ASC 606, the long awaited and much debated new accounting standard for revenue recognition in the United States has now become reality for most public companies. Adoption of this new standard was required for calendar year public companies effective January 1, 2018, and the results of adoption have now become public with the earnings releases and 10-Q filings for the first quarter ending March 31, 2018.
Based on a survey of most publicly traded restaurant companies reporting 1Q results over the past month, it is clear that ASC 606 impacted every one of them. Also, as predicted, the two key issues were the required deferral of initial franchise fees over the life of franchise agreements, and the required gross-up of advertising fund collections as revenues, rather than treating them as an offset to the related marketing spend.
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For more information on ASC 606 or for more information on Bennett Thrasher’s restaurant practice, please contact Michael Dukes or Cory Bennett by calling 770.396.2200.