82 FR 41146 - Staff Accounting Bulletin No. 116

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 166 (August 29, 2017)

Page Range		41146-41147
FR Document		2017-17912

This staff accounting bulletin modifies portions of the interpretive guidance included in the Staff Accounting Bulletin Series in order to make the relevant interpretive guidance consistent with authoritative accounting guidance and Securities and Exchange Commission rules and regulations. Specifically, the staff is updating the Series in order to bring existing guidance into conformity with the Financial Accounting Standards Board Accounting Standards Codification Topic 606, Revenue from Contracts with Customers.

Federal Register, Volume 82 Issue 166 (Tuesday, August 29, 2017)

[Federal Register Volume 82, Number 166 (Tuesday, August 29, 2017)]
[Rules and Regulations]
[Pages 41146-41147]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2017-17912]

[[Page 41145]]

Vol. 82

Tuesday,

No. 166

August 29, 2017

Part III

Securities and Exchange Commission

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17 CFR Parts 211, 231, 241, et al.

Staff Accounting Bulletin No. 116; Commission Guidance Regarding
Revenue Recognition for Bill-and-Hold Arrangements; 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;
Rules

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

[[Page 41146]]

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 211

[Release No. SAB 116]

Staff Accounting Bulletin No. 116

AGENCY: Securities and Exchange Commission.

ACTION: Publication of Staff Accounting Bulletin.

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SUMMARY: This staff accounting bulletin modifies portions of the
interpretive guidance included in the Staff Accounting Bulletin Series
in order to make the relevant interpretive guidance consistent with
authoritative accounting guidance and Securities and Exchange
Commission rules and regulations. Specifically, the staff is updating
the Series in order to bring existing guidance into conformity with the
Financial Accounting Standards Board Accounting Standards Codification
Topic 606, Revenue from Contracts with Customers.

DATES: Effective: August 29, 2017.

FOR FURTHER INFORMATION CONTACT: Ruth Uejio, Professional Accounting
Fellow or Sylvia Alicea, Professional Accounting Fellow, Office of the
Chief Accountant at (202) 551-5300 or Nili Shah, Deputy Chief
Accountant, Division of Corporation Finance at (202) 551-3400,
Securities and Exchange Commission, 100 F Street NE., Washington, DC
20549.

SUPPLEMENTARY INFORMATION: The statements in staff accounting bulletins
are not rules or interpretations of the Commission, nor are they
published as bearing the Commission's official approval. They represent
interpretations and practices followed by the Division of Corporation
Finance and the Office of the Chief Accountant in administering the
disclosure requirements of the federal securities laws.

List of Subjects in 17 CFR Part 211

Accounting, Reporting and recordkeeping requirements, Securities.

Dated: August 18, 2017.
Jill M. Peterson,
Assistant Secretary.
Accordingly, part 211 of title 17 of the Code of Federal
Regulations is amended as follows:

PART 211--INTERPRETATIONS RELATING TO FINANCIAL REPORTING MATTERS

0
1. Amend the table in subpart B by adding an entry for Staff Accounting
Bulletin No. 116 at the end of the table to read as follows:

Subpart B--Staff Accounting Bulletins

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

* * * * * * *
Publication of Staff Accounting SAB-116 August 29, 2017........ [INSERT Federal
Bulletin No. 116. Register CITATION.]
----------------------------------------------------------------------------------------------------------------

Note: The text of SAB 116 will not appear in the Code of Federal
Regulations.

