Accounting and financial reporting developments for private companies

Transcription

1 Accounting and financial reporting developments for private companies YEAR-END 2018 UPDATE In this update, we highlight some of the more important 2018 year-end accounting and financial reporting activities for private companies. The content is not meant to be all-inclusive. Accounting Guidance Issued in Fourth Quarter 2018 Narrow scope improvements for lessors ASU , Leases (Topic 842): Narrow Scope Improvements for Lessors (ASU ), provides updated guidance on three topics where stakeholders had requested additional guidance. The topics are discussed in additional detail below, and the effective date for this additional guidance is the same as the effective date for the new lease standard (ASU and the related amendments). Sales taxes and other similar taxes collected from lessees Under ASC Topic 842 (prior to this amendment), lessors were required to evaluate sales taxes and other taxes collected by the lessor on behalf of the lessee to determine which party had the primary obligation to pay the taxes. If the lessor has the primary obligation, the amounts collected are reported as lease revenue and the payments as lease costs. If the lessee has the primary obligation, the amounts are excluded

2 from revenue and expense. As tax laws can be different in different states (and in foreign jurisdictions), this assessment was required to be made on a jurisdiction-by-jurisdiction basis, which would make reporting this information costly and time-consuming for entities that operated in multiple jurisdictions. Since the net impact of recording these taxes would be zero on the income statement, the FASB agreed to provide lessors with the option to make an accounting policy election to exclude the amounts collected from lessees on behalf of others when determining the amount of the lease payments. This is similar to the accounting policy election the FASB provides for entities to exclude amounts collected from customers for sales taxes (and similar taxes) when determining the transaction price under ASC 606. Certain lessor costs Sometimes, a lessor may incur costs related to its role as the owner of the asset being leased and will pass those costs directly onto the lessor. This can be done either by requiring the lessee to pay a third party directly or by the lessor requiring the lessee to reimburse them for these costs. Under ASC 842 (prior to this amendment), lessors were required to report these amounts as revenues and expenses. As these costs generally have a net impact of zero on the income statement and can be costly for the lessor to obtain, when the lessee pays the costs directly to third parties, ASU excludes these amounts from the calculation of lease revenue. However, costs paid by a lessor to a third party that are reimbursed by the lessee are included as part of the variable lease payments and are therefore included in the calculation of lease revenue. Recognition of variable payments for contracts with lease and nonlease components Stakeholders also raised questions on the accounting for variable lease payments when contracts include both lease and nonlease components. Prior to this amendment, ASC Topic 842 required entities to recognize certain variable payment amounts in profit and loss in the period when the changes in facts and circumstances on which the variable payment is based occur, regardless of whether the payment partially relates to nonlease components. ASU clarifies that when the variable payment relates to both lease and nonlease components the amount of the variable payment must be allocated between the lease and nonlease components. Codification improvements to financial instruments credit losses ASU , Codification Improvements to Topic 326, Financial Instruments Credit Losses (ASU ) was issued to address two issues that stakeholders had brought to the FASB s attention. Transition and effective date for nonpublic business entities Prior to these amendments, ASU was scheduled to be effective for nonpublic business entities for fiscal years beginning after Dec. 15, 2020, (Dec. 31, 2021, for calendar year-end entities) and interim periods within fiscal years beginning after Dec. 15, Nonpublic business entities raised concerns about these effective dates as the requirement to adopt the standard for fiscal years beginning after Dec. 15, 2020, was the same as the requirement for public business entities that were not SEC registrants. The FASB agreed to provide nonpublic business entities with relief on the adoption of ASU After this amendment, ASU will be effective for nonpublic business entities for fiscal years beginning after Dec. 15, 2021 (Dec. 31, 2022, for calendar year-end entities), including interim periods within those fiscal years. Operating lease receivables Stakeholders also raised questions as to whether lease receivables resulting from sales-type leases and direct financings leases should be accounted for within the scope of ASC Topic 842 or ASC Topic 326. ASU clarifies that lease receivables are outside the scope of ASC Topic 326 and should be accounted for in accordance with ASC Topic 842. Clarifying the interaction between ASC Topics 808 and 606 ASU : Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606, was issued to address confusion on when entities should apply the guidance in Topic 606 instead of the guidance in Topic 808 when entering into collaborative arrangements. The new guidance clarifies that collaborative arrangements may fall either wholly or partially within the scope of another topic (e.g., revenue recognition). A collaborative arrangement would fall within the scope of the revenue recognition standard when the entire transaction related to a distinct bundle of goods or service is with a customer. Year-end 2018 update 2

