360° insights - elliott davis · collectibility, noncash consideration, presentation of sales tax,...

Quarterly Accounting Update: Q2 - 2016

What’s Inside?

Selected highlights...........FASB update.....................Regulatory update............Other developments......On the horizon...............Appendices....................

347

121422

elliottdavis.com

360° INSIGHTS

Welcome to the Second Quarter issue of our Quarterly Accounting Update. Each quarter, we will provide you with up-to-date information for consideration in your financial reporting and disclosures. Our goal is for you to have current, relevant information available prior to finalizing your financial reporting deliverables. This update is organized as follows:

Selected Highlights

This section includes an executive summary of selected items and/or hot topics covered in this update.

FASB Update

This section includes an overview of selected Accounting Standards Updates (ASUs) issued during the period.

Regulatory Update

This section includes an overview of selected updates, releases, rules and actions during the period that might impact financial information, operations and/or governance.

Other Developments

This section includes an overview of other developments, actions, and projects of the FASB, PCC, EITF and/or other rulemaking organizations.

On the Horizon

This section includes an overview of selected projects and exposure drafts of the FASB.

Appendices

• A – Important Implementation Dates • B – Illustrative Disclosures for Recently Issued Accounting Pronouncements

Quarterly Accounting Update: Selected Highlights

New Credit Loss Standard is Issued

In June, the FASB issued the long-awaited credit loss standard that significantly changes how entities will measure credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. Given the scope, this new standard will have a big impact on both financial services and non-financial services entities.

Find out more about this new standard in the FASB Update section.

Further Clarification Provided for Revenue Standard

In April and May, the FASB clarified the revenue standard by issuing guidance for identifying performance obligations and accounting for licenses of intellectual property as well as providing narrow-scope improvements and practical expedients, respectively.

Find out more about these updates to the revenue standard in the FASB Update section.

Crackdown on Non-GAAP Measures

The SEC is stepping up efforts to restrict the use of non-GAAP measures in company earnings releases and regulatory filings. The crackdown is a reaction to what the SEC sees as the growing prevalence of non-GAAP measures and the notion that they’re increasingly misleading.

Read more about this issue in the Regulatory Update section.

Final Standard on Not-for-Profit Financial Statements Expected in August

The final standard on not-for-profit financial statements is not expected to include the proposal’s controversial requirement for the direct method of cash flow statement presentation. Not-for-profit organizations objected to the proposed requirement because of the difficulty they would have in gathering the information.

More information on this proposal can be found in the On the Horizon section.

Quarterly Accounting Update: FASB Update

The following selected Accounting Standards Updates (ASUs) were issued by the Financial Accounting Standards Board (FASB) during the second quarter. A complete list of all ASUs issued or effective in 2016 is included in Appendix A.

FASB Issues New Standard on Credit Losses

Affects: All entities that hold financial assets and net investment in leases that are not accounted for at fair value through net income

On June 16, 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments, as part of its project on financial instruments. The new standard introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale (AFS) debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination.

The following are some of the key points of the ASU:

• For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking, lifetime “expected loss” model that generally will result in the earlier recognition of allowances for losses.

• For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to what they do today, except that the losses will be recognized as allowances rather than reductions in the amortized cost of the securities.

• Entities will have to disclose significantly more information, including information they use to track credit quality by year of origination for most financing receivables.

Effective Dates

For public business entities (PBE) that are Securities and Exchange Commission (SEC) filers, the new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 (for a calendar-year entity, it would be effective January 1, 2020). For PBEs that are not SEC filers, the new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. For all other organizations, the new standard is effective for fiscal years beginning after December 15, 2020, and for interim periods within fiscal years beginning after December 15, 2021. Early adoption will be permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.

FASB Makes Narrow-Scope Improvements to the Revenue Standard

Affects: All entities

On May 9, 2016, the FASB finalized amendments to the guidance in the new revenue standard on collectibility, noncash consideration, presentation of sales tax, and transition. ASU 2016-12, Narrow-Scope Improvements and Practical Expedients, addresses implementation issues that were raised by stakeholders and discussed by the Revenue Recognition Transition Resource Group (TRG), and provides additional practical expedients. The following issues are addressed in ASU 2016-12:

• Collectibility—the ASU clarifies that as part of the requirement to assess the collectibility of contract consideration, entities should consider their ability to cease providing goods or services in the event of nonpayment.

• Noncash consideration—the ASU specifies that entities should measure the fair value of noncash consideration at contract inception. Subsequent changes in fair value due to the form of the consideration would not impact the transaction price.

• Presentation of sales taxes—the ASU provides a new policy election that allows entities to present all sales (and other similar) taxes collected from customers on a net basis, excluding them from the transaction price.

• Completed contracts at transition—the ASU specifies that, for transition purposes, a completed contract is a contract for which all, or substantially all, of the revenue was recognized under previous U.S. GAAP before the adoption date.

• Transition—the ASU provides a practical expedient to simplify transition for contracts modified prior to adopting the new standard.

Effective Dates

The amendments affect the guidance in ASU 2014-09, Revenue from Contracts with Customers, which is not yet effective. The effective date and transition requirements for the amendments in this ASU are the same as the effective date and transition requirements of ASU 2014-09. ASU 2015-14, Deferral of the Effective Date, deferred the effective date of ASU 2014-09 by one year.

FASB Clarifies the Revenue Standard Related to Performance Obligations and Licensing

Affects: All entities

On April 14, 2016, the FASB finalized amendments to the guidance in the new revenue standard on identifying performance obligations and accounting for licenses of intellectual property (IP). ASU 2016-10, Identifying Performance Obligations and Licensing, is not intended to change the core principles of the revenue standard; however, it clarifies important aspects of the guidance and improves its operability. The FASB also amended examples and added several new examples to illustrate the new guidance. The following issues are addressed in ASU 2016-10:

• Identifying performance obligations—the ASU clarifies the principle for determining whether a good or service is “separately identifiable” from other promises in the contract and, therefore, should be accounted for separately. The revised principle states that an entity should determine whether its promise is to transfer individual goods or services to the customer, or a combined item (or items) to which the individual goods and services are inputs. The ASU also (1) clarifies that entities are not required to identify promised goods or services that are immaterial in the context of the contract, and (2) allows entities to elect to account for shipping and handling activities as a fulfillment cost rather than as an additional promised service.

• Licenses of intellectual property—the ASU categorizes IP into two categories: “functional” and “symbolic.” Functional IP has significant standalone functionality (e.g., software, completed media content, drug formulas). All other IP is considered symbolic IP (e.g., trade names, logos, franchise rights). Revenue from licenses of functional IP is generally recognized at a point in time, while revenue from licenses of symbolic IP is recognized over time. The ASU also clarifies (1) when to apply the license guidance when a license is bundled with other promises, (2) when to apply the specific guidance for fees in the form of sales- and usage-based royalties, and (3) how restrictions in a license arrangement affect the number of promises to the customer.

Effective Dates

The amendments affect the guidance in ASU 2014-09, Revenue from Contracts with Customers, which is not yet effective. The effective date and transition requirements for the amendments in this ASU are the same as the effective date and transition requirements of ASU 2014-09. ASU 2015-14, Deferral of the Effective Date, deferred the effective date of ASU 2014-09 by one year.

Quarterly Accounting Update: Regulatory Update

SEC Cracks Down on Non-GAAP Measures and IOSCO Shares These Concerns

In recent Staff Comment Letters, the Securities and Exchange Commission (SEC) has stepped up efforts to restrict the practice of non-GAAP measures in company press releases, other statements and SEC filings. Specifically, the SEC has sent comment letters questioning tax items that are reported with non-GAAP adjustments. The letters challenge some companies’ assumptions that as their earnings increase over the next several years, they can still make use of the deductions currently available to them. The SEC has also questioned the use of individually tailored accounting principles to calculate non-GAAP earnings, such as those used in certain adjusted revenue measures; non-GAAP per-share performance measures that appear to be liquidity measures; and the tax treatment of non-GAAP adjustments.

The SEC is concerned by the increased use of these measures as well as the progressively larger difference between the amounts reported for GAAP measures and those reported for non-GAAP measures. For example, a study published by FactSet indicated that for 2015, 67 percent of the companies in the Dow Jones Industrial Average reported non-GAAP earnings per share and, on average, that the difference between the GAAP and non-GAAP earnings per share for these companies was approximately 30 percent, representing a significant increase from approximately 12 percent in 2014.

As part of this effort, in May 2016, the SEC’s Division of Corporate Finance updated its Compliance and Disclosure Interpretations (CDIs) for non-GAAP information. The CDIs do not prohibit companies from using non-GAAP measures that comply with the SEC’s existing rules. However, the tone in the CDIs is intentionally forceful in an effort to “send a message.” The interpretive guidance explains some of the circumstances the SEC considers when determining if the information is misleading to investors. The guidance also provides examples of some instances when the use of the information is considered acceptable.

On June 7, 2016, the International Organization of Securities Commissions (IOSCO) issued a statement that outlined concerns about the increase used of financial information that is not addressed by formal accounting standards. Further, IOSCO also indicated that its member regulatory bodies are free to implement additional restrictions on the measures for the companies they regulate. The SEC is IOSCO’s U.S. representative and had already started addressing non-GAAP measures prior to the IOSCO’s statement release.

