accounting policy election

ASC 605-28 formerly provided the "milestone method" of revenue recognition, an accounting policy election that allowed a vendor in a research-and-development arrangement to recognize contingent milestone consideration in its entirety in the period the milestone was achieved, if the milestone was deemed substantive. Every paragraph of this subtopic — scope, recognition, disclosure, and transition — was superseded by ASU 2014-09 (Revenue from Contracts with Customers). Milestone-type contingent consideration is now accounted for as variable consideration under ASC 606, subject to the constraint on variable consideration.

This subtopic gives franchisors that are not public business entities a practical expedient for identifying performance obligations under Topic 606. Rather than applying the general distinct analysis to the franchise license, a private franchisor may treat listed pre-opening services (site selection, facility assistance, training, manuals, bookkeeping/IT/advisory, quality control) as distinct from the franchise license, and may further elect as an accounting policy to treat all such pre-opening services as a single performance obligation. The expedient affects only step 2 of the model; allocation of transaction price and timing of recognition still follow Topic 606.

ASC 715-930 governs how coal industry entities account for postretirement medical and death benefit obligations imposed by the Coal Industry Retiree Health Benefit Act of 1992, which assigns beneficiaries (and a share of "orphan" beneficiaries) of the UMWA Combined Benefit Fund to former signatories of coal wage agreements. Entities still operating in the coal industry may elect to account for the obligation either as participation in a multiemployer plan or as a liability imposed by the Act; entities electing liability treatment, and all entities no longer operating in the coal industry, must recognize the entire obligation as a loss under Subtopic 450-20 (715-930-25-1). Losses so recognized are presented as an unusual or infrequently occurring item, and the impact of the Act must be disclosed.