3 If the transactions related to the distinct bundle of goods or services include transactions with both customers and noncustomers, then the collaborative arrangement would not fall within the scope of Topic 606. While ASU clarified when collaborative arrangements may fall within the scope of Topic 606 instead of Topic 808, it did not make any changes to the recognition, measurement, or subsequent measurement guidance in Topic 808. So, when arrangements fall within the scope of Topic 808, entities will continue to account for those arrangements in the same manner they have historically accounted for those arrangements. Targeted improvements to related-party guidance for variable interest entities ASU Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. This ASU is intended to simplify the application of the variable interest entity (VIE) guidance for entities under common control. The new guidance will supersede the existing Private Company Council (PCC) alternative for common control leasing arrangements and replace it with an expanded private company alternative. The new alternative will allow a private company to not apply the VIE guidance to all legal entities under common control that meet certain criteria, rather than being limited to only leasing arrangements like the current PCC alternative. The criteria for a private company to apply the new alternative are: 1. The reporting entity (the company preparing financial statements) and legal entity (the potential VIE) must be under common control. 2. The reporting entity and legal entity are not under common control of a public business entity (PBE). 3. The legal entity is not a PBE. 4. The reporting entity does not have a controlling financial interest in the legal entity based on the direct and indirect voting interests. Reporting entities that are currently consolidating legal entities under common control as a result of applying the VIE guidance may want to evaluate whether to early adopt this standard. However, entities should keep in mind that adopting this accounting alternative is an accounting policy election that must be applied to all legal entities under common control and that additional footnote disclosures are required when this election is made. The ASU also changes the guidance for determining if a decision-making fee arrangement is a variable interest for entities under common control. Existing guidance requires entities to consider indirect interests held through related parties under common control as though it were a direct interest. The ASU changes this and requires entities to consider indirect interests held through related parties under common control on a proportional basis. The ASU will be effective for public business entities for fiscal years beginning after Dec. 15, 2019, including interim periods within those fiscal years. For private companies, the ASU will be effective for fiscal years beginning after Dec. 15, 2020, and interim periods beginning after Dec. 15, Early adoption is permitted. Hedge accounting: Addition of new benchmark interest rate ASU , Derivatives and Hedging Topic 815: Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes, adds a fifth benchmark interest rate that can be used for the purposes of applying hedge accounting. Prior to ASU being issued, the only benchmark interest rates were those based on U.S. Treasury Obligations (UST), the London interbank offered rate (Libor), the Overnight Index Swap rate (OIS) based on the Fed Funds effective rate, and the Securities Industries and Financial Markets Association (SIFMA) Municipal Swap Rate. As Libor is set to be phased out of use in 2021, the Federal Reserve has been working to establish a rate to replace Libor. A committee created by the Federal Reserve identified the Secured Overnight Financing Rate (SOFR) as the preferred alternative to replace Libor. To help facilitate wider acceptance of SOFR, the Federal Reserve requested the FASB to allow the OIS based on SOFR be added as a benchmark rate for hedge accounting purposes, which was finalized with ASU This ASU will be effective when an entity adopts the new hedge accounting guidance established in ASU New Revenue Recognition Rules Effective Calendar Year 2019 As a reminder, the new standard, as amended, is effective yearend 2019 for calendar-year private companies (interim periods in 2020), and companies can adopt using a full retrospective adoption or cumulative effect adoption method (modified retrospective option). 3 Plante Moran