SEC Keeping an Eye on Transition to the New Revenue and Lease Standards

The SEC is closely watching the transition to the FASB’s new standards for revenue and leases. Regulators are particularly concerned that companies keep investors apprised of their decisions about implementing the new standards. The SEC expects companies to adhere to Staff Accounting Bulletin (SAB) No. 74, Disclosure of the Impact That Recently Issued Accounting Standards Will Have on the Financial Statements of the Registrant When Adopted in a Future Period, which requires companies to

disclose in their financial statement notes their expectations for how new accounting standards will affect their financial results. The SEC has also decided that companies that make the transition to the new revenue standard via the full-retrospective method, which involves adjusting results from prior periods, must restate an extra year in a Form S-3 short-form registration statement to show the effects from the new revenue accounting. Public companies will have to begin applying the new revenue accounting in ASU 2014-09, Revenue from Contracts with Customers, in 2018. The lease accounting standard, ASU 2016-02, Leases, was published in February and becomes effective in 2019 for public companies.

SEC Approves PCAOB Lead Partner Identification Rule

In May, the SEC approved the Public Company Accounting Oversight Board’s (PCAOB) previously adopted new rules to provide investors with more information about who is participating in public company audits. Under these rules, disclosure will have to be made on a new form titled “Auditor Reporting of Certain Audit Participants,” or Form AP. When naming the other firms that took part in an audit, the lead audit firm will have to state the extent of their work. For accounting firms that participated in 5 percent or more in the audit work, the name and location of the participating firm and the percentage of total audit hours must be disclosed on the form. If accounting firms took part in less than 5 percent of the total audit work, the lead firm has to disclose the number of other accounting firms that participated in the audit and the aggregate percentage of total audit hours of the participating firms.

The yearly reporting requirement becomes effective for auditor reports issued on or after January 31, 2017, for the identification of the engagement partner. The disclosure of the other firms in the audit will become effective after June 30, 2017. The Form AP will have to be filed within 35 days of the submission of the client’s 10-K filing, which includes the auditor’s report.

FINRA Lists First Batch of Crowdfunding Portals

Nine funding portals have registered with the SEC under the Jumpstart Our Business Startups (JOBS) Act crowdfunding rules. Crowdfunding is used by start-up companies to raise capital via relatively small investments via the Internet. Because it was not permitted for investment purposes until the SEC adopted Release No. 33-9974, Crowdfunding, in October 2015, online portals like Kickstarter and Indiegogo limited the practice to other purposes, such as getting an early version of a gadget or software or supporting a charitable cause. The portals play an integral role in the new securities-based crowdfunding regime, which went into effect on May 16, 2016. The intermediaries must either be registered brokers or a new type of registered entity called a “funding portal,” which must also join the Financial Industry Regulatory Authority (FINRA).

Although anyone can invest in a crowdfunding securities offering, due to the risks involved, investors are limited in how much they can invest during any 12-month period in these transactions. The amount they can invest in a given year is determined by their income and net worth. The rules limit an individual with

an income or net worth below $100,000 to investing either $2,000 or 5 percent of the lesser of their net worth or income. Someone above that wealth threshold can put 10 percent of the lesser of their income or net worth into crowdfunding deals, up to $100,000 a year. Securities bought through crowdfunding deals cannot be resold for a year.

FINRA recently released the names of the first batch of registered funding portals, as follows:

• Crowdboarders, LLC (crowdboarders.com) • Indie Crowd Funder, LLC (www.indiecrowdfunder.com) • Jumpstart Micro,Inc. (www.jumpstartmicro.com) • NextSeed US, LLC (www.nextseed.com) • SI Portal, LLC (seedinvest.com) • StartEngine Capital, LLC (www.startengine.com) • Trucrowd, Inc. (www.us.trucrowd.com) • UFP, LLC (www.ufundingPortal.com) • Wefunder Portal, LLC (www.wefunder.com)

The portals, under Release No. 33-9974, must provide investors with educational materials on the crowdfunding process, which must include explanations on the securities offered and when they can be resold. Regulators are depending on crowdfunding portals to provide certain protections for investors, including by taking measures to screen for fraud among companies seeking capital. The platforms must have a “reasonable basis” to believe an issuer is in compliance with the crowdfunding rules.

The intermediaries are allowed, as part of a compromise under the final rules, to take stakes in the companies they help fund as compensation. The SEC’s original 2013 proposal would have barred that practice, which critics said would have forced intermediaries to rely more heavily on charging fees on cash-strapped startup-up companies.

House Bill Would Expand SOX 404(b) Exemptions

In May, the House passed a bipartisan bill to expand the number of companies exempt from the auditor review requirements in Section 404(b) of the Sarbanes-Oxley Act of 2002. The exemptions would apply to emerging growth companies (EGCs) as defined in the 2012 JOBS Act.

The JOBS Act created EGCs, a class of companies within five years of their initial public offerings with less than $1 billion in revenue. They get a number of regulatory breaks, including an exemption from the Section 404(b) auditor attestation over financial reporting controls. If H.R. 4139, the Fostering Innovation Act, is enacted, it will extend the exemption to 10 years after a company went public. Companies lose the exemption if, in that period, revenues exceed $50 million or the value of its shares in the hands of public investors reaches $700 million.

SEC Adopts Rule for Annual Report Summary Pages

In June, the SEC approved a new interim rule that explicitly allows registrants to provide a summary of its business and financial information in their annual report on Form 10-K. The rule implements a provision of the Fixing America’s Surface Transportation (FAST) Act. At the same time, the SEC requested public input on whether the rule should include specific requirements or guidance for the form and content of the summary and whether the rules should be expanded to include other annual reporting forms.

The new SEC regulations allow a registrant, at its option, to include a summary of the information in its Form 10-K in a new Item 16. The rule allows registrants the flexibility to determine what information to include in the summary and its length, provided each item in the summary is presented fairly and accurately and includes an electronic cross-reference, or hyperlink, to the related detailed disclosures contained in the Form 10-K.

The summary should refer only to Form 10-K disclosures included in the Form at the time it is filed. A registrant is not required to update the summary to reflect information incorporated by reference from a proxy or information statement filed after the Form 10-K but must disclose if the summary does not include such information.

PCAOB Re-proposes Changes to the Auditor’s Report Model

In May, the PCAOB re-proposed its standard on auditors’ reports. Like the original proposal, the re-proposal is intended to significantly enhance the auditor’s reporting model while increasing the amount of other information included in auditors’ reports. The re-proposal:

• Includes a new required section of the auditor’s report describing critical audit matters (CAMs)

• Narrows the definition of CAMs • Excludes the following from the requirements related to CAMs: broker-dealers;

investment companies other than business development companies; and employee stock purchase, savings, and similar plans

• Calls for the addition of new elements to the auditor’s report, including statements about the requirement of auditor independence and auditor tenure

House Bill Would Add Cybersecurity Requirements to Sarbanes-Oxley

On April 26, 2016, Representative Jim McDermott introduced House Bill H.R. 5069, “To Amend the Sarbanes-Oxley Act of 2002 to Protect Investors by Expanding the Mandated Internal Controls Reports and Disclosures to Include Cybersecurity Systems and Risks of Publicly Traded Companies.” The bill would, among other things, require public company executives to assess the effectiveness of their information security in addition to the existing requirements related to internal controls over financial reporting (ICFR), as required by Section 404 of Sarbanes-Oxley. In addition to the existing required

reporting about whether the organization has at least one financial expert serving on its audit committee, under the proposed bill, the issuer would also be required to provide similar disclosures for cybersecurity experts on the committee and would also add the “principal cybersecurity systems officer” to the list including the CEO and CFO as signing officers and would give all three executives responsibility for the accuracy of reporting on the systems.

The likelihood of this bill becoming law remains uncertain, however, it is another indicator of the ever-increasing focus and scrutiny directed toward organizations’ information security and protection of informational assets.

Quarterly Accounting Update: Other Developments

AICPA and CIMA Approve Creation of Integrated International Accounting Association

The members of the American Institute of Certified Public Accountants (AICPA) and The Chartered Institute of Management Accountants (CIMA) in separate membership ballots approved the creation of a new international accounting association that will integrate operations and represent the entire accounting profession, while preserving the membership bodies of both organizations.

Membership approval of the new association was overwhelming; a supermajority of AICPA members who voted supported the proposal, 86.5 percent to 13.5 percent. CIMA members also overwhelmingly endorsed the proposal, 89.7 percent to 10.3 percent.

The new joint association is an outgrowth of the joint venture between the AICPA and CIMA that began in 2011 and launched the Chartered Global Management Accountant (CGMA) designation in 2012. AICPA and CIMA believes that by joining together, the organizations will be able to strengthen advocacy, accelerate efforts to boost member employability and provide additional resources to enhance the quality and competency of public and management accountants in the U.S. and abroad.

The new association will have its official launch in 2017, with work to create the new association to begin immediately. The new association will represent approximately 600,000 current and next generation professionals, and all members of the AICPA and CIMA will have automatic dual membership in the association for no additional dues.

