Accounting Standards Updates ( ASUs ) effective in 2017 for calendar year-end entities:

Accounting Standards Updates ( ASUs ) effective in 2017 for calendar year-end entities: ASU Title Effective in 2017 for Public, Nonpublic, or Both? ASU 2014-10 Development Stage Entities (Topic 915): Elimination of Certain Financial Nonpublic Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation ASU 2015-02 Consolidation (Topic 810): Amendments to the Consolidation Analysis Nonpublic ASU 2015-04 Compensation Retirement Benefits (Topic 715): Practical Expedient for the Nonpublic Measurement Date of an Employer s Defined Benefit Obligation and Plan Assets ASU 2015-07 Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Nonpublic Entities That Calculate Net Asset Value per Share (or Its Equivalent) (a consensus of the FASB Emerging Issues Task Force) ASU 2015-09 Financial Services Insurance (Topic 944): Disclosures about Short-Duration Nonpublic Contracts ASU 2015-11 Inventory (Topic 330): Simplifying the Measurement of Inventory Both ASU 2015-16 Business Combinations (Topic 805): Simplifying the Accounting for Nonpublic Measurement-Period Adjustments ASU 2015-17 Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes Public ASU 2016-05 Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Public Existing Hedge Accounting Relationships (a consensus of the Emerging Issues Task Force) ASU 2016-06 Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Public Instruments (a consensus of the Emerging Issues Task Force) ASU 2016-07 Investments Equity Method and Joint Ventures (Topic 323): Simplifying the Both Transition to the Equity Method of Accounting ASU 2016-09 Compensation Stock Compensation (Topic 718): Improvements to Employee Public Share-Based Payment Accounting ASU 2016-17 Consolidation (Topic 810): Interests Held through Related Parties That Are under Both Common Control ASU 2016-19 Technical Corrections and Improvements Both ASU 2017-02 Not-for-Profit Entities Consolidation (Subtopic 958-810): Clarifying When a Both Not-for-Profit Entity That Is a General Partner or a Limited Partner Should Consolidate a For-Profit Limited Partnership or Similar Entity ASU 2017-03 Accounting Changes and Error Corrections (Topic 250) and Investments Equity Public Method and Joint Ventures (Topic 323): Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings (SEC Update) ASU 2017-13 Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments Public

Accounting Standards Updates ( ASUs ) effective after 2017 for calendar year-end entities: ASU Title Effective Date ASU 2014-09 ASU 2015-14 Revenue from Contracts with Customers (Topic 606) and related amendments ASU 2016-08 ASU 2016-10 ASU 2016-12 ASU 2016-20 ASU 2017-05 ASU 2015-17 Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes Public: 2017 Nonpublic: 2018 ASU 2016-01 Financial Instruments Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities ASU 2016-02 Leases (Topic 842) Public: 2019 Nonpublic: 2020 ASU 2016-04 Liabilities Extinguishments of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products (a consensus of the Emerging Issues Task Force) ASU 2016-05 ASU 2016-06 ASU 2016-09 ASU 2016-13 ASU 2016-14 ASU 2016-15 ASU 2016-16 ASU 2016-18 ASU 2017-01 Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships (a consensus of the Emerging Issues Task Force) Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments (a consensus of the Emerging Issues Task Force) Compensation Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting Financial Instruments Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force) Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force) Business Combinations (Topic 805): Clarifying the Definition of a Business Public: 2017 Nonpublic: 2018 Public: 2017 Nonpublic: 2018 Public: 2017 Nonpublic: 2018 Public: 2020 (generally) Nonpublic: 2021 Nonpublic: 2018

ASU Title Effective Date ASU 2017-04 Intangibles Goodwill and Other (Topic 350): Simplifying the Test Public: 2020 for Goodwill Impairment (generally) ASU 2017-06 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 ASU 2017-07 Compensation Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost ASU 2017-08 Receivables Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities ASU 2017-09 Compensation Stock Compensation (Topic 718): Scope of Modification Accounting ASU 2017-10 Service Concession Arrangements (Topic 853): Determining the Customer of the Operation Services ASU 2017-11 ASU 2017-12 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 Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities Nonpublic: 2022 Public: 2019 Public: 2019 Nonpublic: 2020 Nonpublic: 2018 (or upon adoption of 2014-09) Public: 2019 Nonpublic: 2020 Public: 2019 Nonpublic: 2020

