NOTE 5. REVENUE RECOGNITION

The majority of our revenues are derived from the sale of delivered logs, manufactured wood products, residual wood product by-products and real estate. We recognize revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers.

Performance Obligations

A performance obligation, as defined in ASC 606, is a promise in a contract to transfer a distinct good or service to a customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue at the point in time, or over the period, in which the performance obligation is satisfied.

Performance obligations associated with delivered log and residual sales are typically satisfied when the logs and residuals are delivered to our customers’ mills. Performance obligations associated with the sale of wood products are typically satisfied when the products are shipped (FOB shipping point) or upon delivery to our customer (FOB destination) depending on the terms of the customer contract. Shipping and handling costs for all wood product and residual sales are accounted for as cost of goods sold.

ASC Topic 606 requires entities to consider significant financing components of contracts with customers, but allows for the use of a practical expedient when the period between satisfaction of a performance obligation and payment receipt is one year or less. Given the nature of our revenue transactions, we have elected to utilize this practical expedient. Substantially all of our performance obligations are satisfied as of a point in time. We have also elected to use the practical expedient to not disclose unsatisfied or partially satisfied performance obligations as all unsatisfied contracts are expected to be satisfied in less than one year.

Performance obligations associated with real estate sales are generally satisfied at a point in time when all conditions of closing have been met.

Contract Estimates

The transaction price for log and residual sales is determined using contractual rates applied to delivered volumes. The contractual rates are generally based on prevailing market prices and payment is generally due from customers within one month or less of delivery. For log and residual sales subject to long-term supply agreements, the transaction price is variable but is known at the time of delivery. For wood products sales, the transaction price is generally the amount billed to the customer based on the prevailing market price for the products shipped but may be reduced slightly for estimated cash discounts.

There are no significant contract estimates related to the real estate business.

Contract Balances

In general, a customer receivable is recorded as we ship and/or deliver wood products, logs and residuals. We generally receive payment shortly after products have been received by our customers. As of September 30, 2018 and December 31, 2017 we recorded $4.7 million and $1.7 million, respectively, for contract liabilities related to hunting lease rights. These contract liabilities are being amortized over the term of the contracts, which is typically less than twelve months. Other contract asset and liability balances, such as prepayments, are immaterial. For real estate sales, we typically receive the entire consideration in cash at closing.

Major Products

The following table represents our revenues by major product. For additional information regarding our segments, see Note 16: Segment Information.

	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2018			2017			2018			2017
Resource
Northern region
Sawlogs	$	69,658		$	68,699		$	168,869		$	139,043
Pulpwood		1,575			1,272			4,654			4,718
Stumpage		39			11			175			153
Other		765			292			1,233			798
		72,037			70,274			174,931			144,712
Southern region
Sawlogs		21,974			13,314			61,194			29,547
Pulpwood		13,700			9,938			36,138			24,892
Stumpage		653			191			2,106			420
Other		3,057			988			6,069			2,826
		39,384			24,431			105,507			57,685
Total Resource revenues		111,421			94,705			280,438			202,397

Wood Products
Lumber		138,281			84,233			367,062			230,807
Panels		36,655			17,945			106,785			54,923
Residuals		24,089			14,309			58,578			40,878
Total Wood Products revenues		199,025			116,487			532,425			326,608

Real Estate
Rural real estate		8,238			3,282			29,740			25,922
Development real estate		1,287			—			4,249			—
Other		1,708			—			4,230			—
Total Real Estate revenues		11,233			3,282			38,219			25,922

Total segment revenues		321,679			214,474			851,082			554,927

Intersegment Resource revenues¹		(32,480	)		(24,033	)		(93,753	)		(51,576	)
Total consolidated revenues	$	289,199		$	190,441		$	757,329		$	503,351

¹ Intersegment revenues are based on prevailing market prices of logs sold by our Resource segment to the Wood Products segment.