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REVENUE RECOGNITION | 12 Months Ended
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Dec. 31, 2018
REVENUE RECOGNITION |
REVENUE RECOGNITION | 3. REVENUE RECOGNITION The Company adopted ASC 606 on January 1, 2018. The adoption of ASC 606 impacted the accounting for contract acquisition costs, multiyear retail wireless contracts with promotional discounts, and deferral of certain activation fees as further described below. As a result of the adoption, the company established contract asset and liability balances and began capitalizing and subsequently amortizing contract acquisition costs. Contract Assets and Liabilities The Company recognizes contract assets and liabilities on its balance sheet. Contract assets represent unbilled amounts typically resulting from retail wireless contracts with both a multiyear service period and a promotional discount. In these contracts the revenue recognized exceeds the amount billed to the customer. The current portion of the contract asset is recorded in prepayments and other current assets and the noncurrent portion is included in other assets on the Company’s balance sheet. Contract liabilities consist of advance payments and billings in excess of revenue recognized. Retail revenue for postpaid customers is generally billed one month in advance and recognized over the period that the corresponding service is rendered to customers. To the extent the service is not provided by the reporting date the amount is recognized as a contract liability. Prepaid service, including mobile voice and data services, sold to customers is recorded as deferred revenue prior to the commencement of services. Contract liabilities are recorded in advanced payments and deposits on its balance sheets. Contract assets and liabilities consisted of the following (amounts in thousands):
|  | December 31, 2018 |  | January 1, 2018 |  | $ Change |  | % Change
Contract asset – current | $ | 1,900 | $ | 1,176 | $ | 724 |  | 62%
Contract asset – noncurrent |  | 802 |  | 453 |  | 349 |  | 77%
Contract liabilities |  | (13,787) |  | (9,912) |  | (3,875) |  | 39%
Net contract liability | $ | (11,085) | $ | (8,283) | $ | (2,802) |  | 34%
The contract asset-current is included in prepayments and other current assets, the contract asset – noncurrent is included in other assets, and the contract liabilities are included in advance payments and deposits on the Company’s balance sheet. The increase in the Company’s net contract liability was due to the timing of customer prepayments and contract billings. During the year ended December 31, 2018, the Company recognized revenue of $8.0 million related to its January 1, 2018 contract liability and amortized $1.8 million of the January 1, 2018 contract asset into revenue. The Company did not recognize any revenue in the year ended December 31, 2018 related to performance obligations that were satisfied or partially satisfied in previous periods. Contract Acquisition Costs The December 31, 2018 balance sheet includes current contract acquisition costs of $1.4 million in prepayments and other current assets and long term contract acquisition costs of $1.0 million in other assets. During the year ended December 31, 2018 the Company amortized $1.6 million of contract acquisition cost. Remaining Performance Obligations Remaining performance obligations represent the transaction price allocated to unsatisfied performance obligations of certain multiyear retail wireless contracts that include a promotional discount. The transaction price allocated to unsatisfied performance obligations was $12.1 million at December 31, 2018. The Company expects to satisfy the remaining performance obligations and recognize the transaction price within 24 months. The Company has certain retail, wholesale, and renewable energy contracts where transaction price is allocated to remaining performance obligations. However, the Company omits these contracts from the disclosure by applying the right to invoice, one year or less, and wholly unsatisfied performance obligation practical expedients. Disaggregation The Company's revenue is presented on a disaggregated basis in Note 16 based on an evaluation of disclosures outside the financial statements, information regularly reviewed by the chief operating decision maker for evaluating the financial