4 As discussed in previous newsletters, the Transition Resource Group (TRG) was formed to review implementation issues and bring issues to the FASB s attention if further amendments to the guidance were deemed necessary. The TRG has issued numerous white papers addressing implementation issues. Additionally, the AICPA formed 16 industry task forces to help develop a new Accounting Guide on Revenue Recognition that will provide helpful hints and illustrative examples for how to apply the new revenue standard. The industry task forces continue to discuss industry-specific implementation issues, and FinRec released various working drafts of industry guidance, some of which are still available for public comment on the AICPA website. Companies should consider the TRG and FinRec white papers in implementing ASC 606. Calendar year-end public companies were required to adopt the standard on Jan. 1, Private companies should consider reviewing disclosures made by public companies in their industry sector. New Lease Standard Effective Calendar Year 2020 The new lease standard is effective year-end 2020 for calendar-year private companies. Under the new guidance, including amendments, lessees will be required to recognize the assets and liabilities for the rights and obligations created by those leases with terms of more than 12 months on the balance sheet. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a capital or operating lease. However, unlike current GAAP, which requires only capital leases to be recognized on the balance sheet, the guidance in this ASU will require both types of leases to be recognized on the balance sheet. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) may apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, or may apply the practical expedient in ASU , if elected, to apply the cumulative effect in the period of adoption. The modified retrospective approach does not require any transition accounting for leases that expired before the date of adoption, and provides for certain other practical expedients. Lessees and lessors may not apply a full retrospective transition approach. See our 2018 Third Quarter Update for discussion of the new guidance in ASU and ASU Measurement of Credit Losses on Financial Instruments As a reminder, ASU , Financial Instruments Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as amended, changes the impairment model to a current expected credit loss (CECL) model and will require an entity to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. As a result, entities will need to incorporate forward-looking information to better form their credit loss estimates, and credit losses will generally be recognized earlier when a CECL exists. The new guidance also permits the restoration of prior credit losses on available-for-sale debt securities in circumstances where the estimate of credit losses has declined. Entities will continue to use judgment to determine loss estimation for their circumstances. This ASU is effective for SEC filers for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2019 (i.e., Jan. 1, 2020, for calendar-year entities). For public business entities that are not SEC filers, this ASU is effective for fiscal years beginning after Dec. 15, 2020, and interim periods within those fiscal years. For all other entities, this ASU will take effect for fiscal years and interim periods beginning after Dec. 15, Early application is permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, The FASB established a TRG to solicit, analyze, and discuss implementation issues related to the new credit impairment standard. The group has discussed various topics of interest, and the meeting materials can be accessed on the FASB website. The AIPCA s Financial Reporting Executive Committee issued three working drafts of accounting issues related to implementation of Topic 326 as follows: Zero Expected Credit Losses Reversion Method: Estimation vs. Accounting Policy Reasonable & Supportable Forecasting Developing the Period & Use of Historical Information Year-end 2018 update 4

