Hubbell Policies

• The customer has accepted the asset —The customer’s acceptance of an asset may indicate that it has obtained the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset.

For the majority of Hubbell’s revenue transactions, risk of loss passes based on FOB shipping terms. However, careful consideration should be given to the terms and conditions in the contract, long-term supply agreements or any separately signed agreement. In particular specific focus should be given to the Incoterms around when risk of loss transfers to the customer (i.e. FOB Shipping point vs FOB destination).

Measuring Progress of Performance Obligations Satisfied Over Time

The objective when measuring progress is to depict Hubbell’s performance in transferring control of goods and services promised to a customer. Appropriate methods of measuring progress include output methods and input methods. Input methods would include measures such as labor hours, materials used etc., while output methods would be the completion of significant stages in the production process. Hubbell shall recognize revenue for a performance obligation satisfied over time only if Hubbell can reasonably measure its progress toward complete satisfaction of the performance obligation. Any business that recognizes revenue using the overtime method should contact the Corporate Controller ’s Office to obtain approval for the method of recognition.

Other Matters

Cost to Obtain a Contract

The standard allows Hubbell to capitalize costs that would not have been incurred if the sale had not taken place (i.e. sales commission). The standard allows for a practical expedient to only capitalize these costs for contracts/transactions that are greater than one year. Hubbell has elected to adopt the practical expedient and will expense as incurred all expenses for contracts/transaction less than one year.

Contact the Corporate Controller’s Office for approval before capitalizing any costs to obtain a contract.

Any asset recognized from capitalizing costs to obtain a contract should be amortized on a systematic basis consistent with the pattern of the transfer of the goods or services in which the assets relate.

Legal

Any Hubbell business unit, Group, division, function or employee seeking to enter into, modify, terminate or interpret a contract (whether written or oral) must work with Hubbell Legal on same.

ADMINISTRATION

Roles and Responsibilities. The Business Unit Controller is responsible for ensuring the revenue recognition procedure is followed and that revenue is properly recorded.

Monitoring, Evaluation and Review. On a quarterly basis, Business Unit Controllers and Group Controllers will complete the revenue recognition questionnaire.

Exceptions. In order to obtain an exception to this procedure a written request must be submitted to the VP, Corporate Controller that contains a compelling business reason why the Procedure cannot be adhered to.

ACCOUNTING AND DISCLOSURE

None

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