Staff Accounting Bulletin No. 116

This staff accounting bulletin (``SAB'') modifies portions of the
interpretive guidance included in the Staff Accounting Bulletin Series
in order to make the relevant interpretive guidance consistent with
current authoritative accounting and auditing guidance and Securities
and Exchange Commission (``Commission'') rules and regulations.
Specifically, the staff is updating the Series in order to bring
existing guidance into conformity with the Financial Accounting
Standards Board (``FASB'') Accounting Standards Codification (``ASC'')
Topic 606, Revenue from Contracts with Customers (``ASC Topic 606'').
The FASB adopted ASC Topic 606 through its issuance of Accounting
Standards Update (``ASU'') No. 2014-09--Revenue from Contracts with
Customers (Topic 606).\1\ In addition, the Commission has updated its
interpretative guidance related to bill and hold arrangements and
vaccine stockpiles.\2\ This SAB provides guidance applicable upon a
registrant's adoption of ASC Topic 606. Prior to adoption of ASC Topic
606, registrants should continue to refer to prior Commission and staff
guidance on revenue recognition topics.
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\1\ ASC Topic 606 was subsequently amended through the issuances
of ASU No. 2015-14--Deferral of the Effective Date, ASU No. 2016-
08--Revenue from Contracts with Customers (Topic 606) Principal
versus Agent Considerations (Reporting Revenue Gross versus Net),
ASU No. 2016-10--Revenue from Contracts with Customers (Topic 606)
Identifying Performance Obligations and Licensing, ASU No. 2016-12--
Revenue from Contracts with Customers (Topic 606) Narrow-Scope
Improvements and Practical Expedients, and ASU No. 2016-20--
Technical Corrections and Improvements to Update No. 2014-09,
Revenue from Contracts with Customers (Topic 606)--Additional
Corrections.
\2\ See Commission Guidance Regarding Revenue Recognition for
Bill-and-Hold Arrangements, Release No. 33-10402 (Aug. 18, 2017) and
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, Release No. 33-10403 (Aug. 18, 2017).
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The following describes the changes made to the Staff Accounting
Bulletin Series that are presented at the end of this release:

1. Topic 13: Revenue Recognition

a. Topic 13 is no longer applicable upon a registrant's adoption of
ASC Topic 606. This topic provided the staff's views regarding then-
existing general revenue recognition guidance as codified in ASC Topic
605. ASC Topic 606 provides a single set of revenue recognition
principles governing all contracts with customers and supersedes the
existing revenue recognition framework in ASC Topic 605, which
eliminates the need for Topic 13. Additionally, upon adoption of ASC
Topic 606, a registrant should no longer look to the guidance in
Securities Exchange Act Release No. 23507 and Accounting and Auditing
Enforcement Release No. 108, In the Matter of Stewart Parness (``AAER
108''), for criteria to be met in order to recognize revenue when
delivery has not occurred (commonly referred to as ``bill-and-hold'')
as ASC Topic 606 provides specific guidance for bill-and-hold
arrangements.\3\ Prior to adoption of ASC Topic 606, registrants should
continue to refer to prior Commission and staff guidance on revenue
recognition topics.
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\3\ Release No. 33-10402.
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2. Topic 8: Retail Companies

a. Topic 8 is no longer applicable upon a registrant's adoption of
ASC Topic 606. This topic provided 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)

[[Page 41147]]

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

41146 Federal Register / Vol. 82, No. 166 / Tuesday, August 29, 2017 / Rules and Regulations

SECURITIES AND EXCHANGE Financial Accounting Standards Board the Chief Accountant in administering
COMMISSION Accounting Standards Codification the disclosure requirements of the
Topic 606, Revenue from Contracts with federal securities laws.
17 CFR Part 211 Customers.
List of Subjects in 17 CFR Part 211
[Release No. SAB 116] DATES: Effective: August 29, 2017.
Accounting, Reporting and
FOR FURTHER INFORMATION CONTACT: recordkeeping requirements, Securities.
Staff Accounting Bulletin No. 116 Ruth Uejio, Professional Accounting
Fellow or Sylvia Alicea, Professional Dated: August 18, 2017.
AGENCY: Securities and Exchange Jill M. Peterson,
Commission. Accounting Fellow, Office of the Chief
Accountant at (202) 551–5300 or Nili Assistant Secretary.
ACTION: Publication of Staff Accounting Accordingly, part 211 of title 17 of the
Shah, Deputy Chief Accountant,
Bulletin. Division of Corporation Finance at (202) Code of Federal Regulations is amended
SUMMARY: This staff accounting bulletin 551–3400, Securities and Exchange as follows:
modifies portions of the interpretive Commission, 100 F Street NE.,
Washington, DC 20549. PART 211—INTERPRETATIONS
guidance included in the Staff RELATING TO FINANCIAL REPORTING
Accounting Bulletin Series in order to SUPPLEMENTARY INFORMATION: The
MATTERS
make the relevant interpretive guidance statements in staff accounting bulletins
consistent with authoritative accounting are not rules or interpretations of the ■ 1. Amend the table in subpart B by
guidance and Securities and Exchange Commission, nor are they published as adding an entry for Staff Accounting
Commission rules and regulations. bearing the Commission’s official Bulletin No. 116 at the end of the table
Specifically, the staff is updating the approval. They represent interpretations to read as follows:
Series in order to bring existing and practices followed by the Division
guidance into conformity with the of Corporation Finance and the Office of Subpart B—Staff Accounting Bulletins

