18. Revenue
Effective September 1, 2018, the Company adopted ASU 2014-09, Revenue Recognition (Topic 606). The new standard is a comprehensive new revenue recognition model that requires the Company to recognize revenue in a manner which depicts the transfer of goods or services to its customers at an amount that reflects the consideration the Company expects to receive in exchange for those goods or services.
Prior to the adoption of the new standard, the Company recognized substantially all of its revenue from contracts with customers at a point in time, which was generally when the goods were shipped to or received by the customer, title and risk of ownership had passed, the price to the buyer was fixed or determinable and collectability was reasonably assured (net of estimated returns). Under the new standard, the Company recognizes revenue over time for the majority of its contracts with customers which results in revenue for those customers being recognized earlier than under the previous guidance. Revenue for all other contracts with customers continues to be recognized at a point in time, similar to recognition prior to the adoption of the standard.
Additionally, the new standard impacts the Company’s accounting for certain fulfillment costs, which include upfront costs to prepare for manufacturing activities that are expected to be recovered. Under the new standard, such upfront costs are recognized as an asset and amortized on a systematic basis consistent with the pattern of the transfer of control of the products or services to which to the asset relates.
The Company adopted ASU 2014-09 using the modified retrospective method by applying the guidance to all open contracts upon adoption and recorded a cumulative effect adjustment as of September 1, 2018, net of tax,  effect adjustment (in thousands):
(1) Differences primarily relate to the timing of revenue recognition for over time customers and certain balance sheet reclassifications.
(2) Differences primarily relate to the timing of recognition and recovery of fulfillment costs and certain balance sheet reclassifications.
(3) Included within accrued expenses on the Consolidated Balance Sheets.
(4) Differences included in contract liabilities as of September 1, 2018.
Table:
 | Balance as of August 31, 2018 | Adjustments due to adoption of ASU 2014-09 | Balance as of September 1, 2018
Assets |  |  | 
Contract assets(1) | $— | $591,616 | $591,616
Inventories, net(1) | $3,457,706 | $(461,271) | $2,996,435
Prepaid expenses and other current assets(1)(2) | $1,141,000 | $(37,271) | $1,103,729
Deferred income taxes(1)(2) | $218,252 | $(8,325) | $209,927
Liabilities |  |  | 
Contract liabilities(2)(3) | $— | $690,142 | $690,142
Deferred income(2)(3)(4) | $691,365 | $(691,365) | $—
Other accrued expenses(3)(4) | $1,000,979 | $40,392 | $1,041,371
Deferred income taxes(1) | $114,385 | $2,977 | $117,362
Equity |  |  | 
Retained earnings(1)(2) | $1,760,097 | $42,602 | $1,802,699


Question: What does the new standard entail?
Answer: a comprehensive new revenue recognition model that requires the Company to recognize revenue in a manner which depicts the transfer of goods or services to its customers at an amount that reflects the consideration the Company expects to receive in exchange for those goods or services