5 Standards Effective Calendar Year 2018 Certain key updates (as described more fully in earlier newsletters) are effective calendar year 2018 as follows (not all-inclusive): Presentation of financial statements of not-for-profit entities (ASU ): Changes presentation and disclosure requirements to provide more relevant information about resources (and the changes in those resources). Improvements to employee share-based payment accounting (ASU ): Simplifies accounting for share-based payments in the following areas: accounting for forfeitures; statutory withholding requirements; excess tax benefits/tax deficiencies upon vesting or settlement of awards; classifications on the statement of cash flows; and allows nonpublic entities to elect practical expedients related to the expected-term and measurement of liability-classified awards. Contingent puts and calls in debt instruments (ASU ): Clarifies analysis for embedded contingent puts and calls in debt instruments. Balance sheet classification of deferred taxes (ASU ): Provides that all deferred tax assets and liabilities be classified as noncurrent on the balance sheet. Accounting Guidance Eligible for Early Adoption in Calendar Year 2018 In addition to the guidance effective this calendar year discussed above, some ASUs issued earlier this year and in prior years also allow for early adoption, if the financial statements have not been issued. Key ASUs (not all-inclusive) allowing for early adoption include the following: Targeted improvements to related party guidance for variable interest entities (ASU ): Provides an accounting alternative for private companies to not apply the variable interest entity guidance to potential VIEs that are under common control when certain criteria are met. Also, changes the guidance for determining if a decision-making fee arrangement is a variable interest for entities under common control. Customer s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract (ASU ): Aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software and hosting arrangements that include an internal-use software license. Changes to the disclosure requirements for fair value measurements (ASU ): Modifies the disclosure requirements on fair value measurements. Certain targeted disclosures are removed, modified, and added. Improvements to nonemployee share-based payment accounting (ASU ): Expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. Reclassification of certain tax effects from accumulated other comprehensive income (ASU ): Allows entities the option to reclassify the stranded tax effects resulting from the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings. Hedge accounting (ASU ): Expands eligible hedge strategies, simplifies hedge documentation and effectiveness testing, and revises presentation of hedging results. Down-round features in certain financial instruments (ASU ): Eliminates requirement to consider down-round features when assessing classification of certain warrants and financial instruments containing conversion features. Premium amortization on purchased callable debt securities (ASU ): Requires the premium on purchased callable debt securities to be amortized to the earliest call date instead of to maturity. Improving the presentation of net periodic pension cost and net periodic postretirement benefit cost (ASU ): Requires an employer to report the service cost component of net periodic pension/ postretirement cost in the same line item as other compensation costs. All other components of net periodic pension/postretirement cost are required to be presented outside of income from operations. 5 Plante Moran

6 Simplifying goodwill impairment testing (ASU ): Eliminates step 2 of the goodwill impairment test and requires recognition of an impairment loss if the carrying value of the reporting unit exceeds its fair value. Definition of a business (ASU ): Clarifies guidance for determining whether an acquisition or disposition meets the definition of a business requiring accounting under business combination guidance. Restricted cash in cash flow presentation (ASU ): Provides guidance to combine restricted and unrestricted cash balances on the cash flow statement. Intra-entity transfers of assets other than inventory (ASU ): Provides that income tax consequences of intra-entity transfer of an asset other than inventory be recognized when the transfer occurs. Cash flow statement classification (ASU ): Provides guidance for cash flow classification for eight types of transactions. Recognition and measurement of certain financial instruments (ASU ): Removes fair value disclosure requirements for financial instruments not measured at fair value for private companies. The amendments also introduce changes to the accounting for equity investments and the reporting of other comprehensive income for certain financial liabilities, and various changes to the presentation and disclosure of financial instruments. The removal of the fair value of financial instruments disclosure may be implemented before the other changes. Standards Issued in : Leases (Topic 842): Narrow-Scope Improvements for Lessors adopted : Codification Improvements to Topic 326, Financial Instruments Credit Losses adopted : Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic adopted Nonpublic: annual reporting periods beginning after Dec. 15, 2020, and interim periods within annual periods beginning after Dec. 15, Dec. 15, 2019, and interim periods within these fiscal years : Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities Nonpublic: annual reporting periods beginning after Dec. 15, 2020, and interim periods within annual periods beginning after Dec. 15, Dec. 15, 2019, and interim periods within these fiscal years : Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes adopted Year-end 2018 update 6

