Accounting and Financial Reporting Developments for Public Companies

Transcription

1 Accounting and Financial Reporting Developments for Public Companies YEAR-END UPDATE 2017 The Quarterly Newsletter is a quarterly publication from EKS&H s Technical Accounting and Auditing Group. In the newsletter, we highlight some of the more important 2017 year-end accounting, financial reporting and regulatory activities. The content is not meant to be all inclusive. You can access prior Quarterly Newsletters at s Accounting for Effects of the Recent Tax Cuts and Jobs Act Overview EKS&H recently sent a summary of the Tax Cuts and Jobs Act (Act) to clients that included highlights of the bill relating to individual and business changes. This summary can be found at The Act, enacted December 22, 2017, represents the most comprehensive and significant changes to U.S. tax and related laws since 1986 and could have a significant impact on a company s domestic and international tax consequences. The new legislation contains several key provisions including reduction of the corporate income tax rate to 21% effective January 1, 2018, limitation of the interest expense tax deductibility, acceleration of expensing of certain business assets, reductions in the amount of executive pay that could qualify as a tax deduction and international tax consequences for companies that operate internationally. ASC 740, Income Taxes, requires companies to reflect changes in tax law in the financial statement period in which the law is enacted. The Act was signed into law prior to the end of the year for calendar year-end companies and will affect both current and deferred taxes. Accordingly, calendar yearend companies should reflect the change in their December 31, 2017 financial statements. This can impact the deferred income tax calculation, including potential remeasurement of deferred tax assets, as well as disclosures. The timing of the new tax law places a huge burden on companies to assess and record the tax impacts. There may be situations where the accounting for certain of the income tax effects will be incomplete by the time the yearend financial statements are issued. SEC Guidance The SEC acknowledged the difficulty in determining the financial statement effects and recently issued SAB 118 to provide clarification in situations where a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act pursuant to ASC 740 in the year-end financial statements. Under SAB 118, the SEC will accept reasonable estimates until all information necessary to complete the accounting for the impact of the Act becomes available but in no event beyond a year (December 22, 2018) along with robust disclosure explaining the implications of the new tax law. In addition, the SEC also issued a new question and answer in its Compliance and Disclosure Interpretations for specific items related to deferred tax asset remeasurement. SAB 118 provides clarification and relief when a company s accounting for certain income tax effects of the Act is incomplete as follows: Company can determine a reasonable estimate: Company should report a provisional amount in the year-end financial statements reported as a provisional amount during the measurement period (not to exceed a year from enactment of the Act). During the measurement period, adjustments to the provisional amounts will be YEAR-END UPDATE (PUBLIC COMPANY)