AICPA Issues Proposal Related to Audit Data Standards

In May the Assurance Services Executive Committee of the AICPA issued an exposure draft of a proposed audit data standard. The proposal recommends a standard format for fields and files related to the inventory subledger frequently requested by internal and external auditors. The proposed subledger standard would accommodate basic analysis of the inventory process and facilitate analysis performed as part of an audit, as well as analysis that might be performed by company staff and internal audit in order to improve internal processes.

An Update on the New Revenue Recognition Standard

The FASB and International Accounting Standards Board (IASB) published their landmark revenue recognition standards in May 2014. However, since its issuance, some companies and their auditors have expressed concern that the FASB introduced too much principles-based guidance for U.S. companies to effectively adopt. In addition, some critics have said they need more implementation guidance. Others have said there was too little time for them to confidently plan for the standard’s effective date.

In response to those implementation concerns, the FASB and the IASB decided at a meeting in February, 2015, to propose revisions to clarify the standard to reduce diversity in practice. Both Boards agreed

that amendments to the guidance are needed to reduce the potential for diversity in practice. But, in general, the FASB decided to propose more changes than the IASB did.

Effective Date Deferred

On July 22, 2015, the IASB approved a one-year deferral of the effective date of its revenue standard, IFRS 15, to January 1, 2018. On August 12, 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, to delay the effective date of the revenue standard by one year. As a result, the standard will be effective for public entities for annual periods beginning after December 15, 2017 and interim periods therein. Nonpublic entities will be required to adopt the standard for annual reporting periods beginning after December 15, 2018 and interim periods within annual periods beginning after December 15, 2019. All entities will be allowed to adopt the standard as early as the original public entity effective date (i.e., annual periods beginning after December 15, 2016).

Principal-Versus-Agent Considerations Clarified

On March 18, 2016, the FASB issued ASU 2016-08, Principal Versus Agent Considerations—Reporting Revenue Gross Versus Net, to address how an entity should assess whether it is the principal or the agent in contracts that include three or more parties. The ASU clarifies that an entity should evaluate whether it is the principal or the agent for each specified good or service (i.e., each good or service or bundle of distinct goods or services that is distinct) promised in a contract with a customer. Specifically, the amendments require an entity to (1) identify the specified goods or services (or bundles of goods or services), including rights to goods or services from a third party, and (2) determine whether it controls each specified good or service before each good or service (or right to a third-party good or service) is transferred to the customer.

Licenses of Intellectual Property and Identifying Performance Obligations

On April 14, 2016, the FASB issued ASU 2016-10, Identifying Performance Obligations and Licensing, to clarify certain aspects of the guidance and improve its operability. See discussion in the FASB Update section.

Other Improvements to the Revenue Standard

On May 9, 2016, the FASB issued ASU 2016-12, Narrow-Scope Improvements and Practical Expedients, to address implementation issues that were raised by stakeholders and discussed by the Revenue Recognition Transition Resource Group (TRG), and provide additional practical expedients, including collectibility, noncash consideration, presentation of sales tax, and transition. See discussion in the FASB Update section.

Quarterly Accounting Update: On the Horizon

The following selected FASB exposure drafts and projects are outstanding as of June 30, 2016.

FASB Simplification Initiative

The FASB’s Simplification Initiative is a tightly-focused initiative to make narrow-scope simplifications and improvements to accounting standards through a series of short-term projects. The projects included in the initiative are intended to improve or maintain the usefulness of the information reported to investors while reducing cost and complexity in financial reporting. In addition to the Simplification Initiative, the FASB recently completed several projects, and currently is working on several projects intended to reduce cost and complexity in financial reporting. The FASB launched the initiative in 2015 to reduce the cost and complexity of financial reporting by making targeted changes to U.S. GAAP while maintaining or improving the usefulness of information for investors.

Balance Sheet Classification of Debt

This project is expected to reduce cost and complexity by replacing the existing fact-pattern specific guidance with a principle to classify debt as current or noncurrent based on the contractual terms of a debt arrangement and an organization’s current compliance with debt covenants. An exposure draft is expected in the third quarter of 2016.

Accounting for Income Taxes, Intra-Entity Asset Transfers

In January 2015, the FASB issued a proposal which is expected to simplify accounting for income taxes by eliminating the prohibition on the recognition of income taxes for transfers of assets from one jurisdiction to another.

Nonemployee Share-Based Payment Accounting Improvements

The objective of this project is to reduce cost and complexity and improve the accounting for nonemployee share-based payment awards issued by public and private companies.

Financial Instruments

The FASB continues to work on its financial instruments project. This project took on heightened significance in the wake of the 2008 financial crisis and once was considered an essential international accounting convergence project. Negotiations with the IASB to write global accounting guidelines have since fallen apart, and the amendments the FASB published in 2016 will not match the IASB’s revisions to its standards. The project has three primary areas that are being individually addressed: (1) recognition and measurement, (2) impairment and (3) hedging.

Recognition and Measurement

The recognition and measurement element of the financial instruments project has been completed. On January 5, 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, to address certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The ASU affects public and private companies, not-for-profit organizations and employee benefit plans that hold financial assets or owe financial liabilities.

The new guidance makes targeted improvements to existing U.S. GAAP by:

• Requiring equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income

• Requiring public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes

• Requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements

• Eliminating the requirement to disclose the fair value of financial instruments measured at amortized cost for organizations that are not public business entities

• Eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet, and

• Requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments.

Effective Dates

For public companies the new guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. For private companies, not-for-profit organizations, and employee benefit plans, the guidance becomes effective for fiscal years beginning after December 15, 2018, and for interim periods within fiscal years beginning after December 15, 2019.

The ASU permits early adoption of the own credit provision (referenced above). Additionally, it permits early adoption of the provision that exempts private companies and not-for-profit organizations from having to disclose fair value information about financial instruments measured at amortized cost.

Impairment

The impairment element of the financial instruments project has been completed. On June 16, 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments. The new standard introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale (AFS) debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. A discussion of the new ASU is included in the FASB Update section.

Hedging

At its June 2015 meeting, the FASB made a number of tentative decisions that would significantly modify certain aspects of the existing hedge accounting model. The FASB directed the staff to draft a proposed ASU, which will likely be issued in the third quarter of 2016. The objective of this project is to make targeted improvements to the hedge accounting model based on feedback received from preparers, auditors, users and other stakeholders. The FASB will consider opportunities to align with IFRS 9, Financial Instruments, which was issued in 2013.

Disclosure Framework

The objective and primary focus of this project is to improve the effectiveness of disclosures in notes to financial statements by clearly communicating the information that is most important to users of each entity’s financial statements. Although reducing the volume of the notes to financial statements is not the primary focus, the FASB hopes that a sharper focus on important information will result in reduced volume in most cases. In March 2014, the FASB issued an Exposure Draft, Conceptual Framework for Financial Reporting: Chapter 8 Notes to Financial Statements, intended to improve its process for evaluating existing and future disclosure requirements in notes to financial statements. Specifically, it addresses the FASB’s process for identifying relevant information and the limits on information that should be included in notes to financial statements. If approved, it would become part of the FASB’s Conceptual Framework, which provides the foundation for making standard-setting decisions.

In September 2015, the FASB issued two proposals—one about the use of materiality by reporting entities, Assessing Whether Disclosures Are Material, and the other amending the Conceptual Framework’s definition of materiality, Conceptual Framework for Financial Reporting Chapter 3: Qualitative Characteristics of Useful Financial Information. These two proposals were issued to help entities decide what information should be included in their footnotes without bogging them down with extra details.

The main provisions would draw attention to the role materiality plays in making decisions about disclosures. More specifically, the proposed ASU explains: (a) materiality would be applied to quantitative and qualitative disclosures individually and in the aggregate in the context of the financial statements as a whole; therefore, some, all, or none of the requirements in a disclosure Section may be

material; (b) materiality would be identified as a legal concept; and (c) omitting a disclosure of immaterial information would not be an accounting error.

Financial Statements of Not-for-Profit Entities

In April 2015, the FASB issued a proposal that would significantly change the financial statements of not-for-profit (NFP) entities, including business-oriented healthcare entities. The proposal would require NFPs to present two rather than three net asset classes and standardized measures of operating performance. It also would change how NFPs report cash flows, classify expenses and provide information about liquidity.

At its June 2016, meeting, the FASB voted to finalize the amendments in the proposal and expects to issue a final standard in the third quarter of 2016. The final standard is not expected to include the proposal’s requirement for NFPs to use the direct method of cash flow presentation. Instead, the final standard will allow not-for-profits to choose between direct and indirect cash flow reporting. In addition, the FASB agreed that an organization’s net investment return does not have to be reported as a single line item but can be presented in two or more line items on the statement of activities, as long as they are appropriately labeled. The FASB also agreed that the analysis of an organization’s costs by function and nature in the financial statement notes cannot include the investment portfolio expenses that have been netted out of investment returns.

In March, the FASB decided that the planned NFP standard will be effective for financial statements for fiscal years beginning after December 15, 2017, and for interim periods within fiscal years beginning after December 15, 2018. The FASB also said it will let not-for-profits adopt the standard ahead of the effective date.

