Summary
Blackstone Inc. (BX) filed an 8-K on April 17, 2018, to disclose the adoption of new accounting standards, specifically ASC 606 (Revenue from Contracts with Customers) and a change in accounting principle for Carried Interest and Incentive Allocations. The company has elected to adopt ASC 606 on a full retrospective basis, effective January 1, 2018. While the impact on Management and Advisory Fees was not material, the new guidance alters the presentation and timing of revenue recognition for Contractual Incentive Fees, previously reported within Performance Fees. Furthermore, Blackstone is changing its accounting principle for Performance Allocations (Carried Interest and Incentive Fees earned through equity method investments). These will now be recognized within Investment Income, alongside Blackstone's proportionate share of fund income, rather than within Realized and Unrealized Performance Fees. This change, effective January 1, 2018, and applied retrospectively, aims to align with equity method accounting principles and does not alter the total amount or timing of revenue recognized from these arrangements. Investors should note these changes are primarily presentational and do not reflect new economic events.
Key Highlights
- 1Adoption of new revenue recognition guidance (ASC 606) effective January 1, 2018, applied retrospectively.
- 2No material impact on Management and Advisory Fees from ASC 606 adoption.
- 3ASC 606 adoption alters presentation and timing of revenue recognition for Contractual Incentive Fees.
- 4Implementation of a change in accounting principle for Performance Allocations (Carried Interest and Incentive Fees from equity method investments).
- 5Performance Allocations will now be recognized within Investment Income, not Performance Fees.
- 6The change in accounting for Performance Allocations does not change the total amount or timing of revenue recognized.
- 7These disclosures are made under Regulation FD and are furnished, not filed, with the SEC.