2 recorded to reflect refinements of the estimate and final and complete accounting. Company is unable to determine a reasonable estimate: No provisional amount should be reported and the company should continue to apply ASC 740 based on the provisions of the tax law that were in effect immediately prior to the Act being enacted. A company should record provisional amounts in the first reporting period in which a reasonable estimate can be determined. SAB 118 requires disclosures if a company uses the measurement period approach including the following: Qualitative disclosures of the income tax effects of the Act for which the accounting is incomplete Disclosures of items reported as provisional amounts Disclosures of existing current or deferred tax amounts for which the income tax effects of the Act have not been completed The reason why the initial accounting is incomplete The additional information that is needed to be obtained, prepared, or analyzed in order to complete the accounting requirements under ASC Topic 740 The nature and amount of any measurement period adjustments recognized during the reporting period The effect of measurement period adjustments on the effective tax rate When the accounting for the income tax effects of the Act has been completed FASB Guidance FASB met January 10, 2018 regarding the accounting impacts of the Act. The Board considered and provided preliminary views on four specific implementation issues, voted to issue a proposed ASU to allow a one-time reclassification from accumulated other comprehensive income to retained earnings for certain tax effects resulting from the newly enacted corporate tax rate, announced plans to develop a website dedicated to tax reform and agreed to allow application of SAB 118 by private companies. Application of SAB 118 by Private Companies Private companies and not-for-profit entities may apply SAB 118, even though the views and interpretations of the SEC staff are not directly applicable to them. In the past, some private companies and not-for-profits have voluntarily applied SEC staff accounting bulletins, and FASB will not object to application of SAB 118. The FASB staff believes, however, that if a private company or a not-for-profit entity applies SAB 118, it should apply all relevant aspects of the SAB in its entirety, including the disclosures listed in SAB 118, and it should also disclose its accounting policy of applying SAB 118. Implementation Issues The four specific implementation issues discussed along with FASB s preliminary views follow. The staff will draft Q&As on these issues for review by the EITF on January 18, Any changes resulting from that meeting will be reflected in the Q&As and will then be posted to the new website. Issue #1: The new law taxes companies on undistributed and previously untaxed post-1986 foreign earnings and profits. The deemed repatriation tax may be paid over an eight-year period and does not impose interest on the unpaid portion of the liability. FASB view is that the tax liability should not be discounted in company financial reports. Issue #2: The Act repeals the alternate minimum tax (AMT) for corporations and permits any existing AMT credit carryforwards to be used to reduce the regular tax obligation in 2018, 2019, and Any AMT credit carryforwards that do not reduce regular taxes are eligible for a 50% refund in 2018, 2019, and 2020, and a 100% refund in This results in full realization of an existing AMT credit carryforward irrespective of future taxable income. FASB view is that the AMT credits that will be used or ultimately refunded should not be discounted in company financial reports. Issue #3: Under the new law, an entity must pay a base-erosion and anti-abuse tax (BEAT) if the BEAT is greater than its regular tax liability. The BEAT calculation eliminates the deduction of certain base-erosion payments made to foreign corporations, but the calculation includes a lower tax rate on the resulting income. FASB view is that deferred tax assets and liabilities should be measured for financial reporting purposes at the regular tax rate rather than the lower BEAT rate. Issue #4: The Act s global intangible low-taxed income (GILTI) provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. In general, this income will be effectively taxed at a 10.5% tax rate. FASB considered if deferred tax assets and liabilities should be recognized for basis differences expected to reverse as a result of the GILTI provisions in future years, or if the tax on GILTI should be included in the period in which it occurred. YEAR-END UPDATE (PUBLIC COMPANY)

3 FASB view is to permit preparers to elect either approach, based on their specific facts and circumstances. Proposed ASU to be issued FASB considered that as a result of the Act, the tax effects of items within accumulated other comprehensive income (AOCI) do not reflect the appropriate tax rates. This is because the adjustment of deferred taxes due to the reduction of the corporate rate to 21% from 35% is required to be included in income from continuing operations. FASB voted to issue a proposed ASU to allow a one-time reclassification from AOCI to retained earnings for these tax effects with the amount of the reclassification being the difference between the 35% historical corporate tax rate and the newly enacted 21% rate. The guidance would be applied to each period in which the effect of the Act (or portion thereof) is recorded, which may be retrospectively to the December 2017 enactment date in some cases. Under the proposed ASU, companies would disclose the following in the period in which a reclassification adjustment is made: The nature and reason for the change. A description of the prior-period information that has been retrospectively adjusted. The effect of the change on affected financial statement line items. After the proposal is issued, stakeholders will have 15 days to comment. FASB will consider the comments and then vote on whether to proceed with a final standard. Details about the estimated effect of the guidance on the company s reporting or a statement detailing that the effect is not yet known or reasonably estimable. Any significant impacts of adoption on the company. SEC staff has indicated they will monitor disclosures about the expected effects of the new revenue, lease, financial instruments and credit losses standards and investors should expect the level of transition disclosures to increase as a company progresses in its implementation plans. SEC staff has stated that if a registrant does not know or cannot reasonably estimate the effect the adoption of the above new standards will have on the entity s financial statements, it should make a statement to that effect and consider making the following qualitative disclosures: Compare the not-yet-adopted standard to current accounting policies of the entity. Discuss the status of the process to implement the new standard and the nature of any significant implementation matters not yet addressed. Discuss transition method elected or the status of the election. Provide any additional qualitative disclosures necessary to help financial statement users to understand the potential impact of the new standard on the entity s financial statements. In a November 2017 speech, Wesley Bricker, Chief Accountant of the SEC, noted Increasingly through the third and fourth quarter reporting, I anticipate companies to be in a position to disclose in their SAB 74 disclosures the anticipated impact, at least qualitatively and directionally, of adoption of the revenue standard. s Regulatory Update Disclosures Regarding Impact of New Standards As a reminder, SAB 74 (Topic 11.M) requires disclosures about new accounting standards that have not been adopted as of the date of the financial statements contained in an SEC filing. Specifically required transitional disclosures in MD&A and the financial statements include the following information to the extent the effects are known: Details of the new standard, the methods the company plans to adopt when implementing the principles and the date of planned adoption by the company. In a June 2017 speech, Wesley Bricker noted that the new revenue disclosures may require disclosure of different data and information than previously provided, which may potentially require updates to existing processes and controls. He encouraged companies to ensure the appropriate resources needed to plan and prepare these disclosures are being dedicated to the project. In an earlier speech in May, he also emphasized the importance of the new revenue disclosures and noted that preparing them may be one of the more challenging parts of implementation. He encouraged companies to not wait until the end of the year to address disclosures and to allocate proper time and resources. YEAR-END UPDATE (PUBLIC COMPANY)

