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Significant Accounting Policies (Policies) | 6 Months Ended
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Jun. 30, 2018
Accounting Policies [Abstract] |
New Accounting Pronouncements | Adopted In The Current Reporting Period Effective January 1, 2018, the Company adopted FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). ASC 606 was applied using the modified retrospective method, with the cumulative effect of the initial adoption being recognized as an adjustment to opening retained earnings at January 1, 2018. As a result, comparative prior periods have not been adjusted and continue to be reported under FASB ASC Topic 605, Revenue Recognition (“ASC 605”). The following represents changes to the Company’s policies resulting from the adoption of ASC 606:
i. | Under the guidance in effect through December 31, 2017, performance incentives were recognized in revenue when specific quantitative goals were achieved, or when the Company’s performance against qualitative goals was determined by the client. Under ASC 606, the Company now estimates the amount of the incentive that will be earned at the inception of the contract and recognizes such incentive over the term of the contract. This results in an acceleration of revenue recognition for certain contract incentives compared to ASC 605.
ii. | Under the guidance in effect through December 31, 2017, non-refundable retainer fees were generally recognized on a straight-line basis over the term of the specific customer arrangement. Under ASC 606, an input method is typically used to measure progress and recognize revenue for these types of arrangements. This resulted in both the deferral and acceleration of revenue recognition in certain instances.
iii. | In certain client arrangements, the Company records revenue as a principal and includes within revenue certain third-party-pass-through and out-of-pocket costs, which are billed to clients in connection with the services provided. In other arrangements, the Company acts as an agent and records revenue equal to the net amount retained. The adoption of ASC 606 resulted in certain arrangements previously being accounted for as principal, now being accounted for as agent.
As a result of these changes, the Company recorded a cumulative effect adjustment to increase opening accumulated deficit at January 1, 2018 by $1,170. The following table summarizes the impact of adoption of ASC 606 on the unaudited condensed consolidated statement of operations during the three and six months ended June 30, 2018:
|  | Three Months Ended June 30, 2018
|  | As Reported |  | Adjustments |  | Adjusted to Exclude Adoption of ASC 606
Revenue - Services |  | $ | 379,743 |  |  | $ | 9,728 |  |  | $ | 389,471 |
Costs of services sold |  | $ | 253,390 |  |  | $ | 18,764 |  |  | $ | 272,154 |
Operating profit (loss) |  | $ | 30,772 |  |  | $ | (9,036 | ) |  | $ | 21,736 |
Net income (loss) attributable to MDC Partners, Inc. common shareholders |  | $ | 1,133 |  |  | $ | (5,616 | ) |  | $ | (4,483 | )
Income (loss) per common share - basic and diluted |  | $ | 0.02 |  |  | $ | (0.10 | ) |  | $ | (0.08 | )
|  | Six Months Ended June 30, 2018
|  | As Reported |  | Adjustments |  | Adjusted to Exclude Adoption of ASC 606
Revenue - Services |  | $ | 706,711 |  |  | $ | 31,004 |  |  | $ | 737,715 |
Costs of services sold |  | $ | 496,420 |  |  | $ | 33,961 |  |  | $ | 530,381 |
Operating profit (loss) |  | $ | 16,139 |  |  | $ | (2,957 | ) |  | $ | 13,182 |
Net loss attributable to MDC Partners, Inc. common shareholders |  | $ | (30,105 | ) |  | $ | (1,385 | ) |  | $ | (31,490 | )
Loss per common share - basic and diluted |  | $ | (0.53 | ) |  | $ | (0.02 | ) |  | $ | (0.55 | )
The impact on the balance sheets and shareholders’ deficit as of and for the six months ended June 30, 2018 was immaterial. There was no effect on other comprehensive income (loss) and the statement of cash flows for the three and six months ended June 30, 2018 and 2017. In May 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-09, Compensation - Stock Compensation: Scope of Modification Accounting, which provides guidance concerning which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in ASC 718. This guidance is effective for annual and interim periods beginning after December 15, 2017. Amendments in this ASU are applied prospectively to any award modified on or after the adoption date. The Company adopted this guidance on January 1, 2018. The impact on the Company’s consolidated statement of financial position and results of operations was not material. In March 2017, the FASB issued ASU 2017-07, Compensation - Retirement Benefits, which requires the presentation of the service cost component of the net periodic pension and postretirement benefits costs in the same line item in the statement of operations as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of the net periodic pension and postretirement benefits costs are required to be presented as non-operating expenses in the statement of operations. This guidance is effective for annual periods beginning after December 15, 2017. The Company adopted this guidance on January 1, 2018. The impact on the Company’s consolidated statement of financial position and results of operations was not material. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows. This new guidance is intended to reduce diversity in practice regarding the classification of certain transactions in the statement of cash flows. This guidance is effective January 1, 2018 and requires a retrospective transition method. Prior to the Company’s adoption on January 1, 2018, all cash outflows for contingent consideration were classified as a financing activity. Effective January 1, 2018, the Company is now required to classify any cash payments made soon after the acquisition date of a business to settle a contingent consideration liability as cash outflows for investing activities. Cash payments which are not made soon after the acquisition date of a business to settle a contingent consideration liability are separated and classified as cash outflows for financing activities up to the amount of the contingent consideration liability recognized at the acquisition date and as cash outflows from operating activities for any excess. As a result, $24,459 of an acquisition-related contingent consideration payment of $65,121, which was in excess of the liability initially recognized at the acquisition date, has been classified as a cash outflow within net cash provided by operating activities in the accompanying consolidated statement of cash flows for the six months ended June 30, 2017. There was no impact on the Company’s consolidated statement of financial position and results of operations. In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Liabilities, which will require equity investments, except equity method investments, to be measured at fair value and any changes in fair value will be recognized in results of operations. This guidance is effective for annual and interim periods beginning after December 15, 2017. Additionally, this guidance provides for the recognition of the cumulative effect of retrospective application of the new standard in the period of initial application. The Company adopted this guidance on January 1, 2018. The impact on the Company’s consolidated statement of financial position and results of operations was not material. Standards to be Adopted in Future Reporting Periods In January 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income (“GILTI”) provisions of the Tax Cuts and Jobs Act (the “Act”). The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The guidance indicates that either accounting for deferred taxes related to GILTI inclusions or treating any taxes on GILTI inclusions as period cost are both acceptable methods subject to an accounting policy election. The Company continues to assess the impact of GILTI provisions on its financial statements and whether it will be subject to U.S. GILTI inclusion in future years. As such, the Company has not made a policy election on whether to record tax effects of GILTI when paid as a period expense or to record deferred tax assets and liabilities on basis differences that are expected to affect the amount of GILTI inclusion. In February 2016, the FASB issued ASU 2016-02, Leases. The new guidance will require lessees to recognize a right-to-use asset and lease liability for most of its leases with a term of more than twelve months, including those classified as operating leases. The new guidance also requires additional quantitative and qualitative disclosures. This guidance, which will be effective for annual periods beginning after December 15, 2018, requires modified retrospective application, with early adoption permitted. The Company’s assessment of the new guidance is ongoing. Therefore, the Company is not yet in a position to assess the full impact of the application of the new guidance. However, the Company expects that the recognition of a right-to-use asset and lease liability for operating leases will have a significant impact on its balance sheet.

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