Revenue from contracts with customers
|12 Months Ended|
Dec. 31, 2018
|Revenue from Contract with Customer [Abstract]|
|Revenue from Contract with Customer||
Note 12 – Revenue from contracts with customers
On January 1, 2018, the Company adopted Accounting Standards Codification Topic 606 – “Revenue from Contracts with Customers” (“ASC 606”), using the modified retrospective method. Results for the year ended December 31, 2018 are presented under the new revenue recognition standard, while the prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for the prior periods.
The Company recorded a net increase to opening accumulated deficit of approximately $17.0 thousand as of January 1, 2018 due to the cumulative impact of adopting ASC 606, with the impact primarily related to the licensing of our restaurants and the amortization of fees associated with license agreements. The changes were as follows (in thousands):
Under ASC 606, the Company has determined that the services it provides under its licensing agreements are primarily the rights to access and derive benefit from our symbolic intellectual property. As a result, the initial license fees and upfront fees are recognized on a straight-line basis over the term of the license agreement. Under previous guidance, initial license fees were recognized when the related services had been provided, which was generally upon the opening of the restaurant, and upfront fees were recognized on a pro-rata basis as restaurants under the development agreement were opened. These fees will continue to be recorded as a component of management, license and incentive fee revenue on the consolidated statement of operations and comprehensive income (loss). ASC 606 requires sales-based royalties to continue to be recognized as licensee restaurant sales occur.
The impact of adopting ASC 606 as compared to the previous recognition guidance on the Company’s consolidated statement of operations and comprehensive income (loss) was as follows (in thousands):
The following table provides information about receivables and contract liabilities (deferred license revenue) from contracts with customers (in thousands):
Significant changes in deferred license revenue for the year ended December 31, 2018 are as follows (in thousands):
As of December 31, 2018, the estimated deferred license revenue to be recognized in the future related to performance obligations that are unsatisfied as of December 31, 2018 were as follows for each year ending (in thousands):
Significant changes in deferred gift certificate revenue for the year ended December 31, 2018 are as follows (in thousands):
The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef