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Revenues from Contracts with Customers
 9 Months Ended
Sep. 30, 2021
Revenue from Contract with Customer [Abstract]  
Revenues from Contracts with Customers

14) Revenues from Contracts with Customers

 

The Company reports revenues from contracts with customers pursuant to ASC No. 606, Revenue from Contracts with Customers.

 

Information about Performance Obligations and Contract Balances

 

The Company’s cemetery and mortuary segment sells a variety of goods and services to customers in both at-need and pre-need situations. Due to the timing of the fulfillment of the obligation, revenue is deferred until that obligation is fulfilled.

 

The Company’s three types of future obligations are as follows:

 

Pre-need Merchandise and Service Revenue: All pre-need merchandise and service revenue is deferred and the funds are placed in trust until the need arises, the merchandise is received or the service is performed. The trust is then relieved, and the revenue and commissions are recognized.

 

At-need Specialty Merchandise Revenue: At-need specialty merchandise revenue consists of customizable merchandise ordered from a manufacturer such as markers and bases. When specialty merchandise is ordered, it can take time to manufacture and deliver the product. Revenue is deferred until the at-need merchandise is delivered to the Company.

 

Deferred Pre-need Land Revenue: Deferred pre-need revenue and corresponding commissions are deferred until 10% of the funds are received from the customer through regular monthly payments. Deferred pre-need land revenue is not placed in trust.

 

Complete payment of the contract does not constitute fulfillment of the performance obligation. Goods or services are deferred until such time the service is performed or merchandise is received. Pre-need contracts are required to be paid in full prior to a customer using a good or service from a pre-need contract. Goods and services from pre-need contracts can be transferred when paid in full from one owner to another. In such cases, the Company will act as an agent in transferring the requested goods and services. A transfer of goods and services does not fulfill an obligation and revenue remains deferred.

 

 

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 2021 (Unaudited)

 

14) Revenues from Contracts with Customers (Continued)

 

The opening and closing balances of the Company’s receivables, contract assets and contract liabilities are as follows:

 

 

   Contract Balances 
   Receivables (1)   Contract Asset   Contract Liability 
Opening (1/1/2021)  $4,119,988   $—   $13,080,179 
Closing (9/30/2021)   4,952,257    —    14,184,328 
Increase/(decrease)   832,269    —    1,104,149 

 

   Contract Balances 
   Receivables (1)   Contract Asset   Contract Liability 
Opening (1/1/2020)  $2,778,879   $—   $12,607,978 
Closing (12/31/2020)   4,119,988    —    13,080,179 
Increase/(decrease)   1,341,109    —    472,201 

 

(1) Included in Receivables, net on the condensed consolidated balance sheets

 

The amount of revenue recognized and included in the opening contract liability balance for the three months ended September 30, 2021 and 2020 was $1,143,745 and $ 1,427,418, respectively, and for the nine months ended September 30, 2021 and 2020 was $3,588,682 and $ 3,258,824, respectively

 

The difference between the opening and closing balances of the Company’s contract assets and contract liabilities primarily results from the timing difference between the Company’s performance and the customer’s payment.

 

Disaggregation of Revenue

 

The following table disaggregates revenue for the Company’s cemetery and mortuary contracts for the periods presented:

 

                 
   Three Months Ended
September 30		   Nine Months
Ended September 30		 
   2021   2020   2021   2020 
Major goods/service lines                    
At-need  $4,129,203   $4,272,816   $12,172,631   $10,915,712 
Pre-need   1,838,472    1,098,899    6,055,568    3,614,872 
Net mortuary and cemetery sales  $5,967,675   $5,371,715   $18,228,199   $14,530,584 
                     
Timing of Revenue Recognition                    
Goods transferred at a point in time  $4,132,050   $3,559,431   $12,882,878   $9,641,751 
Services transferred at a point in time   1,835,625    1,812,284    5,345,321    4,888,833 
Net mortuary and cemetery sales  $5,967,675   $5,371,715   $18,228,199   $14,530,584 

 

The following table reconciles revenues from cemetery and mortuary contracts to Note 7 – Business Segment Information for the Cemetery/Mortuary Segment for the periods presented:

 

                     
   Three Months Ended
September 30		   Nine Months Ended
September 30		 
   2021   2020   2021   2020 
Net mortuary and cemetery sales  $5,967,675   $5,371,715   $18,228,199   $14,530,584 
Gains (losses) on investments and other assets   (112,828)   (66,673)   913,058    (244,413)
Net investment income   826,008    168,478    1,296,899    444,971 
Other revenues   24,492    22,470    74,378    84,849 
Revenues from external customers   6,705,347    5,495,990    20,512,534    14,815,991