XML 21 R8.htm IDEA: XBRL DOCUMENT v3.10.0.1
Note 2 - Summary of Significant Accounting Policies
 9 Months Ended
Sep. 30, 2018
Notes to Financial Statements  
Significant Accounting Policies [Text Block]
NOTE
2.
        
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Consolidation Policy
 
The financial statements of Boston Omaha Corporation include the accounts of the Company and its wholly-owned and majority-owned subsidiaries, as follows:
 
Link Media Holdings, LLC which we refer to as “LMH”
Link Media Alabama, LLC which we refer to as “LMA”
Link Media Florida, LLC which we refer to as “LMF”
Link Media Wisconsin, LLC which we refer to as “LMW”
Link Media Georgia, LLC which we refer to as “LMG”
Link Media Midwest, LLC which we refer to as “LMM”
Link Media Omaha, LLC which we refer to as “LMO”
Link Media Southeast, LLC which we refer to as “LMSE”
Link Media Services, LLC which we refer to as “LMS”
Tammy Lynn Outdoor, LLC which we refer to as “Tammy Lynn”
General Indemnity Group, LLC which we refer to as “GIG”
General Indemnity Insurance Company PCC, LLC which we refer to as “GIIC”
The Warnock Agency, Inc. which we refer to as “Warnock”
United Casualty and Surety Insurance Company which we refer to as “UCS”
Surety Support Services, Inc. which we refer to as “SSS”
South Coast Surety Insurance Services, LLC which we refer to as “SCS”
Boston Omaha Investments, LLC which we refer to as “BOIC”
Boston Omaha Asset Management, LLC which we refer to as “BOAM”
 
All significant intercompany profits, losses, transactions and balances have been eliminated in consolidation.
 
Revenues
 
On
January 1, 2018,
we adopted Financial Accounting Standards Board, which we refer to as “FASB,” Accounting Standards Update, which we refer to as “ASU,”
No.
2014
-
09
(Codified as Accounting Standards Codification, which we refer to “ASC,”
606
),
Revenue from Contracts with Customers
using the cumulative effect transition method applied to those contracts which were
not
completed as of
January 1, 2018
and are
not
accounted for under ASC
840
Leases.
Results for the reporting periods beginning after
January 1, 2018
are presented under ASC
606
or
840,
while comparative information has
not
been adjusted and continues to be reported under ASC
605.
 
A majority of our billboard contracts are accounted for under ASC
840
and will continue to be accounted for under the topic until
January 1, 2019,
our adoption date of FASB ASU
No.
2016
-
02
(Codified as ASC
842
),
Leases
. Contracts which begin prior to
January 1, 2019
and are accounted for under ASC
840
will continue to be accounted for as a lease until the contract ends or is modified. Contracts beginning or modified on or after
January 1, 2019
which do
not
meet the criteria of a lease under ASC
842
will be accounted for under ASC
606
Revenue
. The majority of our advertising space contracts will
not
meet the definition of a lease under ASC
842.
 
Premium revenues derived from our insurance operations are
not
subject to this guidance.
 
Revenue Recognition
 
Billboard Rentals
 
We generate revenue from outdoor advertising through the leasing of advertising space on billboards. The terms of the operating leases generally range from less than
one
month to
three
years and are generally billed monthly. Revenue for advertising space rental is recognized on a straight-line basis over the term of the contract. Advertising revenue is reported net of agency commissions. Agency commissions are calculated based on a stated percentage applied to gross billing revenue for operations. Payments received in advance of being earned are recorded as deferred revenue. Another component of billboard rentals consists of production services which include creating and printing advertising copy. Contract revenues for production services are recognized upon satisfaction of the contract, which is typically less than
one
week.
 
Deferred Revenues
 
We record deferred revenues when cash payments are received in advance of our performance obligation. The term between invoicing and when a payment is due is
not
significant. For certain services we require payment before the product or services are delivered to the customer. The balance of deferred income is considered short-term and will be recognized in revenue within
twelve
months.
 
Premiums and Unearned Premium Reserves
 
Premiums written are recognized as revenues based on a pro-rata daily calculation over the respective terms of the policies in-force. The cost of reinsurance ceded is initially written as prepaid reinsurance premiums and is amortized over the reinsurance contract period in proportion to the amount of insurance protection provided. Premiums ceded are netted against premiums written.
 
Commissions
 
We generate revenue from commissions on surety bond sales. The insurance commissions are calculated based upon a stated percentage applied to the gross premiums on bonds. Commissions are earned as of the policy effective date and are nonrefundable.
 
Practical Expedients and Exemptions
 
Upon our transition to ASC
606
from ASC
840,
we utilized the following practical expedients and exemptions from ASC
606.
We generally expense sales commissions when incurred because the amortization period is
one
year or less. These costs are recorded within cost of billboard revenues (exclusive of depreciation and amortization). We do
not
disclose the value of unsatisfied performance obligations as the majority of our contracts with customers have an original expected length of less than
one
year. For contracts with customers which exceed
one
year the future amount to be invoiced to the customer corresponds directly with the value to be received by the customer.
 
