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Summary of Significant Accounting Policies Summary of Significant Accounting Policies (Tables)

v3.19.1
Summary of Significant Accounting Policies Summary of Significant Accounting Policies (Tables)
6 Months Ended
Mar. 31, 2019
Accounting Policies [Abstract]  
Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block]
Beginning in 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASC 606”), plus a number of related ASUs designed to clarify and interpret ASC 606. The new standard requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard supersedes U.S. GAAP guidance on revenue recognition and requires the use of more estimates than the previously effective standards. It also requires significant disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. The new standard became effective for our fiscal year beginning on October 1, 2018 and was adopted on a modified retrospective basis. The Company elected the practical expedient and only evaluated contracts for which substantially all revenue had not been recognized under ASC Topic 605, with the cumulative effect of the new guidance recorded as of the date of initial application.

The primary changes from the adoption of ASC 606 resulted from certain performance obligations that were previously recognized at a point in time that are now recognized over time. The cumulative effect of the changes made to the Consolidated Balance Sheet as of October 1, 2018 for the adoption of ASC 606 was as follows:
 
Balance at September 30, 2018
 
Adjustments due to ASC 606
 
Balance at October 1, 2018
Assets
 
 
 
 
 
Receivables from long-term manufacturing contracts
$
120.3

 
$
1.9

 
$
122.2

Inventories
172.5

 
(1.6
)
 
170.9

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Deferred income taxes
$
76.4

 
$
0.1

 
$
76.5

 
 
 
 
 
 
Shareholders’ Equity
 
 
 
 
 
Retained earnings
$
531.0

 
$
0.2

 
$
531.2


The following tables summarize the impacts of adopting ASC 606 on the Company’s consolidated financial statements as of and for the three and six months ended March 31, 2019.

Consolidated Statements of Income:
 
Three Months Ended March 31, 2019
 
Six Months Ended March 31, 2019
 
As Reported
 
Adjustments Due to ASC 606
 
Balances without Adoption
 
As Reported
 
Adjustments Due to ASC 606
 
Balances without Adoption
Net revenue
$
464.6

 
$
(0.1
)
 
$
464.5

 
$
874.9

 
$
(1.1
)
 
$
873.8

Cost of goods sold
303.7

 
(0.1
)
 
303.6

 
567.0

 
(1.0
)
 
566.0

Gross profit
160.9

 

 
160.9

 
307.9

 
(0.1
)
 
307.8

Income before income taxes
53.3

 

 
53.3

 
96.8

 
(0.1
)
 
96.7

Consolidated net income
39.5

 

 
39.5

 
68.5

 
(0.1
)
 
68.4


Consolidated Balance Sheet:
 
March 31, 2019
 
As Reported
 
Adjustments Due to ASC 606
 
Balances without Adoption
Assets
 
 
 
 


Receivables from long-term manufacturing contracts
$
164.8

 
$
(3.0
)
 
$
161.8

Inventories
183.0

 
2.7

 
185.7

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Deferred income taxes
$
79.4

 
$
(0.1
)
 
$
79.3

 
 
 
 
 
 
Shareholders’ Equity
 
 
 
 
 
Retained earnings
$
571.1

 
$
(0.2
)
 
$
570.9


The Company has elected the following as a result of adopting the new standard on revenue recognition:

Hillenbrand elected not to adjust the promised amount of consideration for the effects of the time value of money for contracts in which the anticipated period between when Hillenbrand transfers the goods or services to the customer and when the customer pays is equal to one year or less.

Hillenbrand elected to account for shipping and handling activities that occur after the customer has obtained control of a good as fulfillment activities rather than as a promised service.

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, and that are collected by the Company from a customer, are excluded from revenue.