Clarifying the Definition of a Business

This project is intended to clarify the definition of a business with the objective of addressing whether transactions involving in-substance nonfinancial assets (held directly or in a subsidiary) should be accounted for as acquisitions (or disposals) of nonfinancial assets or as acquisitions (or disposals) of businesses. The project will include clarifying the guidance for partial sales or transfers and the corresponding acquisition of partial interests in a nonfinancial asset or assets.

Classification of Certain Cash Receipts and Cash Payments

In November 1987, the FASB issued FASB Statement No. 95, Statement of Cash Flows. Statement 95 was later codified in ASC 230, Statement of Cash Flows. Recently, FASB staff research indicated that there was diversity in practice with respect to the classification of certain cash receipts and payments. In February 2016, the FASB issued a proposal addressing eight classification issues related to the statement of cash flows:

• Debt prepayment or debt extinguishment costs; • Settlement of zero-coupon bonds; • Contingent consideration payments made after a business combination; • Proceeds from the settlement of insurance claims; • Proceeds from the settlement of corporate-owned life insurance policies, including

bank-owned life insurance policies; • Distributions received from equity method investees; • Beneficial interests in securitization transactions; and • Separately identifiable cash flows and application of the predominance principle.

The FASB will determine the effective date and whether to permit early adoption after considering stakeholder feedback.

Restricted Cash

In April 2014, the FASB decided to add a statement of cash flows project to the FASB's technical agenda. The project, Clarifying Certain Existing Principles on Statement of Cash Flows, was intended to reduce diversity in practice in financial reporting by clarifying certain existing principles in Accounting Standards Codification (ASC) 230, Statement of Cash Flows.

At its April 1, 2015, meeting, the FASB decided to have the Emerging Issues Task Force (EITF) consider nine specific cash flow classification issues with the goal of reducing the existing diversity in practice on those issues on a timely basis. Eight of those issues are being addressed in EITF Issue 15-F, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments. The ninth issue, which relates to restricted cash and restricted cash equivalents, was previously included in Issue 15-F and is now being addressed in Issue 16-A.

On April 28, 2016, the FASB issued a proposal which would require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents would be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows.

Defined Benefit Pension Plans

In January 2016, the FASB issued two proposals that would amend the requirements in ASC 715, Compensation—Retirement Benefits, related to (1) the income statement presentation of the components of net periodic benefit cost for the defined benefit pension and other postretirement plans an entity sponsors and (2) disclosures about those defined benefit plans.

The income statement presentation project is part of the FASB’s simplification initiative. Under the proposed guidance, entities would present current service cost with other current employee

compensation costs and present the remaining components of net benefit cost elsewhere in the income statement.

The proposed changes related to disclosures are part of the FASB’s disclosure framework project, which was launched in 2014 to improve the effectiveness of disclosures in notes to financial statements. Under the proposed guidance, an entity would consider materiality in determining the extent of its defined benefit plan footnote disclosures. The proposal also contains a number of disclosure requirements that would be added to or deleted from U.S. GAAP.

Accounting for Interest Income Associated with the Purchase of Callable Debt Securities

At its meeting in September 2015, the FASB voted to add to its technical agenda a project to require disclosures about interest income on purchased debt securities and loans. The FASB discussed whether to amend the scope of the project to include the amortization period for purchased callable debt securities, for example, municipal bonds. The FASB decided to amortize all premiums to the first call date and all discounts to the maturity date.

The Board further directed the FASB staff to research the disclosure requirements related to the accounting for interest income on callable debt securities and callable loans. The Board also directed the FASB staff to consider whether and how to limit the scope of the instruments subject to the change.

Accounting for Goodwill Impairment

On May 12, 2016, the FASB proposed eliminating Step 2 of the current goodwill impairment test, which requires a hypothetical purchase price allocation to measure impairment loss. Under the proposal, goodwill impairment loss would instead be measured as the amount by which a reporting unit’s carrying amount exceeds its fair value. All other goodwill impairment guidance would remain unchanged. The proposal would apply to all entities except for private companies that have adopted the Private Company Council goodwill accounting alternative (ASU 2014-02). Under the proposal, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss would be recognized for the amount by which the reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill in that reporting unit. An entity would still have the option to perform a qualitative assessment before proceeding to the quantitative goodwill impairment test. Further, the proposal would not change the timing of goodwill impairment (i.e., annual or more frequently if there are triggering events) or the unit of account to which the test is applied (i.e., reporting units).

The FASB is considering whether to make additional changes to the subsequent accounting for goodwill in a related project, Subsequent Accounting for Goodwill for Public Business Entities and Not-for-Profit Entities.

Sales and Disposals of Nonfinancial Assets

On June 6, 2016, the FASB issued a proposal, Clarifying the Scope of Asset Derecognition Guidance and

Accounting for Partial Sales of Nonfinancial Assets, in an effort to address accounting for partial sales of nonfinancial assets which is not addressed in current accounting guidance. The proposed amendments would be applied when selling or disposing of nonfinancial assets unless the transactions are specifically covered by another area of U.S. GAAP.

Prior to the publication of the revenue recognition standard, ASU 2014-09, Revenue from Contracts with Customers, U.S. GAAP addressed partial sales of real estate, which are common. ASU 2014-09 eliminated the guidance for partial sales, and the proposed ASU is intended to address confusion about the accounting for such transactions created by the issuance of the revenue recognition standard. The ASU, if finalized, will become effective at the same time as ASU 2014-09.

FASB Proposes Amendments for Consolidated Reporting of Variable Interest Entities

On June 23, 2016, the FASB issued a proposal, Interests Held Through Related Parties That Are Under Common Control, that would change the evaluation of whether a reporting entity is the primary beneficiary of a variable interest entity (VIE) by changing how a reporting entity that is a single decision maker of a VIE would treat indirect interests in the entity held through related parties that are under common control with the reporting entity. Specifically, the proposed amendments, among other things, will require reporting entities to consider all direct variable interests in the VIE and the indirect variable interests in the VIE held through related parties when making a consolidated reporting assessment.

EITF Agenda Items

At its June 2016 meeting, the FASB’s Emerging Issues Task Force (EITF) discussed two Issues and reached a final consensus on one of them. The EITF also reached a consensus-for-exposure on a series of issues relating to employee benefit plan master trust reporting.

Final Consensus

Issue 15-F: Classification of Certain Cash Receipts and Cash Payments—this issue addresses eight specific cash flow classification issues under ASC 230, Statement of Cash Flows, with the intent to reduce diversity in practice. The EITF reached a final consensus on all eight issues. Entities would adopt the guidance on a retrospective basis for all eight issues unless it is impracticable.

Consensus-for-Exposure

Issue 16-B: Employee Benefit Plan Master Trust Reporting—the EITF reached a consensus-for-exposure on eight specific issues related to Employee Benefit Plan Master Trust Reporting under the following guidance:

• ASC 960, Defined Benefit Pension Plans • ASC 962, Defined Contribution Pension Plans • ASC 965, Health and Welfare Benefit Plans

The eight issues are intended to reduce diversity in reporting among employee benefit plans with investments held in master trusts. Entities would adopt the proposed guidance on a retrospective basis.

PCC Activities

The Private Company Council (PCC) met on April 12, 2016, and discussed the following issues:

• PCC Issue 15-02—Applying VIE Guidance to Entities Under Common Control This project relates to the application of Variable Interest Entities (VIE) guidance to entities under common control that are not already addressed in ASU 2014-07, Applying Variable Interest Entities Guidance to Common Control Leasing Arrangements. After discussing the scope of existing guidance, the PCC voted to recommend that the FASB add the project to its agenda. The FASB will address the recommendation at a future meeting.

• Partnerships The PCC removed partnership issues related to the goodwill method, payments made to partners and non-monetary partner contributions from its research agenda.

PCC Input on Select FASB Projects

• EITF Issue No. 16-A, Restricted Cash: The FASB staff delivered an update and the PCC provided input on the EITF’s consensus intended to improve the classification and presentation of changes in restricted cash on the statement of cash flows.

• Disclosures by Business Entities about Government Assistance: While considering the cost and complexity, the PCC recommended that the FASB narrow the scope of disclosures. The PCC expressed general support of the disclosures’ objectives.

• Nonemployee Share-Based Payment Accounting Improvements: The PCC generally supported aligning the models for nonemployee and employee share-based payments under U.S. GAAP.

• Improving the Equity Method of Accounting: The PCC discussed the FASB staff’s proposed alternatives to simplify the accounting for the basis difference that results from applying the equity method of accounting.

• Disclosure Framework: The FASB staff delivered updates, and the PCC provided input, on the Disclosure Framework projects related to disclosures for income taxes, inventory, and fair value measurements.

APPENDIX A

Important Implementation Dates

The following table contains significant implementation dates and deadlines for FASB/EITF/PCC and GASB standards.

FASB/EITF/PCC Implementation Dates

Pronouncement Affects Effective Date and Transition

ASU 2016-13, Measurement of Credit Losses on Financial Instruments

All entities that hold financial assets and net investment in leases that are not accounted for at fair value through net income.

For public business entities (PBE) that are Securities and Exchange Commission (SEC) filers, the new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 (for a calendar-year entity, it would be effective January 1, 2020).

For PBEs that are not SEC filers, the new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.

For all other organizations, the new standard is effective for fiscal years beginning after December 15, 2020, and for interim periods within fiscal years beginning after December 15, 2021.