4 Mr. Bricker also noted in the June speech that many companies are devoting their resources to the revenue standard implementation. He suggested concurrent implementation planning for the lease, financial instruments and credit losses standards because of the number of complementary activities and upcoming effective dates. ICFR The new revenue, lease, credit losses and financial instrument standards will require greater judgment when applying the guidance. Registrants should reassess the adequacy of current internal controls and identify and implement any appropriate changes. As companies transition to the new revenue standard as well as other new accounting standards and policies, resulting changes or the redesigning of controls may require disclosure in the Form 10-Q or Form 10-K. Management and audit committees should consider the disclosure requirements related to the establishment of new controls and processes related to the adoption of the new accounting standards. error or fraud, in describing the auditor s responsibility under PCAOB standards to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. With respect to CAMs, the auditor s report will be required to (1) identify the CAM; (2) describe the principal considerations that led the auditor to determine the matter is a CAM; (3) describe how it was addressed in the audit; and (4) make reference to the relevant financial statement accounts and disclosures. If the auditor determines there are no CAMs, the auditor must state so in the auditor s report. There is a phased approach to the effective date for the new requirements as follows: New auditor s report format, tenure, and other information: audits for fiscal years ending on or after December 15, Communication of CAMs for audits of large accelerated filers: audits for fiscal years ending on or after June 30, Communication of CAMs for audits of all other companies: audits for fiscal years ending on or after December 15, In the November 2017 speech, Wesley Bricker addressed the revenue recognition standard implementation and warned that some public companies may need to accelerate the pace of their work to complete their implementation timely. Where there is a risk of material misstatement, companies need to have internal controls that address the judgments and estimates required of management to implement and, subsequently, apply the new standard. The effectiveness of internal controls over the transition adjustment and ongoing application of the new standard should be supported by appropriate documentation of significant judgments and decisions. SEC Approves PCAOB Changes to Auditor s Reports On October 23, 2017, the SEC approved PCAOB changes to the auditing standard that would require auditors to include in the auditor s report a discussion of the critical audit matters (CAMs) which are matters that have been communicated to the audit committee, are related to accounts or disclosures that are material to the financial statements, and involved especially challenging, subjective, or complex auditor judgement. Under the new standard, the auditor s report will disclose, among other things, the tenure of an auditor, and the phrase, whether due to The final standard only applies to audits conducted under PCAOB standards. In addition, the communication of CAMs is not required for audits of emerging growth companies; brokers and dealers; investment companies other than business development companies; and employee stock purchase, savings, and similar plans. SEC Hot Topics Calendar-year companies should consider certain SEC concerns and suggestions when preparing the annual financial statements and disclosures. At the 2017 AICPA National Conference on Current SEC and PCAOB Developments, SEC staff discussed matters related to accounting and financial reporting, including frequent areas of comment during filing reviews. Non-GAAP Measures Comparable GAAP measures must be equal to or more prominent than the non-gaap measure Perceived non-gaap measures that could be misleading, including the use of individually-tailored accounting principles to calculate non-gaap revenues and earnings Prohibition against presenting liquidity measures on a per share basis. YEAR-END UPDATE (PUBLIC COMPANY)

