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New Accounting Pronouncements
 12 Months Ended
Sep. 30, 2020
Accounting Changes And Error Corrections [Abstract]  
New Accounting Pronouncements

3.  NEW ACCOUNTING PRONOUNCEMENTS:

Revenue Recognition

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”), a converged standard on revenue recognition.  The new pronouncement requires revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.  The guidance also specifies the accounting for some costs to obtain or fulfill a contract with a customer, as well as enhanced disclosure requirements. The FASB also subsequently issued several amendments to the standard, including clarification on principal versus agent guidance, identifying performance obligations, and immaterial goods and services in a contract.

The new accounting standard update must be applied using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a modified retrospective approach with the cumulative effect of initially adopting the standard recognized at the date of adoption (which requires additional footnote disclosures).

The new accounting standard is effective for reporting periods beginning after December 15, 2017. We adopted the accounting standard effective October 1, 2018, using the modified retrospective approach applied only to contracts not completed as of the date of adoption, with no restatement of comparative periods. Therefore, the comparative information has not been adjusted and continues to be reported under ASC Topic 605. We recognized a net after-tax cumulative effect adjustment to retained earnings of $399,000 as of the date of adoption. The details and quantitative impacts of the significant changes are described below.

We previously recognized revenue for parts and service operations (boat maintenance and repairs) when the services were completed and recorded amounts due to us as receivables. Under ASC Topic 606, performance obligations associated with parts and service operations are satisfied over time, which results in the acceleration of revenue recognition, and amounts due to us are reflected as a contract asset until the right to such consideration becomes unconditional, at which time amounts due to us are reclassified to receivables.

 

 

Consolidated Balance Sheet Line Items

 

 

 

Impact of changes in accounting policies

 

 

 

 

 

 

 

Balances without

 

 

Impact of

 

 

 

 

 

 

 

adoption of ASC

 

 

adoption

 

September 30, 2019

 

As Reported

 

 

Topic 606

 

 

Higher/(Lower)

 

Inventories, net

 

$

477,468

 

 

$

477,405

 

 

$

63

 

Prepaid expenses and other current assets

 

 

10,206

 

 

 

7,681

 

 

 

2,525

 

     Accounts payable

 

 

33,674

 

 

 

33,708

 

 

 

(34

)

     Accrued expenses

 

 

42,849

 

 

 

40,669

 

 

 

2,180

 

     Deferred tax liabilities

 

 

1,142

 

 

 

1,005

 

 

 

137

 

     Retained earnings

 

$

202,455

 

 

$

202,150

 

 

$

305

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statements of Operations Line Items

 

 

 

Impact of changes in accounting policies

 

 

 

 

 

 

 

Balances without

 

 

Impact of

 

 

 

 

 

 

 

adoption of ASC

 

 

adoption

 

Fiscal Year Ended September 30, 2019

 

As Reported

 

 

Topic 606

 

 

Higher/(Lower)

 

Revenue

 

$

1,237,153

 

 

$

1,237,899

 

 

$

(746

)

Cost of sales

 

 

914,321

 

 

 

914,939

 

 

 

(618

)

Income from operations

 

 

60,532

 

 

 

60,660

 

 

 

(128

)

     Income before income tax provision

 

 

48,953

 

 

 

49,081

 

 

 

(128

)

Income tax provision

 

 

12,968

 

 

 

13,002

 

 

 

(34

)

Net Income

 

$

35,985

 

 

$

36,079

 

 

$

(94

)

 

Consolidated Statements of Cash flows

 

 

 

Impact of changes in accounting policies

 

 

 

 

 

 

 

Balances without

 

 

Impact of

 

 

 

 

 

 

 

adoption of ASC

 

 

adoption

 

Fiscal Year Ended September 30, 2019

 

As Reported

 

 

Topic 606

 

 

Higher/(Lower)

 

Net income

 

$

35,985

 

 

$

36,079

 

 

$

(94

)

(Increase) decrease in —

 

 

 

 

 

 

 

 

 

 

 

 

Inventories, net

 

 

(84,330

)

 

 

(83,712

)

 

 

(618

)

Prepaid expenses and other assets

 

 

(3,182

)

 

 

(1,748

)

 

 

(1,434

)

Increase (decrease) in —

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

 

8,701

 

 

 

8,735

 

 

 

(34

)

Accrued expenses and other long-term liabilities

 

$

4,731

 

 

$

2,551

 

 

$

2,180

 

 

Accounting for Leases

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”).  This update requires organizations to recognize lease assets and lease liabilities on the balance sheet and also disclose key information about leasing arrangements. ASU 2016-02 was effective for annual reporting periods beginning on or after December 15, 2018, and interim periods within those annual periods. Earlier application was permitted for all entities as of the beginning of an interim or annual period. Subsequent amendments to the standard provide an additional and optional transition method that allows entities to initially apply the new standard at the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. An entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new leases standard will continue to be in accordance with current GAAP (ASC Topic 840) if the optional transition method is elected.

 

We adopted ASU 2016-02 effective October 1, 2019 the first day of fiscal 2020. We elected the package of practical expedients available under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification of our existing leases. Consequently, on adoption, we recognized additional operating lease liabilities of $44.0 million and right-of-use (“ROU”) assets of $42.1 million. The new standard also provides practical expedients for an entity’s ongoing accounting. We elected the short-term lease recognition exemption for all leases that qualify. As a result, for those leases that qualify, we will not recognize ROU assets or lease liabilities, and we did not recognize ROU assets or lease liabilities for existing short-term leases of those assets in transition. We also elected the practical expedient to not separate lease and non-lease components. We recognized a net after-tax cumulative effect adjustment to retained earnings of $0.6 million as of the date of adoption. See Note 7 for additional information on our leases.

 

Other New Pronouncements

 

In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which aligns the accounting for implementation costs incurred in a cloud computing arrangement that is a service contract with the guidance on capitalizing costs associated with developing or obtaining internal-use software. The guidance amends Accounting Standards Codification (ASC) 350 to include in its scope implementation costs of a cloud computing arrangement that is a service contract and clarifies that a customer should apply ASC 350 to determine which implementation costs should be capitalized in such a cloud computing arrangement. This guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2019. We are currently evaluating the impact that this standard will have on our consolidated financial statements.

 

In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses. ASU 2016-13 requires entities to report “expected” credit losses on financial instruments and other commitments to extend credit rather than the current “incurred loss” model. These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU will also require enhanced disclosures relating to significant estimates and judgments used in estimating credit losses, as well as the credit quality. This guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2019. We are currently evaluating the impact that this standard will have on our consolidated financial statements.