Early adoption will be permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.

ASU 2016-12, Narrow-Scope Improvements and Practical Expedients

All entities See the Effective Date and Transition of ASU 2014-09, below.


ASU 2016-11, Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting (SEC Update)

None. None.

ASU 2016-10, Identifying Performance Obligations and Licensing

All entities See the Effective Date and Transition of ASU 2014-09, below.

ASU 2016-09, Improvements to Employee Share-Based Payment Accounting

All entities that issue share-based payment awards to their employees.

For public business entities, the amendments are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods.

For entities other than public business entities, the amendments are effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018.

Early adoption is permitted for any organization in any interim or annual period.

ASU 2016-08, Principal versus Agent Considerations

(Reporting Revenue Gross versus Net)

All entities. See the Effective Date and Transition of ASU 2014-09, below.


ASU 2016-07, Simplifying the Transition to the Equity Method of Accounting

Entities that have an investment that becomes qualified for the equity method of accounting as a result of an increase in the level of ownership interest or degree of influence.

The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The amendments should be applied prospectively upon their effective date to increases in the level of ownership interest or degree of influence that result in the adoption of the equity method. Earlier application is permitted.

ASU 2016-06, Contingent Put and Call Options in Debt Instruments (a consensus of the Emerging Issues Task Force)

Entities that are issuers of or investors in debt instruments (or hybrid financial instruments that are determined to have a debt host) with embedded call (put) options.

For public business entities, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years.

For entities other than public business entities, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within fiscal years beginning after December 15, 2018.

An entity should apply the amendments on a modified retrospective basis to existing debt instruments as of the beginning of the fiscal year for which the amendments are effective.

Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.


ASU 2016-05, Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships (a consensus of the Emerging Issues Task Force)

Entities for which there is a change in the counterparty to a derivative instrument that has been designated as a hedging instrument.

For public business entities, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years.

For all other entities, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within fiscal years beginning after December 15, 2018.

An entity has an option to apply the amendments on either a prospective basis or a modified retrospective basis.

Early adoption is permitted, including adoption in an interim period.


ASU 2016-04, Recognition of Breakage for Certain Prepaid Stored-Value Products (a consensus of the Emerging Issues Task Force)

Entities that offer certain prepaid stored-value products.

For public business entities, NFPs that have issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an OTC market, or an employee benefit plan that files financial statements with the SEC, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.

For all other entities, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019.

The amendments should be applied either using a modified retrospective transition method by means of a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year in which the guidance is effective or retrospectively to each period presented.

Earlier application is permitted, including adoption in an interim period.


ASU 2016-03, Effective Date and Transition Guidance (a consensus of the Private Company Council)

All entities except public business entities, as defined in the Master Glossary of the FASB Accounting Standards Codification, not-for-profit entities, and employee benefit plans.

The amendments are effective immediately.

ASU 2016-02, Leases All lessee and lessor entities.

For public business entities, NFPs that have issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an OTC market, or an employee benefit plan that files financial statements with the SEC, the amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020.

Early application of the amendments is permitted for all entities.


ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities

Entities that hold financial assets or owe financial liabilities.

For public companies the amendments are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.

For private companies, not-for-profit organizations, and employee benefit plans, the standard becomes effective for fiscal years beginning after December 15, 2018, and for interim periods within fiscal years beginning after December 15, 2019.

ASU 2015-17, Balance Sheet Classification of Deferred Taxes

Entities that have deferred tax assets and/or deferred tax liabilities.

For public business entities, the amendments are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods.

For all other entities, the amendments are effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018.


ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments

Entities that have reported provisional amounts for items in a business combination for which the accounting is incomplete.

For public business entities, the amendments are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. All other entities are required to apply the new requirements for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017.

All entities are required to apply the amendments prospectively to adjustments to provisional amounts that occur after the effective date, with earlier application permitted for financial statements that have not been issued.

ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated With Line-of-Credit Arrangements: Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting

SEC Registrants. Effective upon issuance (August 16, 2015).

ASU 2015-14, Revenue From Contracts With Customers (ASC 606): Deferral of the Effective Date

All entities. See the Effective Date and Transition of ASU 2014-09, below.


ASU 2015-13, Application of the Normal Purchases and Normal Sales Scope Exception to Certain Electricity Contracts Within Nodal Energy Markets—a consensus of the FASB Emerging Issues Task Force

Entities that enter into contracts for the purchase or sale of electricity on a forward basis.

The amendments were effective upon issuance (August 10, 2015) and should be applied prospectively. Therefore, an entity will have the ability to designate on or after the date of issuance any qualifying contracts as normal purchases or normal sales.

ASU 2015-12, (Part I) Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, (Part III) Measurement Date Practical Expedient

Defined Contribution Pension Plans, Defined Benefit Pension Plans, and Health and Welfare Benefit Plans

The amendments in all three are effective for fiscal years beginning after December 15, 2015; early adoption is permitted. An entity should apply the amendments in parts I and II retrospectively to all financial statements presented, while the amendments in part III should be applied prospectively.

ASU 2015-11, Simplifying the Measurement of Inventory

Entities that have inventory.

For public business entities, the amendments are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The amendments should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period.


ASU 2015-10, Technical Corrections and Improvements

All entities. Effective upon issuance (June 12, 2015) for amendments that do not have transition guidance. Amendments that are subject to transition guidance: effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015.

ASU 2015-09, Disclosures about Short-Duration Contracts

Insurance entities that issue short-duration contracts as defined in FASB ASC 944, Financial Services—Insurance.

For public business entities, the amendments are effective for annual periods beginning after December 15, 2015, and interim periods within annual periods beginning after December 15, 2016. For all other entities, the amendments are effective for annual periods beginning after December 15, 2016, and interim periods within annual periods beginning after December 15, 2017.

ASU 2015-08, Pushdown Accounting—Amendments to SEC Paragraphs Pursuant to Staff Accounting Bulletin No. 115 (SEC Update)

None. None.

ASU 2015-07, Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)

Entities that elect to use the NAV practical expedient.

For public business entities the amendments are effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Earlier application is permitted.


ASU 2015-06, Effects on Historical Earnings per Unit of Master Limited Partnership Dropdown Transactions

Master limited partnerships.

Effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Earlier application is permitted.

ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement

All entities. For public business entities, the amendments will be effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. For all other entities, the amendments will be effective for annual periods beginning after December 15, 2015, and interim periods in annual periods beginning after December 15, 2016. Early adoption is permitted for all entities.

ASU 2015-04, Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets

All entities. The amendments are effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. For all other entities, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. Earlier application is permitted.


ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs

All entities. For public business entities, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. For all other entities, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within fiscal years beginning after December 15, 2016. Early adoption is permitted for financial statements that have not been previously issued.

ASU 2015-02, Amendments to the Consolidation Analysis

All entities. Effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2016, and for interim periods within fiscal years beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.

A reporting entity may apply the amendments using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption. A reporting entity also may apply the amendments retrospectively.


ASU 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items

All entities. Effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The effective date is the same for both public business entities and all other entities.

ASU 2014-18, Accounting for Identifiable Intangible Assets in a Business Combination—a consensus of the Private Company Council


Effective prospectively to the first in-scope transaction after the adoption of the accounting alternative.


ASU 2014-17, Pushdown Accounting

All entities. Effective on November 18, 2014. After the effective date, an acquired entity can make an election to apply the guidance to future change-in-control events or to its most recent change-in-control event. However, if the financial statements for the period in which the most recent change-in-control event occurred already have been issued or made available to be issued, the application of this guidance would be treated as a change in accounting principle.

ASU 2014-16, Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or to Equity

All entities that are issuers of, or investors in, hybrid financial instruments that are issued in the form of a share.

Effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2016. Early adoption is permitted. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.

Entities should apply the guidance on a modified retrospective basis (cumulative-effect retained earnings adjustment as of the beginning of the year of adoption) to existing hybrid instruments issued in the form of a share as of the beginning of the fiscal year for which this ASU is effective. Retrospective application is permitted to all relevant prior periods.


ASU 2014-15, Disclosure of Uncertainties About and an Entity’s Ability to Continue as a Going Concern

All entities. Effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted.

ASU 2014-14, Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure

Creditors that hold government-guaranteed mortgage loans, including those guaranteed by the FHA and the VA.

Effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. For all other entities, the amendments are effective for annual periods ending after December 15, 2015, and interim periods beginning after December 15, 2015.

An entity should adopt the amendments using either a prospective transition method or a modified retrospective transition method. For prospective transition, an entity should apply the amendments to foreclosures that occur after the date of adoption. For modified retrospective transition, an entity should apply the amendments by means of a cumulative-effect adjustment (through a reclassification to a separate other receivable) as of the beginning of the annual period of adoption. Prior periods should not be adjusted. However, a reporting entity must apply the same method of transition as elected under ASU 2014-04. Early adoption, including adoption in an interim period, is permitted if the entity already has adopted ASU 2014-04.


ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period

Entities that issue share-based payments when the terms of an award stipulate that a performance target could be achieved after an employee completes the requisite service period.

Effective for all entities for annual periods and interim periods within those annual periods beginning after December 15, 2015. Early adoption is permitted.

