2. Revenue

Adoption of ASC 606, Revenue from Contracts with Customers

On January 1, 2018, the Company adopted ASC 606 using the modified retrospective method applied to those contracts that were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historical accounting under ASC 605.

The following table details the cumulative effect of the changes made to the consolidated January 1, 2018 balance sheet for the adoption of ASC 606 (in thousands):


	Balance at		Adjustments		Balance at
	December 31,		Due to		January 1,
	2017		ASU 2014-09		2018
Assets
Accounts receivable, net	$	79,881	$	(1,489)	$	78,392
Inventories		1,415,915		(5,142)		1,410,773
Prepaid expenses and other assets		41,138		4,508		45,646
Deferred tax assets, net		152,683		(303)		152,380
Other assets		21,903		(4,051)		17,852
Liabilities
Accrued liabilities		101,929		(6,598)		95,331
Deferred revenues and gains, current		77,669		857		78,526
Deferred revenues and gains, non-current		64,061		(471)		63,590
Other long-term liabilities		51,589		(4,051)		47,538
Equity
Retained earnings		7,619		1,310		8,929
Non-controlling interests		21,252		2,476		23,728

The adjustments above related primarily to i) the deferral of sales commissions expenses relating to multiyear consumer services and plans and the recording of such expenses over the same period as the recognition of the related revenues, ii) adjustment of recognition period of RV service revenue from point-in-time to over time, iii) adjustment of capitalized direct-response advertising to expense when the advertising is mailed instead of over the expected benefit period, iv) reclassification of estimated product returns from inventory to prepaid expenses and other assets, v) reclassification of expected refunds previously included in deferred revenues and gains to accrued liabilities, and vi) reclassification and adjustment of the point obligation for the Coast to Coast service from accrued liabilities to deferred revenues and gains.

The following table details the impact of the adoption of ASC 606 on the consolidated balance sheet as of December 31, 2018 (in thousands):


	December 31, 2018
	As		Balances Without		Effect of Change
	Reported		Adoption of ASC 606		Higher/(Lower)
Assets
Accounts receivable, net	$	85,711	$	88,966	$	(3,255)
Inventories		1,558,970		1,567,409		(8,439)
Prepaid expenses and other assets		51,710		42,823		8,887
Deferred tax assets, net		145,943		146,246		(303)
Other assets		18,326		23,515		(5,189)
Liabilities
Accrued liabilities		124,619		131,671		(7,052)
Deferred revenues and gains, current		88,054		87,806		248
Deferred revenues and gains, non-current		67,157		68,312		(1,155)
Other long-term liabilities		79,958		85,147		(5,189)
Equity
Retained earnings		(3,370)		(5,051)		1,681
Non-controlling interests		(11,621)		(14,789)		3,168

The following table details the impact of the adoption of ASC 606 on the consolidated statement of operations for the year ended December 31, 2018 (in thousands):


	Year Ended December 31, 2018
			Balances Without		Effect of Change
	As Reported		Adoption of ASC 606		Higher/(Lower)
Revenue
Consumer services and plans	$	214,052	$	214,112	$	(60)
Dealership parts, services and other		279,438		279,493		(55)
Retail		669,945		669,896		49
Costs applicable to revenue
Consumer services and plans		86,687		87,268		(581)
Dealership parts, services and other		140,076		140,083		(7)
Retail		445,187		445,158		29
Operating and income tax expenses
Selling, general, and administrative		1,069,359		1,070,053		(694)
Income tax expense		30,790		30,666		124
Net income
Net income		65,581		64,518		1,063
Less: net income attributable to non-controlling interests		(55,183)		(54,491)		(692)
Net income attributable to Camping World Holdings, Inc.		10,398		10,027		371

For the year ended December 31, 2018, basic and diluted earnings per share of Class A common stock would have been $0.27 per share without the adoption of ASC 606 compared to the as-reported amount of $0.28 per share.

Contract Assets

As of December 31, 2018 and January 1, 2018, a contract asset of $6.3 million relating to RV service revenues was included in accounts receivable in the accompanying consolidated balance sheet. As of December 31, 2018 and January 1, 2018, the Company had capitalized costs to acquire a contract consisting of $6.0 million and $4.4 million, respectively, from the deferral of sales commissions expenses relating to multiyear consumer services and plans and the recording of such expenses over the same period as the recognition of the related revenues.

Deferred Revenues

The Company records deferred revenues when cash payments are received or due in advance of the Company’s performance, net of estimated refunds that are presented separately as a component of accrued liabilities. The increase in the deferred revenue balance for the year ended December 31, 2018 was primarily driven by cash payments received or due in advance of satisfying the Company’s performance obligations, partially offset by $76.3 million of revenues recognized that were included in the deferred revenue balance at the beginning of the period.

As of December 31, 2018, the Company has unsatisfied performance obligations relating to multiyear plans for its Good Sam Club, RA, Coast to Coast memberships, and magazine publication revenue streams. The total unsatisfied performance obligation for these revenue streams at December 31, 2018 and the periods during which the Company expects to recognize the amounts as revenue are presented as follows (in thousands):


	As of
	December 31, 2018
2018	$	86,876
2019		27,608
2020		13,376
2021		6,759
2022		3,405
Thereafter		6,637
Total	$	144,661

The Company’s payment terms vary by the type and location of its customer and the products or services offered. The term between invoicing and when payment is due is not significant. For certain products or services and customer types, the Company requires payment before the products or services are delivered to the customer.

Practical Expedients and Exemptions

The Company does not adjust the promised amount of consideration for the effects of a significant financing component if the Company expects, at contract inception, that the period of time between payment and transfer of the promised goods or services will be one year or less.

The Company expenses sales commissions when incurred in cases where the amortization period of those otherwise capitalized sales commissions would have been one year or less.

The Company does not disclose the value of unsatisfied performance obligations for revenue streams for (i) contracts with an original expected length of one year or less and (ii) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed.

The Company accounts for shipping and handling as activities to fulfill the promise to transfer the good to the customer and does not evaluate whether shipping and handling is a separate performance obligation.