MoldMaking Technology

APR 2017

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44 MoldMaking Technology —— APRIL 2017 THE BOTTOM CONTRIBUTOR Quinn R. Martin, CPA, CMP, MBA, and Matthew J. Frazier, CPA, CCA, are both partners in the business services department, and Michael J. Devereux II, CPA, CMP, is a partner and director of manufacturing, distribution and plastics industry services at Mueller Prost. the mold builder is required to disclose any prior-period infor- mation that was adjusted. The alternative transition method requires a company to apply the new standard only to contracts not completed under legacy GAAP at the date of initial application and recognize the cumulative effect (the change) of adoption as an adjust- ment to the opening balance of retained earnings in the year of initial application. A company choosing to apply the alter- native transition method would not restate comparative years, but it would be required to provide additional disclosures in the initial year of adoption. That is, mold builders will be required to disclose the difference in revenue recognized using the old standard and the new standard. Getting Started These changes in revenue recognition may present challenges for mold-building companies, such as bundled goods and services (design services or warrants bundled with the sale of a mold), transaction price calculations for multiple tools or services, contract considerations (contract combinations and modifications), capitalization of costs to acquire customer contracts, financial statement disclosures and tax implications. To overcome these challenges, mold builders may need to implement new policies; adopt updated or new ERP, account- ing or general ledger systems; use new processes and controls; provide effective training and communication of new require- ments for both staff and external users (such as banks); and offer a structured means of implementing the new revenue recognition standard. Some effective first steps to evaluating the implications of this new standard may include: • Evaluating significant revenue streams and key contracts to identify the specific revenue recognition changes required and the specific business units where these changes may have the greatest impact. • Addressing the longer lead time areas where new or revised allocation processes may be required. • Establishing a detailed project plan and roadmap to manage the effort across multiple business units. A cross-functional team with expertise in various disci- plines, such as accounting, information technology, legal, sales and manufacturing, is recommended to ease the process. The next step is to identify and analyze all a company's revenue streams, examining several sample contracts for each revenue stream to reveal potential problems and inconsisten- cies with the new standard. This step is extremely impor- tant and needs to happen very soon, because digging into the details of spe- cific contracts and purchase orders is the only way to assess the magnitude of the challenge. A quick overview assess- ment will be insufficient. Getting started now is the best way to mitigate the stress and headache of a last-minute fire drill, or even worse, the unthinkable outcome of not being able to issue compliant financial statements once the new standard goes into full effect. FOR MORE INFORMATION Mueller Prost 314-862-2070 mdevereux@muellerprost.com muellerprost.com

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