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REVENUE RECOGNITION

12 Months Ended

Dec. 31, 2019

REVENUE RECOGNITION

REVENUE RECOGNITION

3. REVENUE RECOGNITION

Impact of adoption

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.

Contract Assets and Liabilities

Contract assets and liabilities consisted of the following (amounts in thousands):


	December 31, 2019			December 31, 2018				$ Change		% Change
Contract asset – current	$	2,413		$	1,900		$	513		27	%
Contract asset – noncurrent		905			802			103		13	%
Contract liability- current		(15,044)			(13,787)			(1,257)		(9)	%
Contract liability- noncurrent		(5,450)			—			(5,450)		100	%
Net contract liability	$	(17,176)		$	(11,085)		$	(6,091)		(55)	%

The contract asset-current is included in prepayments and other current assets, the contract asset-noncurrent is included in other assets, the contract liability-current is included in advance payments and deposits, and the contract liability-noncurrent is included in other liabilities 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, and the FirstNet Transaction. During the year ended December 31, 2019, the Company recognized revenue of $12.1 million related to its December 31, 2018 contract liability and amortized $1.8 million of the December 31, 2018 contract asset into revenue. The Company did not recognize any revenue in the years ended December 31, 2019 and 2018 related to performance obligations that were satisfied or partially satisfied in previous periods.

Contract Acquisition Costs

The December 31, 2019 balance sheet includes current contract acquisition costs of $1.7 million in prepayments and other current assets and long term contract acquisition costs of $1.1 million in other assets. 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 years ended December 31, 2019 and 2018 the Company amortized $1.8 million and $1.6 million, respectively, 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, which include a promotional discount, and the Company’s construction and service contracts. The transaction price allocated to unsatisfied performance obligations was $241 million and $12 million at December 31, 2019 and December 31, 2018, respectively. The Company expects to satisfy the majority of the remaining performance obligations and recognize the transaction price within 24 months and the remainder thereafter.

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 17 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.