REVENUE

3 Months Ended

Sep. 30, 2018

Revenue

REVENUE

Method and Impact of Adoption

Effective as of July 1, 2018, the Company adopted ASU 2014-09, Revenue from contracts with Customers (Topic 606), and its related amendments using the modified retrospective transition method. This method was applied to contracts that were not complete as of the date of adoption. Under the modified retrospective transition approach, periods prior to the adoption date were not adjusted and continue to be reported in accordance with ASC 605.

An assessment was made on the impact of all existing arrangements as at the date of adoption, under ASC 606, to identify the cumulative effect of applying ASC 606 on the beginning retained earnings. The Company quantified the impact of the adoption on its’ financial position, results of operations and cash flow. The impact amounted to 0.06% of fiscal 2018 sales or $28, which is immaterial to the Company. Hence, based on materiality principle, the Company concluded that the cumulative adjustment is not required to be made to the Company’s Beginning Retained Earnings.

The impact is primarily driven by the changes related to the accounting of standard warranty. Prior to adoption of ASC 606, the Company accounted for the estimated warranty cost as a charge to costs of sales when revenue was recognized. Upon adoption of ASC 606, the standard warranty for customized products is recognized as a separate performance obligation.

We have completed our adoption and implemented policies, processes and controls to support the standard’s measurement and disclosure requirements. We recognize net product revenue when we satisfy obligations as evidenced by the transfer of control of our products and services to customers. The guidance did not have material impact on the company’s consolidated financial results.

Contract Balances

The timing of revenue recognition, billings and collections may result in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities). As of July 1, 2018, deferred income amounting to $260 was reclassified from trade receivables to contract assets and customer deposits amounting to $31 was reclassified from accrued expenses to contract liabilities in order to establish the new opening balance for contract assets and liabilities.

The Company’s payment terms and conditions vary by contract type, although terms generally include a requirement of payment of 70% to 90% of total contract consideration within 30 to 60 days of shipment, with the remainder payable within 30 days of acceptance. In instances where the timing of revenue recognition differs from the timing of

invoicing, the Company has determined that

its contracts

generally do not include a significant financing component.

Contract assets were recorded under other receivable while contract liabilities were recorded under accrued expenses in the balance sheet.

The following table summarizes the effects of adopting ASU 2014-09 as an adjustment to the opening balance.

	Bal as at June 30, 2018		Adjustment for (ASC 606)			Opening as at July 1, 2018
Assets
Trade Accounts Receivable		8,007		(260	)		7,747
Other Receivables
Others		621		-			621
Contract Assets		-		260			260
Total		621		260			881

	Bal as at June 30, 2018		Adjustment for (ASC 606)			Opening as at July 1, 2018
Liabilities
Accounts Payable		3,704		-			3,704
Accrued Expenses
Others		3,172		(31	)		3,141
Contract Liabilities		-		31			31
Total		3,172		-			3,172

The following table is the reconciliation of contract balances.

	Sept. 30, 2018 (Unaudited)		July 1, 2018 (Unaudited)
Trade Accounts Receivable		8,121		7,747
Accounts Payable		2,939		3,704
Contract Assets		271		260
Contract Liabilities		485		31