Recent Accounting Pronouncements
 
In
May 2014,
the FASB issued ASU
No.
2014
-
09
(Codified as ASC
606
),
Revenue from Contracts with Customers
, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In
August 2015,
the FASB issued ASU
No.
2015
-
14
deferring the effective date from
January 1, 2017
to
January 1, 2018,
while allowing for early adoption as of
January 1, 2017.
The standard permits the use of either the retrospective or cumulative effect transition method. We adopted the provisions of ASU
No.
2014
-
09
on
January 1, 2018
using the cumulative effect transition method. We did
not
have an adjustment to our opening balance of accumulated deficit for the adoption of this update.
 
In
February 2016,
the FASB issued ASU
No.
2016
-
01,
Recognition and Measurement of Financial Assets and Financial Liabilities
, which requires entities to carry all investments in equity securities at fair value and recognize any changes in fair value in net income. Under the standard, equity investments that do
not
have readily determinable fair values and do
not
qualify for the net asset value practical expedient are eligible for the measurement alternative. We adopted the provisions of ASU
No.
2016
-
01
on
January 1, 2018,
for our equity investments in private companies
not
accounted for under the equity method, using the measurement alternative, defined as cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer.
 
In
November 2016,
the FASB issued ASU
No.
2016
-
18,
Statement of Cash Flows (Topic
230
)
,
Restricted Cash.
The guidance requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The standard is effective for public business entities for fiscal years beginning after
December 15, 2017,
and interim periods within those fiscal years. We adopted ASU
No.
2016
-
18
on
January 1, 2018.
In accordance with the guidance of ASU
No.
2016
-
18,
changes in restricted cash have been included with cash and cash equivalents in the consolidated statements of cash flows. We retrospectively adopted the standard.
 
The adoption increases the ending cash balance within our consolidated statements of cash flows by the aggregate amount of our restricted cash balances and requires a new disclosure to reconcile the cash balances within our consolidated statements of cash flows to the consolidated balance sheets. 
 
On
January 1, 2018,
we adopted ASU
No.
2016
-
15
, Statement of Cash Flows (Topic
230
), Classification of Certain Cash Receipts and Payments
. The ASU is required to be reflected on a retrospective basis and provides guidance on the classification of certain cash receipts and cash payments, including distributions received from an equity method investee. We adopted the cumulative earnings approach, whereby distributions received are considered to be returns on investment and, thus, should be classified as cash inflows from operating activities on our consolidated statement of cash flows. The adoption of ASU
No.
2016
-
15
did
not
have a material impact on our consolidated financial statements.
 
In
February 2016,
the FASB issued ASU
No.
2016
-
02,
Leases (Topic
842
),
specifying the accounting for leases, which supersedes the leases requirements in Topic
840,
Leases.
The objective of Topic
842
is to establish the principles that lessee and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. Lessees are permitted to make an accounting policy election to
not
recognize the asset and liability for leases with a term of
twelve
months or less. Lessors’ accounting is largely unchanged from the previous accounting standard. In addition, Topic
842
expands the disclosure requirements of lease arrangements. Lessees and lessors will use a modified retrospective transition approach, which includes a number of practical expedients. This guidance is effective for fiscal years and interim periods within those fiscal years, beginning after
December 15, 2018
with early adoption permitted.
 
In
January 2018,
the FASB issued ASU
No.
2018
-
01,
Leases (Topic
842
)
,
Land Easement Practical Expedient for Transition to Topic
842.
The update provides an optional transition practical expedient to
not
evaluate under Topic
842
existing or expired land easements that were
not
previously accounted for as leases under the current lease guidance in Topic
840.
An entity that elects this practical expedient should evaluate new or modified land easements under Topic
842
upon adoption. An entity that does
not
elect this practical expedient should evaluate all existing or expired land easements in connection with the adoption of the new lease requirements in Topic
842
to assess whether they meet the definition of a lease. We plan to elect the provided practical expedient within this update upon our adoption of Topic
842.
 
In
July 2018,
the FASB issued ASU
No.
2018
-
10
Leases
(Topic
842
), Codification Improvements
and ASU
No.
2018
-
11
Leases
(Topic
842
), Targeted Improvements,
to provide additional guidance for the adoption of Topic
842.
ASU
No.
2018
-
10
clarifies certain provisions and corrects unintended applications of the guidance such as the application of implicit rate, lessee reassessment of lease classification, and certain transition adjustments that should be recognized to earnings rather than to stockholders’ equity. ASU
No.
2018
-
11
provides an alternative transition method which allows recognition of a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than in the earliest period presented, and a practical expedient for separating contract components for the adoption of Topic
842.
ASU
No.
2018
-
10
and ASU
No.
2018
-
11
(collectively, “the new lease standards”) are effective for fiscal years beginning after
December 15, 2018,
with early adoption permitted. We are currently assessing the effect the new lease standards will have on our consolidated financial statements.