performance of operating segments and other information that is used for performance evaluation and resource allocations. This includes revenue from wireline, wireless and renewable energy, as well as domestic versus international wireline and wireless services. This disaggregation of revenue depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Impacts of adoption in the current period The Company adopted ASC 606 on January 1, 2018 using the modified retrospective method. The Company elected the practical expedient to apply the new guidance only to contracts that were not substantially complete at the adoption date. The cumulative effect of adopting ASC 606 resulted in a contract asset of $1.6 million of which $1.2 million was recorded in prepayments and other current assets and $0.4 million was recorded in other assets, a contract liability of $0.2 million recorded in advance payments and deposits, contract acquisition costs of $1.5 million of which $0.9 million was recorded in prepayments and other current assets and $0.6 million was recorded in other assets, and a deferred tax liability of $0.3 million with the offset of $1.5 million recorded to retained earnings and $1.1 million recorded to minority interest. The tables below identify changes to the Company’s financial statements as of December 31, 2018 and for the year then ended as a result of the adoption of ASC 606 as compared to previous revenue guidance (amounts in thousands):
Balance Sheet - December 31, 2018
|  | Reported |  | Change |  | Under previous guidance
Prepayments and other current assets | $ | 37,855 | $ | (3,319) | $ | 34,536
Total current assets |  | 275,765 |  | (3,319) |  | 272,446
Other assets |  | 37,708 |  | (1,785) |  | 35,923
Total assets |  | 1,107,304 |  | (5,104) |  | 1,102,200
Advance payments and deposits |  | 20,574 |  | (337) |  | 20,237
Accrued taxes |  | 31,795 |  | (131) |  | 31,664
Total current liabilities |  | 140,650 |  | (468) |  | 140,182
Deferred income taxes |  | 10,276 |  | (302) |  | 9,974
Total liabilities |  | 283,980 |  | (770) |  | 283,210
Retained earnings |  | 563,593 |  | (2,481) |  | 561,112
Minority interest |  | 127,937 |  | (1,853) |  | 126,084
Total equity |  | 823,324 |  | (4,334) |  | 818,990
Total liabilities and equity | $ | 1,107,304 | $ | (5,104) | $ | 1,102,200
|  | Statement of Operations |
|  | Year ended December 31, 2018 |
|  | Reported |  | Change |  | Under previous guidance |
Wireless revenue | $ | 198,824 | $ | (1,075) | $ | 197,749 |
Total revenue |  | 451,207 |  | (1,075) |  | 450,132 |
Sales, marketing and customer service |  | 35,207 |  | 755 |  | 35,962 |
Total operating expenses |  | 390,184 |  | 755 |  | 390,939 |
Income from operations |  | 61,023 |  | (1,830) |  | 59,193 |
Income before taxes |  | 53,742 |  | (1,830) |  | 51,912 |
Income tax provision |  | 18,870 |  | (131) |  | 18,739 |
Net income |  | 34,872 |  | (1,699) |  | 33,173 |
Net income attributable to non-controlling interests |  | (15,057) |  | 706 |  | (14,351) |
Net income attributable to ATN International, Inc. stockholders | $ | 19,815 | $ | (993) | $ | 18,822 |
|  | Statement of Comprehensive Loss |
|  | Year ended December 31, 2018 |
|  | Reported |  | Change |  | Under previous guidance |
Net income | $ | 34,872 | $ | (1,699) | $ | 33,173 |
Other comprehensive loss, net of tax |  | (5,152) |  | — |  | (5,152) |
Comprehensive loss |  | 29,720 |  | (1,699) |  | 28,021 |
Less: Comprehensive income attributable to non-controlling interests |  | (15,057) |  | 706 |  | (14,351) |
Comprehensive income (loss) attributable to ATN International, Inc. | $ | 14,663 | $ | (993) | $ | 13,670 |
Statement of Cash Flows - Year ended December 31, 2018
|  | Reported |  | Change (1) |  | Under previous guidance
Net income | $ | 34,872 | $ | (1,699) | $ | 33,173
Materials and supplies, prepayments and other current assets | $ | 5,924 | $ | 1,243 | $ | 7,167
Accrued taxes |  | 29,089 |  | (131) |  | 28,958
Accounts payable and accrued liabilities, advance payments and deposits and other current liabilities |  | (7,044) |  | (107) |  | (7,151)
Other assets | $ | (238) | $ | 694 | $ | 456
| (1) |  | The adoption of ASC 606 had no impact on operating cash flows, investing cash flows, financing cash flows or net change in total cash.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
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