2. REVENUE

Adoption of ASC Topic 606

On January 1, 2018, the company adopted the amended guidance in ASC Topic 606, Revenue from Contracts with Customers, and all related amendments (“new revenue standard”) and applied it to all contracts using the modified retrospective transition method. There were no adjustments to the consolidated January 1, 2018 balance sheets for the adoption of the new revenue standard. As such, comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. In addition, there was no impact of adoption on the consolidated statements of operations or balance sheets for the six months ended June 30, 2018.

Revenue Recognition

Revenue is recognized when obligations under the terms of a contract with a customer are satisfied. Generally this occurs with the transfer of control of products or services. Revenue is measured as the amount of consideration expected to be received in exchange for transferring goods or providing services. Sales, value add, and other taxes the company collects concurrent with revenue-producing activities are excluded from revenue.

Revenue by Source

The following table disaggregates revenue by major source for the three and six months ended June 30, 2018 (in thousands):


	Three Months Ended June 30, 2018
	Ethanol Production		Agribusiness & Energy Services		Food & Ingredients		Partnership		Eliminations		Total
Revenues:
Revenues from contracts with customers under ASC Topic 606:
Ethanol	$	634	$	-	$	-	$	-	$	-	$	634
Distillers grains		62,657		-		-		-		-		62,657
Cattle and vinegar		-		-		222,059		-		-		222,059
Service revenues		-		-		-		1,229		-		1,229
Other		1,201		806		-		-		-		2,007
Intersegment revenues		875		-		38		-		(913)		-
Total revenues from contracts with customers		65,367		806		222,097		1,229		(913)		288,586
Revenues from contracts accounted for as derivatives under ASC Topic 815 (1):
Ethanol		451,083		106,117		-		-		-		557,200
Distillers grains		49,940		32,706		-		-		-		82,646
Corn oil		19,132		3,488		5,350		-		-		27,970
Grain		337		22,843		-		-		-		23,180
Cattle and vinegar		-		-		(1,522)		-		-		(1,522)
Other		4,272		4,114		-		-		-		8,386
Intersegment revenues		3,344		14,128		-		2,517		(19,989)		-
Total revenues from contracts accounted for as derivatives		528,108		183,396		3,828		2,517		(19,989)		697,860
Leasing revenues under ASC Topic 840 (2)		-		-		-		22,094		(21,703)		391
Total Revenues	$	593,475	$	184,202	$	225,925	$	25,840	$	(42,605)	$	986,837


	Six Months Ended June 30, 2018
	Ethanol Production		Agribusiness & Energy Services		Food & Ingredients		Partnership		Eliminations		Total
Revenues:
Revenues from contracts with customers under ASC 606:
Ethanol	$	3,100	$	-	$	-	$	-	$	-	$	3,100
Distillers grains		119,902		-		-		-		-		119,902
Cattle and vinegar		-		-		489,475		-		-		489,475
Service revenues		-		-		-		2,447		-		2,447
Other		1,332		1,483		-		-		-		2,815
Intersegment revenues		1,537		-		80		-		(1,617)		-
Total revenues from contracts with customers		125,871		1,483		489,555		2,447		(1,617)		617,739
Revenues from contracts accounted for as derivatives under ASC Topic 815 (1):
Ethanol		893,656		228,658		-		-		-		1,122,314
Distillers grains		90,401		53,918		-		-		-		144,319
Corn oil		35,602		12,158		7,637		-		-		55,397
Grain		470		37,129		-		-		-		37,599
Cattle and vinegar		-		-		6,884		-		-		6,884
Other		8,556		38,515		-		-		-		47,071
Intersegment revenues		4,635		25,557		-		4,689		(34,881)		-
Total revenues from contracts accounted for as derivatives		1,033,320		395,935		14,521		4,689		(34,881)		1,413,584
Leasing revenues under ASC 840 (2)		-		-		-		44,589		(43,788)		801
Total Revenues	$	1,159,191	$	397,418	$	504,076	$	51,725	$	(80,286)	$	2,032,124

(1)

Revenues from contracts accounted for as derivatives represent physically settled derivative sales that are outside the scope of ASC Topic 606, Revenue from Contracts with Customers (ASC Topic 606), where the company recognizes revenue when control of the inventory is transferred within the meaning of ASC Topic 606 as required by ASC Topic 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets.

(2)

Leasing revenues do not represent revenues recognized from contracts with customers under ASC Topic 606, and continue to be accounted for under ASC Topic 840, Leases.

Payment Terms

The company has standard payment terms, which vary depending upon the nature of the services provided, with the majority falling within 10 to 30 days after transfer of control or completion of services. In instances where the timing of revenue recognition differs from the timing of invoicing, the company has determined that contracts generally do not include a significant financing component.

Contract Liabilities

The company records unearned revenue when consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of service and lease agreements. Unearned revenue from service agreements, which represents a contract liability, is recorded for fees that have been charged to the customer prior to the completion of performance obligations, and is generally recognized in the subsequent quarter. The company expects to recognize all of the unearned revenue associated with service agreements as of June 30, 2018 in the subsequent quarter when the inventory is withdrawn from the partnership’s tank storage.

Practical Expedients

Under the new revenue standard, companies may elect various practical expedients upon adoption. As a result, the company elected to recognize the cost for shipping and handling activities that occur after the customer obtains control of the promised goods as fulfillment activities and not when performance obligations are met. The company also elected to exclude sales taxes from transaction prices.