7 : Intangibles Goodwill and Other Internal-Use Software (Subtopic ): Customer s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract Nonpublic: annual reporting periods beginning after Dec. 15, 2020, and interim periods within annual periods beginning after Dec. 15, Dec. 15, 2019, and interim periods within those fiscal years : Compensation Retirement Benefits Defined Benefit Plans General (Subtopic ): Disclosure Framework Changes to the Disclosure Requirements for Defined Benefit Plans Nonpublic: fiscal years ending after Dec. 15, Public business entities: fiscal years ending after Dec. 15, : Fair Value Measurement (Topic 820): Disclosure Framework: Changes to the Disclosure Requirements for Fair Value Measurement Fiscal years beginning after Dec. 15, 2019, and interim periods within those fiscal years : Financial Services Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts Nonpublic: fiscal years beginning after Dec. 15, 2021 and interim periods beginning after Dec. 15, Dec. 15, 2020 and interim periods within those fiscal years : Leases (Topic 842): Targeted Improvements adopted : Codification Improvements to Topic 842, Leases adopted Update : Codification Improvements N/A Update : Not-For-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made Nonpublic entities that serve as a resource recipient: annual periods beginning after Dec. 15, 2018, and interim periods within fiscal years beginning after Nonpublic entities that serve as a resource provider; annual periods beginning after Dec. 15, 2019, and interim periods within fiscal years beginning after Dec. 15, Public business entities that serve as a resource recipient: annual periods beginning after June 15, 2018, and interim periods within those fiscal years.* Public business entities that serve as a resource provider: annual periods beginning after Dec. 15, 2018, and interim periods within those fiscal years. 7 Plante Moran

8 Update : Compensation Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting adopted Nonpublic: fiscal years beginning after Dec. 15, 2019 and interim periods beginning after Dec. 15, Dec. 15, 2018 and interim periods within those fiscal years Update : Codification Improvements to Topic 942, Financial Services Depository and Lending N/A Upon addition to FASB codification*, ** Update : Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (SEC Update) N/A Upon addition to FASB codification** Update : Investments Debt Securities (Topic 320) and Regulated Operations (Topic 980): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 117 and SEC Release No (SEC Update) N/A Upon addition to FASB codification*, ** Update : Technical Corrections and Improvements to Financial Instruments Overall (Subtopic ): Recognition and Measurement of Financial Assets and Financial Liabilities adopted ** Update : Income Statement Reporting Comprehensive Income (Topic 220) Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income Fiscal years beginning after Dec. 15, 2018, and interim periods within those fiscal years. Update : Leases (Topic 842) Land Easement Practical Expedient for Transition to Topic * Effective 2018 for nonpublic companies ** Effective 2018 for public business entities Year-end 2018 update 8

9 Standards Issued in Prior Years Effective 2018 or After Update : Codification Improvements to Topic 995, U.S. Steamship Entities: Elimination of Topic 995 Fiscal years and first interim periods beginning after Dec. 15, Update Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842) Update : Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities ** Nonpublic: fiscal years beginning after Dec. 15, 2019, and interim periods beginning after Dec. 15, Dec. 15, 2018, and interim periods within those fiscal years. Update : Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception Part I: Nonpublic: fiscal years beginning after Dec. 15, 2019, and interim periods beginning after Dec. 15, Dec. 15, 2018, and interim periods within those fiscal years. Part II: No transition guidance is required as no accounting impact exists. Update : Service Concession Arrangements (Topic 853): Determining the Customer of the Operation Services ** Update : Compensation Stock Compensation (Topic 718): Scope of Modification Accounting Fiscal years beginning after Dec. 15, *,** Update : Receivables Nonrefundable Fees and Other Costs (Subtopic ), Premium Amortization on Purchased Callable Debt Securities Nonpublic: fiscal years beginning after Dec. 15, 2019, and interim periods beginning after Dec. 15, Dec. 15, 2018, and interim periods within those fiscal years. Update : Compensation Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Cost and Net Periodic Postretirement Benefit Cost Nonpublic: fiscal years beginning after Dec. 15, 2018, and interim periods within fiscal years beginning after Dec. 15, 2017, and interim periods within those fiscal years.** 9 Plante Moran