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

* * * * * * *
Publication of Staff Accounting Bulletin No. 116 ............ SAB–116 August 29, 2017 ................. [INSERT Federal Register CITATION.]

Note: The text of SAB 116 will not appear addition, the Commission has updated 605, which eliminates the need for
in the Code of Federal Regulations. its interpretative guidance related to bill Topic 13. Additionally, upon adoption
and hold arrangements and vaccine of ASC Topic 606, a registrant should no
Staff Accounting Bulletin No. 116 stockpiles.2 This SAB provides longer look to the guidance in Securities
This staff accounting bulletin (‘‘SAB’’) guidance applicable upon a registrant’s Exchange Act Release No. 23507 and
modifies portions of the interpretive adoption of ASC Topic 606. Prior to Accounting and Auditing Enforcement
guidance included in the Staff adoption of ASC Topic 606, registrants Release No. 108, In the Matter of Stewart
Accounting Bulletin Series in order to should continue to refer to prior Parness (‘‘AAER 108’’), for criteria to be
make the relevant interpretive guidance Commission and staff guidance on met in order to recognize revenue when
consistent with current authoritative revenue recognition topics. delivery has not occurred (commonly
accounting and auditing guidance and The following describes the changes referred to as ‘‘bill-and-hold’’) as ASC
Securities and Exchange Commission made to the Staff Accounting Bulletin Topic 606 provides specific guidance
(‘‘Commission’’) rules and regulations. Series that are presented at the end of for bill-and-hold arrangements.3 Prior to
Specifically, the staff is updating the this release: adoption of ASC Topic 606, registrants
Series in order to bring existing 1. Topic 13: Revenue Recognition should continue to refer to prior
guidance into conformity with the Commission and staff guidance on
a. Topic 13 is no longer applicable revenue recognition topics.
Financial Accounting Standards Board
upon a registrant’s adoption of ASC
(‘‘FASB’’) Accounting Standards 2. Topic 8: Retail Companies
Topic 606. This topic provided the
Codification (‘‘ASC’’) Topic 606,
staff’s views regarding then-existing a. Topic 8 is no longer applicable
Revenue from Contracts with Customers
general revenue recognition guidance as upon a registrant’s adoption of ASC
(‘‘ASC Topic 606’’). The FASB adopted
codified in ASC Topic 605. ASC Topic Topic 606. This topic provided the
ASC Topic 606 through its issuance of
606 provides a single set of revenue staff’s views regarding (i) the
Accounting Standards Update (‘‘ASU’’)
recognition principles governing all prohibition of presenting sales of a
No. 2014–09—Revenue from Contracts
contracts with customers and leased or licensed department within a
with Customers (Topic 606).1 In
supersedes the existing revenue retailer’s statement of comprehensive
1 ASC Topic 606 was subsequently amended
recognition framework in ASC Topic income consistent with the principles
through the issuances of ASU No. 2015–14— codified within ASC Subtopic 605–45
Deferral of the Effective Date, ASU No. 2016–08— from Contracts with Customers (Topic 606)— and (ii) the disclosure of finance charges
Revenue from Contracts with Customers (Topic Additional Corrections.
imposed by retailers on credit sales.
sradovich on DSK3GMQ082PROD with RULES3

