Fellow, Office 

of the Chief Accountant, at (202) 551– 

5300, U.S. Securities and Exchange 

Commission, 100 F Street NE., 

Washington, DC 20549–6561. Inquiries 

about this interpretive release also can 

be directed to oca@sec.gov. 

SUPPLEMENTARY INFORMATION: 

I. Introduction 

The Securities and Exchange 

Commission (‘‘Commission’’) continues 

to be committed, as stated in previouslyissued guidance (the ‘‘2005 Release’’),1

to addressing any unintended 

consequences of accounting 

requirements that could impair the 

nation’s ability to create and maintain 

sufficient supplies of various vaccines 

and bioterror countermeasures 

(‘‘enumerated vaccines’’). The 

Commission issued the 2005 Release to 

address questions about the timing of 

revenue recognition for vaccines placed 

into the Vaccines for Children Program 

and the Strategic National Stockpile. At 

the time of the 2005 Release, some 

expressed concerns that the application 

of generally accepted accounting 

principles may require revenue 

recognition to be delayed beyond the 

period in which the vaccine is placed in 

the stockpile, and may have an 

unintended consequence of causing 

some vaccine manufacturers to decline 

to participate in these critical stockpile 

programs. The Commission published 

the guidance in the 2005 Release to 

resolve the accounting questions. With 

the Financial Accounting Standards 

Board’s (‘‘FASB’’) issuance of 

Accounting Standards Codification 

(‘‘ASC’’) Topic 606, Revenues from 

Contracts with Customers (‘‘ASC Topic 

606’’),2 we are providing this updated 

guidance. 

Government vaccine stockpile 

programs are unique in many respects. 

For example, the primary objective of 

purchasing the vaccines is not to take 

delivery for ultimate use but rather to be 

able to require immediate delivery on 

notice. An additional characteristic of 

vaccine stockpiles is the limited shelf 

life of the vaccines. For these and other 

reasons, the Commission continues to 

limit this guidance to the vaccines 

enumerated below. 

II. The Application of Generally 

Accepted Accounting Principles for 

Revenue Recognition to Vaccine 

Stockpiles 

The Commission historically has 

recognized pronouncements of the 

FASB as authoritative in the absence of 

any contrary determination by the 

Commission.3 In Financial Reporting 

Release No. 70,4 the Commission stated 

its determination that the FASB and its 

parent organization, the Financial 

Accounting Foundation, satisfied the 

criteria in Section 19(b) of the Securities 

Act of 1933 5 and, accordingly, FASB’s 

financial accounting and reporting 

standards are recognized as ‘‘generally 

accepted’’ for purposes of the federal 

securities laws. As a result, registrants 

are required to comply with those 

standards in preparing financial 

statements filed with the Commission, 

unless the Commission provides 

otherwise.6

Although no specific guidance has 

been published by the FASB related to 

revenue recognition for vaccine 

stockpiles, the FASB has issued 

comprehensive revenue recognition 

guidance in ASC Topic 606, which 

supersedes most previous revenue 

recognition guidance issued by the 

FASB. 

In response to the new, 

comprehensive revenue recognition 

model in ASC Topic 606, simultaneous 

with publication of this release, the 

Commission has issued an 

interpretation stating 7 that upon the 

registrant’s adoption of ASC Topic 606, 

such registrant should no longer rely on 

the guidance in Securities Exchange Act 

Release No. 23507 and Accounting and 


sradovich on DSK3GMQ082PROD with RULES3