10 Update : Plan Accounting: Defined Benefit Pension Plans (Topic 960); Defined Contribution Pension Plans (Topic 962); Health and Welfare Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting Fiscal years beginning after Dec. 15, Update : Other Income Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic ): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets ** Update : Intangibles Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment Update : Business Combinations (Topic 805): Clarifying the Definition of a Business Nonpublic: fiscal years beginning after Dec. 15, Public business entities that are SEC filers: fiscal years beginning after All other public business entities: fiscal years beginning after Dec. 15, Nonpublic: fiscal years beginning after Dec. 15, 2018, and interim periods within fiscal years beginning after Dec. 15, 2017, and interim periods within those fiscal years.** Update No : Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers ** Update No : Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force) Nonpublic: fiscal years beginning after Dec. 15, 2018, and interim periods within fiscal years beginning after Dec. 15, 2017, and interim periods within those fiscal years.** Update No : Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory Update No : Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force) Nonpublic: fiscal years beginning after Dec. 15, 2018, Dec. 15, 2017, including interim periods within those fiscal years.** Nonpublic: fiscal years beginning after Dec. 15, 2018, and interim periods within fiscal years beginning after Dec. 15, 2017, and interim periods within those fiscal years.** Year-end 2018 update 10

11 Update No : Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities Nonpublic only: annual financial statements issued for fiscal years beginning after Dec. 15, 2017, and interim periods within fiscal years beginning after Dec. 15, 2018.* Update No : Financial Instruments Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as of fiscal years beginning after Dec.15, 2018, including interim periods within those fiscal years Nonpublic (including not-for-profit entities and employee benefit plans): fiscal years beginning after Dec. 15, 2020, and interim periods within fiscal years beginning after Dec. 15, Public business entities that are SEC filers: fiscal years beginning after Dec. 15, 2019, including interim periods within those fiscal years. All other public business entities: fiscal years beginning after Dec. 15, 2020, including interim periods within those fiscal years. Update No : Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients Update No : Rescission of SEC Guidance Because of Accounting Standards Updates and Pursuant to Staff Announcements at March 3, 2016 EITF meeting Update No : Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing s and ** s and ** ** Update No : Compensation Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting Nonpublic: fiscal years beginning after Dec. 15, 2017, Dec. 15, 2018.* Dec. 15, 2016, including interim periods within those fiscal years. Update No : Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) ** Update No : Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments Nonpublic: fiscal years beginning after Dec. 15, 2017, Dec. 15, 2018.* Dec. 15, 2016, including interim periods within those fiscal years. 11 Plante Moran

12 Update No : Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships Update No : Liabilities Extinguishments of Liabilities (Subtopic ): Recognition of Breakage for Certain Prepaid Stored-Value Products Nonpublic: fiscal years beginning after Dec. 15, 2017, Dec. 15, 2018.* Dec. 15, 2016, including interim periods within those fiscal years. Nonpublic: fiscal years beginning after Dec. 15, 2018, Public business entities, certain not-for-profit entities and certain employee benefit plans: fiscal years beginning after Dec. 15, 2017, including interim periods within those fiscal years.** Update No : Leases (Topic 842) Nonpublic: fiscal years beginning after Dec. 15, 2019, Dec. 15, Dec. 15, 2018, including interim periods within those fiscal years. Update No : Financial Instruments Overall (Subtopic ): Recognition and Measurement of Financial Assets and Financial Liabilities, for certain amendments Nonpublic: fiscal years beginning after Dec. 15, 2018, Dec. 15, 2017, including interim periods within those fiscal years.** Update No : Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes Nonpublic: fiscal years beginning after Dec. 15, 2017, and interim periods within fiscal years beginning after Dec. 15, 2018.* Dec. 15, 2016, including interim periods within those fiscal years. Update No. : Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date Update No : Revenue from Contracts with Customers (Topic 606), under certain circumstances Nonpublic: apply the guidance in ASU to fiscal years beginning after Dec. 15, 2018, and interim periods after Public business entities, certain not-for-profit entities, and certain employee benefit plans: apply the guidance in ASU to fiscal years beginning after Dec. 15, 2017, including interim reporting periods within those fiscal years.** ** * Effective 2018 for nonpublic companies ** Effective 2018 for public business entities Year-end 2018 update 12