606) Principal versus Agent Considerations 2 See Commission Guidance Regarding Revenue

(Reporting Revenue Gross versus Net), ASU No. Recognition for Bill-and-Hold Arrangements, ASC Topic 606 provides guidance
2016–10—Revenue from Contracts with Customers Release No. 33–10402 (Aug. 18, 2017) and Updates regarding the identification of
(Topic 606) Identifying Performance Obligations to Commission Guidance Regarding Accounting for performance obligations in a contract
and Licensing, ASU No. 2016–12—Revenue from Sales of Vaccines and Bioterror Countermeasures to with a customer, presentation of
Contracts with Customers (Topic 606) Narrow- the Federal Government for Placement into the
Scope Improvements and Practical Expedients, and Pediatric Vaccine Stockpile or the Strategic revenue as a principal (on a gross basis)
ASU No. 2016–20—Technical Corrections and National Stockpile, Release No. 33–10403 (Aug. 18,
Improvements to Update No. 2014–09, Revenue 2017). 3 Release No. 33–10402.

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

or as an agent (on a net basis) as well guidance regarding the identification of forth the criteria to be met in order to
as presentation of the effects of performance obligations in a contract recognize revenue when delivery has
financing in the statement of with a customer, presentation of not occurred.
comprehensive income, which revenue as a principal (on a gross basis) DATES: Effective: August 29, 2017.
eliminates the need for the guidance in or as an agent (on a net basis) as well FOR FURTHER INFORMATION CONTACT:
Topic 8. Prior to adoption of ASC Topic as presentation of the effects of Kevin L. Vaughn, Senior Associate Chief
606, registrants should continue to refer financing in the statement of Accountant, or Joseph R. Epstein,
to prior Commission and staff guidance comprehensive income, which Professional Accounting Fellow, Office
on revenue recognition topics. eliminates the need for the guidance in of the Chief Accountant, at (202) 551–
3. Topic 11: Miscellaneous Disclosure Topic 8. Prior to adoption of ASC Topic 5300, U.S. Securities and Exchange
606, registrants should continue to refer Commission, 100 F Street NE.,
a. Topic 11.A is modified to clarify to prior Commission and staff guidance
that revenues from operating-differential Washington, DC 20549–6561. Inquiries
on revenue recognition topics. about this interpretive release also can
subsidies presented under a revenue
* * * * * be directed to oca@sec.gov.
caption should be presented separately
from revenue from contracts with Topic 11.A. Operating-Differential SUPPLEMENTARY INFORMATION:
customers accounted for under ASC Subsidies I. Background
Topic 606. Previously, Topic 11.A Facts: Company A has received an
provided the staff’s view that revenues In 1986, in Securities Exchange Act
operating-differential subsidy pursuant Release No. 23507 and Accounting and
from operating-differential subsidies be to the Merchant Marine Act of 1936, as
presented as a separate line item in the Auditing Enforcement Release No. 108,
amended. In the Matter of Stewart Parness
income statement either under a Question: How should such subsidies
revenue caption or as credit in the costs (‘‘AAER 108’’), the Commission set forth
be displayed in the statement of criteria to be met in order to recognize
and expenses section. comprehensive income?
Accordingly, the staff hereby amends revenue when delivery has not occurred
Interpretive Response: Revenue (commonly referred to as ‘‘bill-and-
the Staff Accounting Bulletin Series as representing an operating-differential
follows: hold’’).1 The Commission staff reiterated
subsidy under the Merchant Marine Act this guidance in Staff Accounting
* * * * * of 1936, as amended, must be set forth Bulletin (‘‘SAB’’) Topic 13, Revenue
Topic 13: Revenue Recognition as a separate line item in the statement Recognition. SAB Topic 13 expressed
of comprehensive income either under a the staff’s views on the basic principles
* * * * * revenue caption presented separately of revenue recognition in then-existing
C. Impact of a Registrant’s Adoption of from revenue from contracts with generally accepted accounting
FASB ASC Topic 606, Revenue From customers accounted for under ASC principles and summarized in one
Contracts With Customers Topic 606 or as a credit in the costs and location the existing guidance on
expenses section. revenue recognition to make that
Topic 13 is no longer applicable upon
a registrant’s adoption of ASC Topic * * * * * guidance more accessible to registrants
[FR Doc. 2017–17912 Filed 8–28–17; 8:45 am] and their auditors.
606. Topic 13 provides the staff’s views
regarding the general revenue BILLING CODE 8011–01–P
II. The Application of Generally
recognition guidance codified in ASC Accepted Accounting Principles for
Topic 605. ASC Topic 606 provides a Revenue Recognition Related to Bill-
single set of revenue recognition SECURITIES AND EXCHANGE
COMMISSION and-Hold Arrangements
principles governing all contracts with
customers and supersedes the revenue The Commission historically has
17 CFR Parts 231, 241, and 271 recognized pronouncements of the
recognition framework in ASC Topic
605, which eliminates the need for [Release Nos. 33–10402; 34–81428; IC– Financial Accounting Standards Board
Topic 13. Prior to adoption of ASC 32784] (‘‘FASB’’) as authoritative in the absence
Topic 606, registrants should continue of any contrary determination by the
Commission Guidance Regarding Commission.2 In Financial Reporting
to refer to prior Commission and staff
Revenue Recognition for Bill-and-Hold Release No. 70,3 the Commission stated
guidance on revenue recognition topics.
Arrangements its determination that the FASB and its
* * * * *
AGENCY: Securities and Exchange parent organization, the Financial
Topic 8: Retail Companies Commission. Accounting Foundation, satisfied the
* * * * * ACTION: Interpretation.
criteria in Section 19(b) of the Securities
Act of 1933 4 and, accordingly, FASB’s
C. Impact of a Registrant’s Adoption of SUMMARY: The Commission is financial accounting and reporting
FASB ASC Topic 606, Revenue From publishing this interpretive release in standards are recognized as ‘‘generally
Contracts With Customers order to bring existing guidance into accepted’’ for purposes of the federal
Topic 8 is no longer applicable upon conformity with Financial Accounting
a registrant’s adoption of ASC Topic Standards Board Accounting Standards 1 See In the Matter of Stewart Parness, AAER 108

