CPSI 2017 Annual Report

70 effective for annual and interim periods in fiscal years beginning after December 15, 2019 with early adoption permitted for any goodwill impairment tests performed after January 1, 2017. The guidance is to be applied prospectively. We elected to early adopt ASU 2017-04 and the guidance has been applied for all goodwill impairment tests performed after January 1, 2017. The adoption of ASU 2017-04 had a material impact on our financial statements, as one of our reporting unit's carrying value exceeded its fair value at the time of impairment assessment. New Accounting Standards Yet to be Adopted In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers , to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes the most current revenue recognition guidance. This guidance will be effective for fiscal years and interim periods within those years beginning after December 15, 2017, which is effective for the Company as of the first quarter of our fiscal year ending December 31, 2018. We will adopt this standard using the modified retrospective method, in which the cumulative effect of initially applying the guidance will be recognized as an adjustment to retained earnings and impacted balance sheet line items as of January 1, 2018, the date of adoption. We have fully completed the assessment of our systems, data, and processes that will be affected by the implementation of this standard and have concluded that this standard will not significantly alter revenue recognition practices for our system sales and support and TruBridge revenue streams. The impact on our revenue recognition is limited to deferring and amortizing implementation fees over the contract life related to our Rycan revenue cycle management product, in which we currently recognize revenue as implementation is completed. Rycan implementation fees totaled $1.6 million in 2017, less than 1% of our 2017 revenues. The balance sheet impact of the deferred revenue related to these fees will be an increase of $1.8 million as of the date of adoption. Also impacting deferred revenue is a decrease of $0.6 million related to previous billings which no longer require deferred recognition as of the date of adoption. In addition to revenue recognition, the new standard will impact on our consolidated financial statements with respect to the capitalization of certain commissions and contract fulfillment costs which are currently expensed as incurred. Commissions and contract fulfillment costs related to the implementation of software as a service arrangements will be capitalized and amortized over the expected life of the customer. TruBridge commissions, which are paid up to twelve months in advance, will be capitalized and amortized over the prepayment period. The balance sheet impact of the prepaid assets will be an increase of $3.8 million as of the date of adoption. In total, the adoption of ASU 2014-09 will result in a net increase in retained earnings of $2.6 million on the date of adoption. In February 2016, the FASB issued ASU 2016-02, Leases , to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The new guidance will require the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under U.S. GAAP. This guidance will be effective for fiscal years and interim periods within those years beginning after December 15, 2018, which is effective for the Company as of the first quarter of our fiscal year ending December 31, 2019. The Company is currently evaluating the impact that the implementation of this standard will have on its financial statements. In August 2016, the FASB issued ASU 2016-15, Classifications of Certain Cash Receipts and Cash Payments, which clarifies cash flow classification for eight specific issues, including debt prepayment or extinguishment costs, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, and proceeds from settlement of corporate-owned life insurance policies. This guidance will be effective for fiscal years and interim periods within those years beginning after December 15, 2017, which is effective for the Company as of the first quarter of our fiscal year ending December 31, 2018. The Company is currently evaluating the impact that the implementation of this standard will have on its financial statements. In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business, to assist an entity in evaluating when a set of transferred assets and activities is a business. The guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2017, and should be applied prospectively to any transactions occurring within the period of adoption. Early adoption is permitted, including for interim or annual periods in which the financial statements have not been issued or made available for issuance. The Company is currently evaluating the impact that the implementation of this standard will have on its financial statements.