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April 24, 2019

Revenue Recognition Analysis Supports Construction Company's Implementation

Client Profile

Industry: Construction
Annual Revenue: >$1 billion
Geographic Footprint: National
Ownership Structure: Wholly Owned Subsidiary of a Public Company

Machinery moving dirtIssue

A construction company received a request from its parent company to evaluate the impact
of adopting the new revenue recognition standard. The parent company needed the analysis
in advance of its 2017 10-K filing to ensure it included adequate disclosures and to meet the
requirements of its Big Four auditor.

Solution

Working with the construction company, we identified some of the more complex, long-term
arrangements for analysis. We applied the new revenue recognition model to those contracts,
which required extensive evaluation of variable consideration, warranties, performance
obligations, and other provisions with specific guidance under the standard.
We also created tools to assist with the evaluation of the remaining contracts. Our team
supplied models for applying the revenue recognition standard to the different types of
contracts the construction company had and assisted with the creation of an accounting
policy whitepaper to substantiate the company’s conclusions about the application of the
new standard.

Outcome

The construction company used our analysis to present a supportable, and timely picture of
the impact revenue recognition would have on its operation. Its adoption effort satisfied the
parent company’s auditors and provided valuable insight into how the new standard would
affect consolidated reporting.

2019 Business Tax Planning Supplement


Copyright © 2019, CBIZ, Inc. All rights reserved. Contents of this publication may not be reproduced without the express written consent of CBIZ. This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional advice. The reader is advised to contact a tax professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

CBIZ MHM is the brand name for CBIZ MHM, LLC, a national professional services company providing tax, financial advisory and consulting services to individuals, tax-exempt organizations and a wide range of publicly-traded and privately-held companies. CBIZ MHM, LLC is a fully owned subsidiary of CBIZ, Inc. (NYSE: CBZ).

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