Revenues from Contracts with Customers

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Revenues from Contracts with Customers

13) 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 received.

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 a 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. The 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, 2023 (Unaudited)

13) 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 (January 1, 2023)	$	5,392,779	$	-	$	16,226,836
Closing (September 30, 2023)		6,088,152		-		17,573,212
Increase/(decrease)		695,373		-		1,346,376
	Contract Balances
		Receivables (1)		Contract Asset		Contract Liability
Opening (January 1, 2022)	$	5,298,636	$	-	$	14,508,022
Closing (December 31, 2022)		5,392,779		-		16,226,836
Increase/(decrease)		94,143		-		1,718,814

(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 month periods ended September 30, 2023 and 2022 was $1,279,750 and $1,034,035, respectively, and for the nine month periods ended September 30, 2023 and 2022 was $3,516,215 and $3,624,463, 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:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Major goods/service lines
At-need	$	4,832,352	$	4,839,289	$	14,985,838	$	16,304,276
Pre-need		2,401,679		1,631,074		5,888,336		4,622,311
	$	7,234,031	$	6,470,363	$	20,874,174	$	20,926,587
Timing of Revenue Recognition
Goods transferred at a point in time	$	4,762,777	$	4,040,381	$	13,321,412	$	12,815,582
Services transferred at a point in time		2,471,254		2,429,982		7,552,762		8,111,005
	$	7,234,031	$	6,470,363	$	20,874,174	$	20,926,587

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 2023 (Unaudited)

13) Revenues from Contracts with Customers (Continued)

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,
	2023			2022			2023			2022
Net mortuary and cemetery sales	$	7,234,031		$	6,470,363		$	20,874,174		$	20,926,587
Losses on investments and other assets		(452,120	)		(640,593	)		(200,610	)		(1,615,253	)
Net investment income		516,094			681,239			2,460,859			1,916,970
Other revenues		118,418			180,989			292,904			217,906
Revenues from external customers		7,416,423			6,691,998			23,427,327			21,446,210