Entities may apply the amendments either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening retained earnings balance at that date.

ASU 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures

Entities that enter into repurchase agreements, securities lending transactions, and repo-to-maturity transactions.

Effective for public business entities for the first interim or annual period beginning after December 15, 2014. For all other entities, the accounting changes are effective for annual periods beginning after December 15, 2014, and interim periods beginning after December 15, 2015. An entity is required to present changes in accounting for transactions outstanding on the effective date as a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. Earlier application for a public business entity is prohibited; however, all other entities may elect to apply the requirements for interim periods beginning after December 15, 2014.

For public business entities, the disclosure for certain transactions accounted for as a sale is required to be presented for interim and annual periods beginning after December 15, 2014, and the disclosure for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions accounted for as secured borrowings is required to be presented for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. For all other entities, both new disclosures are required to be presented for annual periods beginning after December 15, 2014, and interim periods beginning after December 15, 2015.


ASU 2014-10, Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation

All entities. Except for the amendments to ASC 810, the guidance is effective for public business entities for reporting periods (including interim periods) beginning after December 15, 2014. For other entities, the amendments are effective for annual periods beginning after December 15, 2014, and interim periods beginning after December 15, 2015. The amendments to ASC 810 are effective one year later for public business entities and two years later for other entities. The guidance should be applied retrospectively, except for the clarification to ASC 275, which applied prospectively.

Early adoption of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued.

ASU 2014-09, Revenue from Contracts with Customers

All entities. For public business entities, certain not-for-profit entities, and certain employee benefit plans, the ASU is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2017. Early application is permitted only as of annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016.

For all other entities, the ASU is effective for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. All other entities may apply the ASU early as of an annual reporting period beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities also may apply the guidance in the ASU early as of an annual reporting period beginning after December 15, 2016, and interim reporting periods within annual reporting periods beginning one year after the annual reporting period in which the entity first applies the guidance in the ASU.

An entity should apply the guidance either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying guidance at the date of initial application.


ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity

All entities. Effective for public business entities (and not-for-profit entities that issue securities or are conduit bond obligors) in annual periods beginning on or after December 15, 2014, and interim periods within those annual periods. For all other entities, the guidance is effective in annual periods beginning on or after December 15, 2014, and interim periods beginning on or after December 15, 2015. The guidance is applied prospectively to new disposals and new classifications of disposal groups as held for sale after the effective date.

All entities may early adopt the guidance for new disposals (or new classifications as held for sale) that have not been reported in financial statements previously issued or available for issuance.

ASU 2014-07, Applying Variable Interest Entities Guidance to Common Control Leasing Arrangements—a consensus of the Private Company Council


Upon adoption of the accounting alternative, the guidance is applied retrospectively as of the beginning of the first fiscal year in which the accounting alternative is elected and to all periods presented.


ASU 2014-03, Accounting for Certain Receive-Variable, Pay-Fixed Interest Rate Swaps—Simplified Hedge Accounting Approach—a consensus of the Private Company Council

All entities except public business entities, as defined in the Master Glossary of the FASB Accounting Standards Codification, not-for-profit entities, employee benefit plans, and financial institutions.

Upon adoption of the simplified hedge accounting approach, that is applied as of the beginning of the first fiscal year in which the approach is elected. Private companies have the option of applying the amendments in this ASU by using either a modified retrospective approach or a full retrospective approach.

ASU 2014-02, Accounting for Goodwill—a consensus of the Private Company Council


Upon adoption of the accounting alternative, the guidance is effective prospectively for new goodwill recognized after the adoption of that guidance. For existing goodwill, the guidance is effective as of the beginning of the first fiscal year in which the accounting alternative is adopted.


ASU 2014-01, Accounting for Investments in Qualified Affordable Housing Projects—a consensus of the FASB Emerging Issues Task Force

For reporting entities that meet the conditions, and that elect to use the proportional-amortization method, to account for investments in qualified affordable housing projects, all amendments in this ASU apply. For reporting entities that do not meet the conditions or that do not elect the proportional-amortization method, only the disclosure-related amendments in this ASU apply.

Effective for public business entities for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2014. For all entities other than public business entities, the amendments are effective for annual periods beginning after December 15, 2014, and interim periods within annual reporting periods beginning after December 15, 2015. Early adoption is permitted. The amendments in this ASU should be applied retrospectively to all periods presented.

GASB Implementation Dates


Statement 80, Blending Requirements for Certain Component Units—an amendment of GASB Statement No. 14

Governmental entities. Effective for reporting periods beginning after June 15, 2016. Earlier application is encouraged.

Statement 79, Certain External Investment Pools and Pool Participants

Governmental entities. Effective for reporting periods beginning after June 15, 2015, except for certain provisions on portfolio quality, custodial credit risk, and shadow pricing. Those provisions are effective for reporting periods beginning after December 15, 2015. Earlier application is encouraged.

Statement 78, Pensions Provided Through Certain Multiple-Employer Defined Benefit Pension Plans

Governmental entities. Effective for reporting periods beginning after December 15, 2015. Earlier application is encouraged.

Statement 77, Tax Abatement Disclosures

Governmental entities. Effective for reporting periods beginning after December 15, 2015. Earlier application is encouraged.

Statement 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments

Governmental entities. Effective for reporting periods beginning after June 15, 2015. Earlier application is encouraged.

Statement 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions

Governmental entities. Effective for fiscal years beginning after June 15, 2017. Early adoption is encouraged.


Statement 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans

Governmental entities. Effective for financial statements for periods beginning after June 15, 2016. Early adoption is encouraged.

Statement 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68

Governmental entities. Effective for fiscal years beginning after June 15, 2015—except those provisions that address employers and governmental nonemployer contributing entities for pensions that are not within the scope of Statement 68, which are effective for financial statements for fiscal years beginning after June 15, 2016. Early adoption is encouraged.

Statement 72, Fair Value Measurement and Application

Governmental entities. Effective for financial statements for periods beginning after June 15, 2015. Early adoption is encouraged.

Statement 71, Pension Transition for Contributions Made Subsequent to the Measurement Date

Governmental entities Effective for fiscal years beginning after June 15, 2014.

Statement 68, Accounting and Financial Reporting for Pensions—an amendment of GASB Statement No. 27

Governmental entities Effective for financial statements for fiscal years beginning after June 15, 2014. Early application is encouraged.

APPENDIX B

Illustrative Disclosures for Recently Issued Accounting Pronouncements

For the Quarter Ended June 30, 2016

The illustrative disclosures below are presented in plain English. Please review each disclosure for its applicability to your organization and the need for disclosure in your organization’s financial statements.

Applicable to Companies That Have Investments in Qualified Affordable Housing Projects:

In January 2014, the FASB amended the Equity Method and Joint Ventures topic of the Accounting Standards Codification. The amendments provide criteria that must be met in order to apply a proportional amortization method to Low-Income Housing Tax Credit investments and provide guidance on the method used to amortize the investment, the impairment approach, and the eligibility criteria for entities that have other arrangements (e.g., loans) with the limited liability entity. The amendments [were/will be] effective for the Company for new investments in qualified affordable housing projects for [interim and annual periods beginning after December 15, 2014-public companies] [ annual periods beginning after December 15, 2014, and interim periods within annual periods beginning after December 15, 2015-private companies]. [For existing investments in qualified affordable housing projects, the Company will apply the proportional amortization method retrospectively.] [The Company intends to continue using the effective yield method for existing investments in qualified affordable housing projects.] [These amendments did not] [The Company does not expect these amendments to] have a material effect on its financial statements.

Applicable to Private Companies That Elect to Amortize Goodwill:

In January 2014, the FASB amended the Intangibles –Goodwill and Other topic of the Accounting Standards Codification. Under the amended guidance, a nonpublic entity may elect to amortize goodwill on a straight-line basis over a period of ten years or over a shorter period if the company demonstrates that another useful life is more appropriate. Goodwill would be subject to impairment testing only upon the occurrence of a triggering event. The amendments were effective for the Company for annual periods beginning after December 15, 2014, and interim periods within annual periods beginning after December 15, 2015, with early adoption permitted. The alternative is applied on a prospective basis, with amortization of existing goodwill commencing at the beginning of the period of adoption. These amendments did not have a material effect on the Company’s financial statements.

Applicable to Private Companies, Other Than Financial Institutions, That Elect to Use The Simplified Hedge Accounting Approach:

In January 2014, the FASB amended the Derivatives and Hedging topic of the Accounting Standards

Codification. Under the amended guidance, a nonpublic entity may elect to use a simplified hedge accounting approach for its receive-variable, pay-fixed interest rate swaps. Under this approach, the income statement charge for interest expense will be similar to the amount that would result if the company had directly entered into a fixed-rate borrowing instead of a variable-rate borrowing and an interest rate swap. Furthermore, the simplified hedge accounting approach al¬lows the swap to be measured at its settlement value, which measures the swap without non-performance risk, instead of fair value. The amendments were effective for the Company for annual periods beginning after December 15, 2014, and interim periods within annual periods beginning after December 15, 2015, with early adoption permitted. The Company applied the simplified hedge accounting approach [retrospectively] [using a modified retrospective approach]. These amendments did not have a material effect on the Company’s financial statements.

