Registrants should disclose whether the company has recorded any revenue that is at risk due to future performance contingencies, the nature of the contracts giving rise to the contingencies, and, if material, the amount of any such revenue recorded. The staff has been asked about its views on several variations to the basic fact pattern described in the above example. If the customer could avoid all or part of a payment by terminating the contract at will, revenue may only be recorded at an interim date up to the amount that customer would be required to pay in the event of termination. The staff s views would not change if the manager or advisor did not have termination rights during the term of the contract. The SEC staff would encourage registrants with questions about contracts that are similar to, but vary from, the example situation addressed in the announcement, to submit those questions to the staff for pre-clearance.
Earlier adoption is permitted.
If an accounting change is required to conform the accounting to the requirements of this announcement, that change should be calculated as of the beginning of the quarter of adoption and presented in a manner similar to a cumulative-effect change in accounting, as described in paragraph 20 of APB 20. However, the pro forma disclosures described in paragraph 21 of APB 20 are not required.