606. Topic 8 provides the staff’s views Codification Topic 606, Revenue from (Aug. 5, 1986).
2 Rule 4–01(a)(1) of Regulation S–X, 17 CFR
regarding (i) the prohibition of Contracts with Customers. Upon
sradovich on DSK3GMQ082PROD with RULES3

210.4–01(a)(1). See Accounting Series Release
presenting sales of a leased or licensed adoption of Accounting Standards (‘‘ASR’’) No. 150 (Dec. 20, 1973) and ASR No. 4
department within a retailer’s statement Codification Topic 606, registrants (Apr. 25, 1938).
of comprehensive income consistent should no longer rely on the guidance 3 Policy Statement: Reaffirming the Status of the

with the principles codified within ASC in Securities Exchange Act Release No. FASB as a Designated Private-Sector Standard
Setter, Release Nos. 33–8221; 34–47743; IC–26028;
Subtopic 605–45 and (ii) the disclosure 23507 and Accounting and Auditing FR–70 (Apr. 25, 2003) (‘‘FR–70’’); 68 FR 23333 (May
of finance charges imposed by retailers Enforcement Release No. 108, In the 1, 2003).
on credit sales. ASC Topic 606 provides Matter of Stewart Parness, which set 4 15 U.S.C. 77s(b).

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Document Created: 2017-08-29 01:58:13
Document Modified: 2017-08-29 01:58:13

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Rules and Regulations
Action		Publication of Staff Accounting Bulletin.
Dates		Effective: August 29, 2017.
Contact		Ruth Uejio, Professional Accounting Fellow or Sylvia Alicea, Professional Accounting Fellow, Office of the Chief Accountant at (202) 551-5300 or Nili Shah, Deputy Chief Accountant, Division of Corporation Finance at (202) 551-3400, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549.
FR Citation		82 FR 41146
CFR Associated		Accounting; Reporting and Recordkeeping Requirements and Securities