Applicable to Private Companies That Elect to Not Apply VIE Guidance:

In March 2014, the FASB amended the Consolidation topic of the Accounting Standards Codification. Under the amended guidance, a nonpublic entity has the option to exempt itself from applying the VIE consolidation model to a qualifying common control leasing arrangement. The amendments were effective for the Company for annual periods beginning after December 15, 2014, and interim periods within annual periods beginning after December 15, 2015, with early adoption permitted. The Company applied a full retrospective approach in which financial statements for each individual prior period presented and the opening balances of the earliest period presented were adjusted to reflect the period-specific effects of applying the amendments.

Applicable to Companies That Have New Disposals and New Classifications of Disposal Groups as Held for Sale:

In April 2014, the FASB issued guidance to change the criteria for reporting a discontinued operation. Under the new guidance, a disposal of part of an organization that has a major effect on its operations and financial results is a discontinued operation. The amendments were effective for the Company for [annual periods, and interim periods within those annual period beginning after December 15, 2014-public companies and not-for-profit entities that issue securities or are conduit bond obligors] [annual periods beginning after December 15, 2014, and interim periods within annual periods beginning after December 15, 2015-all other entities], with early implementation of the guidance permitted. These amendments did not have a material effect on the Company’s financial statements.

Applicable to All:

In May 2014, the FASB issued guidance to change the recognition of revenue from contracts with customers. The core principle of the new guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. The guidance will be effective for the Company for [reporting periods

beginning after December 15, 2017-public business entities] [annual periods beginning after December 15, 2018, and interim periods within annual reporting periods beginning after December 15, 2019-all other entities]. The Company will apply the guidance using a [full retrospective approach] [modified retrospective approach]. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to Development Stage Entities:

In June 2014, the FASB issued guidance which eliminates the concept of a development stage entity. Accordingly, the incremental reporting requirements for a development stage entity, including inception-to-date information, will no longer apply. The amendments were effective for the Company for [reporting periods beginning after December 15, 2014, except for certain consolidation requirements which are effective one year later-public business entities] [annual periods beginning after December 15, 2014, and interim periods beginning after December 15, 2015, except for certain consolidation requirements which are effective two years later-all other entities], with early implementation of the amendments permitted. The Company applied the guidance using a retrospective approach, except for certain disclosure requirements which will be applied prospectively. These amendments did not have a material effect on its financial statements.

Applicable to Companies With Repurchase Agreements:

In June 2014, the FASB issued guidance which makes limited amendments to the guidance on accounting for certain repurchase agreements. The new guidance (1) requires entities to account for repurchase-to-maturity transactions as secured borrowings (rather than as sales with forward repurchase agreements), (2) eliminates accounting guidance on linked repurchase financing transactions, and (3) expands disclosure requirements related to certain transfers of financial assets that are accounted for as sales and certain transfers (specifically, repos, securities lending transactions, and repurchase-to-maturity transactions) accounted for as secured borrowings. The amendments were effective for the Company for [the first interim or annual period beginning after December 15, 2014-public business entities] [annual periods beginning after December 15, 2014, and interim periods beginning after December 15, 2015-all other entities]. The Company applied the guidance by making a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. These amendments did not have a material effect on the Company’s financial statements.

Applicable to Companies With Stock Compensation Tied to Performance Targets:

In June 2014, the FASB issued guidance which clarifies that performance targets associated with stock compensation should be treated as a performance condition and should not be reflected in the grant date fair value of the stock award. The amendments will be effective for the Company for fiscal years that begin after December 15, 2015. The Company will apply the guidance to [all stock awards granted or modified after the amendments are effective] [stock awards with performance targets that are

outstanding at the start of the first fiscal year in the financial statements and to all stock awards that are granted or modified after the effective date]. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to All:

In August 2014, the FASB issued guidance that is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. In connection with preparing financial statements, management will need to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the organization’s ability to continue as a going concern within one year after the date that the financial statements are issued. The amendments will be effective for the Company for annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to Companies With Hybrid Financial Instruments:

In November 2014, the FASB issued guidance for determining whether embedded features need to be accounted for separately from their host shares. The new guidance requires companies to consider all terms and features, including the embedded feature(s) being evaluated for separate recognition, when determining whether a host contract is more akin to debt or equity; no single term or feature should be considered determinative regarding the nature of the host contract. The amendments will be effective for [fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015-public business entities] [fiscal years beginning after December 15, 2015, and interim periods within fiscal years beginning after December 15, 2016-all other entities], with early adoption, including adoption in an interim period, permitted. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to Companies That Elect to Apply Pushdown Accounting:

In November 2014, the FASB issued guidance that gives acquired entities the option to apply pushdown accounting in their separate financial statements when an acquirer obtains control of them. Pushdown accounting is the practice of adjusting an acquired company’s separate financial statements to reflect the new basis of accounting established by the buyer for the acquired company. The new guidance provides an acquired entity with an option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity. The amendments were effective upon issuance. The Company will apply pushdown accounting as of the most recent change-in-control event.

Applicable to Private Companies That Elect to Not Recognize Certain Intangible Assets In a Business Combination:

In December 2014, the FASB amended the Business Combinations topic of the Accounting Standards Codification. Under the amended guidance, a nonpublic entity may elect to not recognize separately from goodwill (1) customer-related intangible assets that are not capable of being sold or licensed independently from the other assets of the business and (2) noncompetition agreements. This alternative generally will result in recognizing fewer intangible assets in a business combination and, correspondingly, more goodwill. The alternative is applied on a prospective basis. In addition, when this alternative is elected, the Company also is required to adopt the alternative accounting related to goodwill which requires that goodwill be amortized on a straight-line basis over a period of ten years or over a shorter period if the Company demonstrates that another useful life is more appropriate. The amendments will be effective for the Company upon the occurrence of the first transaction within the scope of this accounting alternative in fiscal years beginning after December 15, 2015, and the effective date of adoption depends on the timing of that first in-scope transaction. If the first in-scope transaction occurs in the first fiscal year beginning after December 15, 2015, the elective adoption will be effective for that fiscal year’s annual financial reporting and all interim and annual periods thereafter. If the first in-scope transaction occurs in fiscal years beginning after December 15, 2016, the elective adoption will be effective in the interim period that includes the date of that first in-scope transaction and subsequent interim and annual periods thereafter. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to All:

In January 2015, the FASB issued guidance to eliminate from U.S. GAAP the concept of an extraordinary item, which is an event or transaction that is both (1) unusual in nature and (2) infrequently occurring. Under the new guidance, an entity will no longer (1) segregate an extraordinary item from the results of ordinary operations; (2) separately present an extraordinary item on its income statement, net of tax, after income from continuing operations; or (3) disclose income taxes and earnings-per-share data applicable to an extraordinary item. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company will apply the guidance [prospectively] [retrospectively to all prior periods presented in the financial statements]. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to All:

In February 2015, the FASB issued guidance which amends the consolidation requirements and significantly changes the consolidation analysis required under U.S. GAAP. Although the amendments are expected to result in the deconsolidation of many entities, the Company will need to reevaluate all

its previous consolidation conclusions. The amendments will be effective for [fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015-public business entities] [fiscal years beginning after December 15, 2015, and interim periods beginning after December 15, 2017-all other entities], with early adoption permitted (including during an interim period), provided that the guidance is applied as of the beginning of the annual period containing the adoption date. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to Entities With Debt Issuance Costs:

In April 2015, the FASB issued guidance which changes the presentation of debt issuance costs. The amendments will be effective for [fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015-public business entities] [fiscal years beginning after December 15, 2015, and interim periods beginning after December 15, 2016-all other entities], with early adoption permitted for financial statements that have not been previously issued. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to Entities With Defined Benefit Pension Plans:

In April 2015, the FASB issued guidance which provides a practical expedient that permits the Company to measure defined benefit plan assets and obligations using the month-end that is closest to the Company’s fiscal year-end. The amendments will be effective for [fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015-public business entities] [fiscal years beginning after December 15, 2016, and interim periods beginning after December 15, 2017-all other entities], with early adoption permitted. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to Entities With Cloud Computing Arrangements:

In April 2015, the FASB issued guidance which provides guidance to customers about whether a cloud computing arrangement includes a software license. The amendments will be effective for [fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015-public business entities] [fiscal years beginning after December 15, 2015, and interim periods beginning after December 15, 2016-all other entities], with early adoption permitted. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to Master Limited Partnerships:

In April 2015, the FASB issued guidance which provides guidance to master limited partnerships that receive net assets through a dropdown transaction on the allocation of the earnings (losses) of the transferred business before the date of the dropdown transaction. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to Entities That Elect to Use The Net Asset Value Practical Expedient:

In May 2015, the FASB issued guidance which removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. The amendments will be effective for [fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015-public business entities] [fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016-all other entities], with early adoption permitted. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to Insurance Entities That Issue Short-Duration Contracts:

In May 2015, the FASB issued guidance which requires insurance entities to disclose for annual reporting periods certain information about the liability for unpaid claims and claim adjustment expenses. The amendments will be effective for [fiscal years beginning after December 15, 2015 and interim periods beginning after December 15, 2016-public business entities] [fiscal years beginning after December 15, 2016, and interim periods beginning after December 15, 2017-all other entities], with early adoption permitted. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to All:

In June 2015, the FASB issued amendments to clarify the Accounting Standards Codification (ASC), correct unintended application of guidance, and make minor improvements to the ASC that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. The amendments were effective upon issuance (June 12, 2015) for amendments that do not have transition guidance. Amendments that are subject to transition guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to Entities That Have Inventory:

In July 2015, the FASB issued amendments to the Inventory topic of the Accounting Standards Codification to require inventory to be measured at the lower of cost and net realizable value. Other than the change in the subsequent measurement guidance from the lower of cost or market to the lower of cost and net realizable value for inventory, there are no other substantive changes to the guidance on measurement of inventory. The amendments will be effective for [fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016-public business entities] [fiscal years beginning after December 15, 2016, and interim periods beginning after December 15, 2017-all other entities], with early adoption permitted. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to Defined Benefit Pension Plans, Defined Contribution Pension Plans, and Health and Welfare Benefit Plans:

In July 2015, the FASB issued amendments to (1) require a pension plan to use contract value as the only measure for fully benefit-responsive investment contracts, (2) simplify and increase the effectiveness of the investment disclosure requirements for employee benefit plans, and (3) provide benefit plans with a measurement-date practical expedient. The amendments will be effective for fiscal years beginning after December 15, 2015, with early adoption permitted. The Entity does not expect these amendments to have a material effect on its financial statements.

