Power & Utilities Spotlight — Effects of the new revenue standard: Observations from a review of first-quarter 2018 public filings by power and utilities companies

Published on: 13 Jul 2018

Download PDF

The Bottom Line

  • For most filers that we reviewed in the power and utilities (P&U) industry, the new and comprehensive disclosure requirements were the most significant change that resulted from the adoption of ASC 606.1
  • We observed diversity in the type and amount of information entities disclosed.
  • Most of the filers reviewed chose to add a separate and specific revenue footnote that contains the required disclosures.
  • When providing disaggregated revenue disclosures, most filers reviewed used three or fewer categories. The most commonly selected categories were (1) product line (electric, gas, etc.) and (2) type of customer (residential, commercial, industrial, etc.).
  • The most common practical expedient chosen by P&U adopters was the invoicing practical expedient.
  • Many filers separately disclosed alternative revenue programs and their associated policies.
  • To the extent that the accounting standard setters clarify guidance and regulators issue more comments, we expect entities to continue to refine the information they disclose.

Beyond the Bottom Line

This Power and Utilities Spotlight provides insight into our review of the disclosures in the public filings of a group of companies that adopted the FASB’s new revenue standard (ASC 606) in the first quarter of 2018.2 For a comprehensive discussion of the new standard, see Deloitte’s A Roadmap to Applying the New Revenue Recognition Standard.


As a result of the recognition and measurement guidance in ASC 606, some P&U companies have made changes to their financial statements. For many, the effect of the new requirements has not been significant. However, all P&U entities have needed to carefully consider the standard’s new and modified quantitative and qualitative disclosure guidance, which has significantly increased the amount of information that companies must disclose about revenue activities and related transactions.

As P&U entities adopting the standard in 2018 continue to refine their disclosures, they may benefit from evaluating the disclosure trends we have observed through our review.

Interim Versus Annual Reporting Considerations

The new revenue standard requires entities to disclose information on both an interim and annual basis. The disclosures discussed in this Spotlight are all related to interim financial statements.

Even though the new revenue standard specifies that certain disclosures are not required in interim financial statements, SEC registrants must provide both annual and interim disclosures in the first interim period after adopting any new accounting standard and in each subsequent quarter in the year of adoption.3 Specifically, Section 1500 of the SEC Financial Reporting Manual states:

Article 10 requires disclosures about material matters that were not disclosed in the most recent annual financial statements. Accordingly, when a registrant adopts a new accounting standard in an interim period, the registrant is expected to provide both the annual and the interim period financial statement disclosures prescribed by the new accounting standard, to the extent not duplicative. These disclosures should be included in each quarterly report in the year of adoption.

Thus, SEC registrants must comply with the new revenue standard’s annual and interim disclosure requirements in each quarter of their first year of adoption to the extent that the information they provide is material and not already disclosed elsewhere in the financial statements.

Description of Population

The discussion in this Spotlight is based primarily on the quarterly Form 10-Q filings of 23 P&U companies that adopted the new revenue standard in the first quarter of 2018. Of the sample, three entities had only nonregulated operations.

The discussion below summarizes several key categories of disclosures required under the new revenue standard and identifies trends related to the P&U entities that were analyzed.

View the rest of the Industry Spotlight.


1 FASB Accounting Standards Codification Topic 606, Revenue From Contracts With Customers.

2 Public business entities reporting under U.S. GAAP are required to adopt the new revenue standard for annual reporting periods (including interim reporting periods within those annual periods) beginning after December 15, 2017. Early adoption is permitted as of reporting periods (including interim periods) beginning after December 15, 2016. For nonpublic entities, the new revenue standard is effective for annual periods beginning after December 15, 2018, and early adoption is also permitted. For additional discussion of companies’ disclosures about implementation of the new standard, see Deloitte’s November 21, 2017, Heads Up.

3 In the second year after adoption, entities may exclude annual disclosures from their interim financial statements.


Related Topics

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.