Verizon Reports Impacts From Accounting Change, Tax Cuts And Jobs Act

Excerpts from an article on Nasdaq.com

Verizon announced it has implemented ASU 2014-09, Revenue from Contracts with Customers (ASC 606) on January 1, 2018 using the modified retrospective method for open contracts. The company said the adoption of the new standard will have a significant impact on its 2018 operating results. During the first quarter of 2018, the Group will record a cumulative adjustment to retained earnings which is primarily related to two items: net contract assets arising from open wireless subsidy contracts, and deferred commission costs.

For full year 2018, the company estimates the overall impact from the opening balance sheet adjustment and the ongoing impact from new contracts to result in an insignificant change to consolidated revenue. The revenue change is primarily related to an expected decrease in wireless service revenue offset by an expected increase in wireless equipment revenue. The company estimates a net decrease to operating expenses primarily related to wireless and wireline commission expense. In the aggregate, these items are expected to yield an estimated benefit to full year 2018 consolidated operating income. On opening balance sheet impact, the company estimates pretax retained earnings increase to be in the range of $4.0 – $4.6 billion. The company said the accretive benefit to operating income anticipated in 2018 is expected to moderate in 2019 and become insignificant in 2020.

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