Applicable to Entities That Purchase or Sell Electricity:

In August 2015, the FASB issued amendments to the Derivatives and Hedging topic of the Accounting Standards Codification to clarify the application of the normal purchases and normal sales scope exception to purchases or sales of electricity on a forward basis that are transmitted through, or delivered to a location within, a nodal energy market. The amendments were effective upon issuance and are applied prospectively. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to All:

In August 2015, the FASB deferred the effective date of ASU 2014-09, Revenue from Contracts with Customers. As a result of the deferral, the guidance in ASU 2014-09 will be effective for the Company for [reporting periods beginning after December 15, 2017-public business entities] [annual periods beginning after December 15, 2018, and interim periods within annual reporting periods beginning after December 15, 2019-all other entities]. The Company will apply the guidance using a [full retrospective approach] [modified retrospective approach]. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to SEC Registrants:

In August 2015, the FASB issued amendments to the Interest topic of the Accounting Standards Codification to clarify the SEC staff’s position on presenting and measuring debt issuance costs incurred in connection with line-of-credit arrangements. The amendments were effective upon issuance. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to All Entities That Have Reported Provisional Amounts for Items in a Business Combination for Which The Accounting is Incomplete:

In September 2015, the FASB amended the Business Combinations topic of the Accounting Standards Codification to simplify the accounting for adjustments made to provisional amounts recognized in a business combination by eliminating the requirement to retrospectively account for those adjustments. The amendments will be effective for [fiscal years, and interim periods within those fiscal years,

beginning after December 15, 2015-public business entities] [fiscal years beginning after December 15, 2016, and interim periods beginning after December 15, 2017-all other entities], with early adoption permitted for financial statements that have not been issued. All entities are required to apply the amendments prospectively to adjustments to provisional amounts that occur after the effective date. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to Entities That Have Deferred Tax Assets and/or Deferred Tax Liabilities:

In November 2015, the FASB amended the Income Taxes topic of the Accounting Standards Codification to simplify the presentation of deferred income taxes by requiring that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments will be effective for [financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. -public business entities] [financial statements issued for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018.-all other entities], with early adoption permitted as of the beginning of an interim or annual reporting period. The Company will apply the guidance [prospectively] [retrospectively]. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to Entities That Hold Financial Assets or Owe Financial Liabilities:

In January 2016, the FASB amended the Financial Instruments topic of the Accounting Standards Codification to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The amendments will be effective for [fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.-public companies] [fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019.-all other entities, including not-for-profit organizations and employee benefit plans] The Company will apply the guidance by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values will be applied prospectively to equity investments that exist as of the date of adoption of the amendments. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to Lessee and Lessor Entities:

In February 2016, the FASB amended the Leases topic of the Accounting Standards Codification to revise certain aspects of recognition, measurement, presentation, and disclosure of leasing transactions. The amendments will be effective for [fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. -public companies] [fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020.-all other entities] The Company is currently evaluating the effect that implementation of the new standard will have on its

financial position, results of operations, and cash flows.

Applicable to Private Companies:

In March 2016, the FASB amended several topics of the Accounting Standards Codification to make the guidance in all private company accounting alternatives effective immediately by removing their effective dates. The amendments also include transition provisions that provide that private companies are able to forgo a preferability assessment the first time they elect the private company accounting alternatives. The amendments were effective immediately. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to Entities That Offer Certain Prepaid Stored-Value Products:

In March 2016, the FASB amended the Liabilities topic of the Accounting Standards Codification to address the current and potential future diversity in practice related to the derecognition of a prepaid stored-value product liability. The amendments will be effective for [financial statements issued for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.-public companies] [financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019.-all other entities] The Company will apply the guidance [using a modified retrospective transition method by means of a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year in which the guidance is effective] [retrospectively] to each period presented. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to Entities for Which There is a Change in The Counterparty to a Derivative Instrument That Has Been Designated as a Hedging Instrument:

In March 2016, the FASB amended the Derivatives and Hedging topic of the Accounting Standards Codification to clarify that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The amendments will be effective for [financial statements issued for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. -public companies] [financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within fiscal years beginning after December 15, 2018.-all other entities] The Company will apply the guidance [using a modified retrospective transition] [prospectively] to each period presented. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to Entities That Are Issuers of or Investors in Debt Instruments (or Hybrid Financial Instruments That Are Determined to Have a Debt Host) with Embedded Call (Put) Options:

In March 2016, the FASB amended the Derivatives and Hedging topic of the Accounting Standards

Codification to clarify the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. The amendments will be effective for [financial statements issued for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years.-public companies] [financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within fiscal years beginning after December 15, 2018.-all other entities] The Company will apply the guidance using a modified retrospective transition to existing debt instruments as of the beginning of the fiscal year for which the amendments are effective. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to Entities That Have an Investment That Becomes Qualified for The Equity Method of Accounting as a Result of an Increase in The Level of Ownership Interest or Degree of Influence:

In March 2016, the FASB amended the Investments—Equity Method and Joint Ventures topic of the Accounting Standards Codification to eliminate the requirement to retroactively adopt the equity method of accounting. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The Company will apply the guidance prospectively upon their effective date to increases in the level of ownership interest or degree of influence that result in the adoption of the equity method. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to All:

In March 2016, the FASB amended the Revenue from Contracts with Customers topic of the Accounting Standards Codification to clarify the implementation guidance on principal versus agent considerations and address how an entity should assess whether it is the principal or the agent in contracts that include three or more parties. The amendments will be effective for the Company for [reporting periods beginning after December 15, 2017-public business entities] [annual periods beginning after December 15, 2018, and interim periods within annual reporting periods beginning after December 15, 2019-all other entities]. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to All:

In March 2016, the FASB issued guidance to simplify several aspects of the accounting for share-based payment award transactions including the income tax consequences, the classification of awards as either equity or liabilities, and the classification on the statement of cash flows. Additionally, the guidance simplifies two areas specific to entities other than public business entities allowing them apply a practical expedient to estimate the expected term for all awards with performance or service conditions that have certain characteristics and also allowing them to make a one-time election to

switch from measuring all liability-classified awards at fair value to measuring them at intrinsic value. The amendments will be effective for the Company for [annual periods beginning after December 15, 2016 and interim periods within those annual periods-public business entities] [annual periods beginning after December 15, 2017, and interim periods within annual reporting periods beginning after December 15, 2018-all other entities]. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to All:

In April 2016, the FASB amended the Revenue from Contracts with Customers topic of the Accounting Standards Codification to clarify guidance related to identifying performance obligations and accounting for licenses of intellectual property. The amendments will be effective for the Company for [reporting periods beginning after December 15, 2017-public business entities] [annual periods beginning after December 15, 2018, and interim periods within annual reporting periods beginning after December 15, 2019-all other entities]. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to All:

In May 2016, the FASB amended the Revenue from Contracts with Customers topic of the Accounting Standards Codification to clarify guidance related to collectability, noncash consideration, presentation of sales tax, and transition. The amendments will be effective for the Company for [reporting periods beginning after December 15, 2017-public business entities] [annual periods beginning after December 15, 2018, and interim periods within annual reporting periods beginning after December 15, 2019-all other entities]. The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to Entities That Hold Financial Assets and Net Investment in Leases That Are Not Accounted for at Fair Value Through Net Income:

In June 2016, the FASB issued guidance to change the accounting for credit losses and modify the impairment model for certain debt securities. The amendments will be effective for the Company for [reporting periods beginning after December 15, 2019-SEC filers] [reporting periods beginning after December 15, 2020-public business entities that are not SEC filers] [annual periods beginning after December 15, 2020, and interim periods within annual reporting periods beginning after December 15, 2021-all other entities]. The Company is currently evaluating the effect that implementation of the new standard will have on its financial position, results of operations, and cash flows.

Applicable to All:

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

360° insights - elliott davis · collectibility, noncash consideration, presentation of sales tax,...

Documents