5 Segments Identification and aggregation of operating segments based on similar economic characteristics Changes in reportable segments and disclosures Entity-wide disclosures s Standards Effective Calendar Year 2017 Certain Key Updates (as described more fully in earlier EKS&H Newsletters) are effective calendar year 2017 as follows (not all inclusive): Income taxes Potential tax and liquidity ramifications related to the repatriation of foreign earnings Valuation allowances Disclosures related to the income tax rate (including the rate reconciliation and effective tax rate) Tax effects of significant or unusual transactions Noncompliance with disclosure requirements Transition to/from equity method (ASU ): Eliminates requirement to retroactively adopt equity method of accounting when investment increases. Amendments to consolidation analysis (ASU ): Amends consolidation analysis and requires re-evaluation of consolidation decisions. See EKS&H Newsletter Year- End Update 2016 for discussion. MD&A Material trends and uncertainties that affect results of operations Estimates in critical accounting policies Liquidity and capital resources Disclosure of contractual obligations Early-warning disclosures and disclosures related to income taxes Fair value Valuation techniques and inputs used in fair value measurements, including disclosure requirements for recurring and nonrecurring fair value measurements Use of third-party pricing services Fair value estimates, including those related to revenue recognition, goodwill impairment, and share-based payments Intangible assets and goodwill Goodwill impairment disclosures, including early-warning disclosures and the specific events and circumstances that led to the charge in the period of impairment Asset grouping for goodwill impairment testing (i.e., the identification and composition of reporting units) Whether or why an interim impairment test was performed Share-based payment improvements (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 non-public entities to elect practical expedients related to the expected-term and measurement of liability-classified awards. See EKS&H Newsletter First Quarter Update 2016 for discussion. Balance sheet classification of deferred taxes (ASU ): Provides that all deferred tax assets and liabilities will be classified as noncurrent on the balance sheet. Subsequent measurement of inventory lower of cost and net realizable value (ASU ): Provides for measurement of inventory (excluding LIFO and Retail Method) at the lower of cost or net realizable value. Acquisitions, mergers, and business combinations Identification of the accounting acquirer Allocation of the purchase price to identified assets acquired and liabilities assumed Accounting for any contingent consideration Bargain purchases Required disclosures YEAR-END UPDATE (PUBLIC COMPANY)

6 s Accounting Guidance Eligible for Early Adoption in Calendar Year 2017 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. Previous EKS&H Newsletters summarized these ASUs. Key ASUs (not all inclusive) allowing for early adoption include the following: 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 downround features when assessing classification of certain warrants and financial instruments containing conversion features. Goodwill impairment testing (ASU ): Revises the Step 2 of goodwill impairment test to recognize impairment 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. s Updates on New Revenue Recognition Rules The new standard is effective in 2018 for calendar-year public companies and companies can adopt using full retrospective adoption or cumulative effect adoption method (modified retrospective option). The FASB has issued several ASUs that provide clarification for identifying performance obligations, licensing implementation guidance, principal vs. agent assessment, clarification guidance in certain narrow areas as well as practical expedients. As discussed in previous Newsletters, the 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 no additional meetings scheduled. The TRG has issued numerous whitepapers addressing implementation issues. Additionally, the AICPA formed sixteen 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 whitepapers in implementing ASC 606. As a reminder, companies should review the earlier discussion related to SAB 74 disclosures and ICFR considerations. The FASB recently launched a new webpage, Implementing New Standards, that helps position organizations for a successful and smooth transition to new financial accounting and reporting standards. The webpage focuses on how the FASB: Cash flow statement classification (ASU ): Provides guidance for cash flow classification for eight types of transactions. Assessing contingent puts and calls in debt (ASU ): Clarifies analysis for embedded contingent puts and calls in debt instruments. Conducts outreach with stakeholders; Establishes and operates transition resource groups, and Offers a technical inquiry service for implementation questions. The webpage also acts as a one-stop-shop for educational materials and implementation guidance for FASB s major standards. This is a useful tool for management to use for implementation of the new standards, including the revenue standard. YEAR-END UPDATE (PUBLIC COMPANY)

7 s Updates on New Lease Standard The new lease standard is effective in 2019 for public companies. See EKS&H Newsletter First Quarter Update 2016 for discussion of the new guidance. Under the new guidance, lessees will be required to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with terms of more than 12 months. 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 the 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) must 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 (with potential relief permitting a cumulative effect in the period of adoption pending FASB approval - see later discussion). The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented, and provides for certain other practical expedients. Lessees and lessors may not apply a full retrospective transition approach. The FASB is expected to issue accounting updates to simplify certain aspects of the guidance as follows: Allow for the option to adopt using a cumulative-effect adjustment to retained earnings as of January 1, 2019 (calendar year-end companies). Provide a practical expedient to allow lessors to treat certain leases with multiple components as a single lease. Provide a transition practical expedient for land easements that either expired or exist at adoption that were not previously assessed under lease guidance to allow for an election to not assess under the new lease standard. YEAR-END UPDATE (PUBLIC COMPANY)

8 s Standards Issued in 2017 Final ASU Update Codification Improvements to Topic 995, U.S. Steamship Entities: Elimination of Topic 995 Update Income Statement Reporting Comprehensive Income (Topic 220), Revenue Recognition (Topic 605), and Revenue from Contracts with Customers (Topic 606) (SEC Update) 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 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 Update Service Concession Arrangements (Topic 853): Determining the Customer of the Operation Services Update Compensation Stock Compensation (Topic 718): Scope of Modification Accounting Update Receivables Nonrefundable Fees and Other Costs (Subtopic ), Premium Amortization on Purchased Callable Debt Securities Update Compensation Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Cost and Net Periodic Postretirement Benefit Cost Early Adoption N/A Fiscal years and first interim periods beginning after December 15, November 20, 2017 *, ** December 15, 2019, and interim periods beginning after December 15, beginning after December 15, 2018, and December 15, 2019, and interim periods beginning after December 15, beginning after December 15, 2018, and Fiscal years beginning after December 15, December 15, 2019, and interim periods beginning after December 15, beginning after December 15, 2018, and beginning after December 15, 2017, and YEAR-END UPDATE (PUBLIC COMPANY)

9 s Standards Issued in 2017 (continued) Final ASU 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 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 Accounting Changes and Error Corrections (Topic 250) and Investments Equity Method and Joint Ventures (Topic 323) Update Not-for-Profit Entities Consolidation (Subtopic ): Clarifying When a Not-for-Profit Entity That is a General Partner or a Limited Partner Should Consolidate a For-Profit Limited Partnership or Similar Entity Update Business Combinations (Topic 805): Clarifying the Definition of a Business Early Adoption N/A Fiscal years beginning after December 15, December 15, Public business entities that are SEC filers: fiscal years beginning after All other public business entities: fiscal years beginning after December 15, Upon issuance. Fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, If ASU has not been adopted, must adopt both at same time. beginning after December 15, 2017, and YEAR-END UPDATE (PUBLIC COMPANY)

10 s Standards Issued in Prior Years Effective 2017 or After Final ASU Update No Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers Update No Technical Corrections and Improvements Update No Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force) Update No Consolidation (Topic 810): Interests Held through Related Parties that are Under Common Control Update No Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory Early Adoption Most amendments effective immediately. Six of the amendments provide specific transition guidance and allow for early adoption. beginning after December 15, 2017, and December 15, 2016, and interim periods December 15, Must adopt ASU at same time.* beginning after December 15, 2016, and ** within fiscal periods beginning after beginning after December 15, 2017, including Update No Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force) Update No Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities beginning after December 15, 2017, and Nonpublic companies only: annual financial statements issued for fiscal years beginning after December 15, 2017, and interim periods December 15, * Effective 2017 for nonpublic companies ** Effective 2017 for public business entities YEAR-END UPDATE (PUBLIC COMPANY)

11 s Standards Issued in Prior Years Effective 2017 or After (continued) Final ASU Update No Financial Instruments Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments 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 Update No Compensation Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting Update No Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) Update No Investments Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting Update No Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments Early Adoption, as of fiscal years beginning after December 15, 2018, including interim periods within those fiscal years See ASUs and Nonpublic (including not-for-profit entities and employee benefit plans): fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, Public business entities that are SEC filers: fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. All other public business entities: fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. See ASUs and December 15, 2017, and interim periods within fiscal periods beginning after December 15, beginning after December 15, 2016, including interim periods within those fiscal years. ** Annual periods and interim periods within those periods, beginning after December 15, * ** December 15, 2017, and interim periods within fiscal periods beginning after December 15, beginning after December 15, 2016, including interim periods within those fiscal years. ** * Effective 2017 for nonpublic companies ** Effective 2017 for public business entities YEAR-END UPDATE (PUBLIC COMPANY)

12 s Standards Issued in Prior Years Effective 2017 or After (continued) Final ASU 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 Update No Leases (Topic 842) Update No Financial Instruments Overall (Subtopic ): Recognition and Measurement of Financial Assets and Financial Liabilities Update No Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes Update No Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments Early Adoption, for certain amendments December 15, 2017, and interim periods within fiscal periods beginning after December 15, beginning after December 15, 2016, including interim periods within those fiscal years. ** within fiscal periods beginning after Public business entities, certain not-for-profit entities and certain employee benefit plans: fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. December 15, 2019, and interim periods within fiscal periods beginning after December 15, beginning after December 15, 2018, including interim periods within those fiscal years. within fiscal periods beginning after beginning after December 15, 2017, including interim periods within those fiscal years. December 15, 2017, and interim periods December 15, beginning after December 15, 2016, including interim periods within those fiscal years. ** Can be applied prospectively or retrospectively. December 15, 2016, and interim periods December 15, * beginning after December 15, 2015, including interim periods within those fiscal years. * Effective 2017 for nonpublic companies ** Effective 2017 for public business entities YEAR-END UPDATE (PUBLIC COMPANY)

13 s Standards Issued in Prior Years Effective 2017 or After (continued) Final ASU Update No Revenue from Contracts with Customers (Topic 606): Deferral of the Update No Inventory (Topic 330): Simplifying the Measurement of Inventory Update No Financial Services- Insurance (Topic 944): Disclosures about Short- Duration Contracts Update No Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) Update No Compensation - Retirement Benefits (Topic 715): Practical Expedient for the Measurement Date of an Employer s Defined Benefit Obligation and Plan Assets Update No Consolidation (Topic 810): Amendments to the Consolidation Analysis Early Adoption, under certain circumstances Nonpublic: apply the guidance in ASU to fiscal years beginning after after Public business entities, certain not-for-profit entities, and certain employee benefit plans: apply the guidance in ASU to fiscal years beginning after December 15, 2017, including interim reporting periods within those fiscal years. December 15, 2016, and interim periods December 15, * beginning after December 15, 2016, and ** December 15, 2016, and interim periods December 15, * beginning after December 15, 2015, and interim periods within fiscal years beginning after December 15, Nonpublic: fiscal years, and interim periods within those fiscal years, beginning after December 15, *, and interim periods within those fiscal years, beginning after December 15, December 15, 2016, and interim periods December 15, *, and interim periods within those fiscal years, beginning after December 15, December 15, 2016, and interim periods December 15, *, and interim periods within those fiscal years, beginning after December 15, * Effective 2017 for nonpublic companies ** Effective 2017 for public business entities YEAR-END UPDATE (PUBLIC COMPANY)

14 s Standards Issued in Prior Years Effective 2017 or After (continued) Final ASU Update No Consolidation (Topic 810) - Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity Update No Revenue from Contracts with Customers (Topic 606) Early Adoption Nonpublic: fiscal years, and interim periods within those years, beginning after December 15, *, and interim periods within those years, beginning after December 15, * Effective 2017 for nonpublic companies ** Effective 2017 for public business entities YEAR-END UPDATE (PUBLIC COMPANY)