Accounting Standards Update ( ASU ) 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments What does this standard change? This guidance eliminates the requirement to restate prior period financial statements for measurement period adjustments. Instead, acquirers must recognize the cumulative impact of a measurement period adjustments (including the impact on prior periods) during the period in which the adjustment is identified and the amount is determined. The measurement period begins on the acquisition date and ends on the date the all information is received to complete accounting for the business combination, but may not extend beyond one year after the acquisition date. The adjustments to provisional amounts within the measurement period are referred to as measurement period adjustments. The new guidance does not change what constitutes a measurement period adjustment or the period of time available to record measurement period adjustments. Consistent with existing guidance, the acquirer must disclose the amounts and reasons for adjustments to the provisional amounts. The acquirer also must present separately on the face of the income statement or disclose, by line item, the amount of the adjustment reflected in the current-period income statement that would have been recognized in previous periods if the adjustment to provisional amounts had been recognized as of the acquisition date. When is it effective? The guidance in this ASU applies to all companies. For public companies it is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. For nonpublic companies it is effective for annual periods beginning after December 15, 2016. Early adoption is permitted. The guidance should be applied prospectively to measurement period adjustments that occur after the effective date. Therefore, it applies to open measurement periods, regardless of the acquisition date. Companies with open measurement periods should be aware that any changes to provisional amounts should be made in the current period and prior period income statement amounts are no longer restated.

Accounting Standards Update ( ASU ) 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes What does this standard change? This guidance requires all deferred tax assets and liabilities to be presented in the balance sheet as noncurrent instead of separating between current and noncurrent. Valuation allowances will also be classified as noncurrent. Deferred tax assets and liabilities for each taxpaying component within a tax jurisdiction are still required to be offset. When is it effective? The guidance in this ASU applies to all companies. For public entities it is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. For all other entities, the guidance is effective for annual periods beginning after December 15, 2017. Early adoption is permitted. The guidance may be applied prospectively or retrospectively. We expect this standard will apply to many entities, however, the change is very straight-forward. Companies should ensure prior year presentation is adjusted if retrospective adoption is elected.

Accounting Standards Update ( ASU ) 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities What does this standard change? This guidance requires entities to measure equity investments (except those accounted for under the equity method, those that result in consolidation of the investee and certain other investments) at fair value and recognize any changes in fair value in net income. All equity investments in unconsolidated entities (other than those accounted for using the equity method of accounting) will generally be measured at fair value through earnings. There will no longer be an availablefor-sale classification (changes in fair value reported in other comprehensive income) for equity securities with readily determinable fair values. Entities that aren t public business entities will no longer be required to disclose the fair value of financial instruments measured at amortized cost. When is it effective? The new guidance will be effective for public business entities (PBEs) that are SEC filers for annual periods beginning after December 15, 2019, and interim periods therein. For other PBEs that are not SEC filers, the standard will be effective for annual periods beginning after December 15, 2020, and interim periods therein. For all other entities, the standard will be effective for annual periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021 Early adoption is permitted for all entities for annual periods beginning after December 15, 2018, and interim periods therein. We expect the applicability of this standard to be more limited than the other standard issued this year related to financial instruments, ASU 2016-13. However, companies should review the new guidance and determine if they are affected.

Accounting Standards Update ( ASU ) 2016-09, Compensation Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting What does this standard change? This guidance changes how companies account for certain aspects of share-based payments to employees. The changes include: Elimination of APIC pools excess tax benefits will not be recorded in APIC. Instead they will be recorded as income tax expense or benefit in the income statement. This guidance will be applied prospectively, so amounts currently in APIC will stay in APIC. Recognition of excess tax benefits the guidance eliminates the requirement that excess tax benefits be realized through a reduction in income taxes payable before being recognized, which is current guidance. This guidance will be applied using a modified retrospective transition method with a cumulative-effect adjustment in retained earnings for excess tax benefits not previously recognized. Excess tax benefits on cash flow statement excess tax benefits should be presented as operating activities on the statement of cash flows. This guidance can be applied retrospectively or prospectively. Statutory withholding employers can now withhold shares with a fair value up to the amount of tax owed using the maximum statutory tax rate in the employee s applicable jurisdiction(s) in order to satisfy the employer s statutory income tax withholding obligation, without triggering liability accounting. This guidance will be applied using a modified retrospective transition method with a cumulative adjustment to retained earnings. Statutory withholding on cash flow statement cash paid to a tax authority will be classified as financing activities on the statement of cash flows. This guidance will be applied retrospectively. Forfeitures companies must elect whether to recognize forfeitures as they occur or estimate forfeitures, as is currently required. This guidance will be applied using a modified retrospective transition method with a cumulative adjustment to retained earnings. Expected term practical expedient nonpublic entities can estimate the expected term as the midpoint between the vesting date and the contractual term for awards that meet certain criteria and have time-based vesting. Awards with performance conditions can use this practical expedient for those where the performance condition is probable of being met using the service period rather than the vesting date. This guidance will be applied prospectively. Intrinsic value practical expedient nonpublic entities can elect a one-time change in accounting principle to measure liability-classified awards at intrinsic value rather than fair value. This guidance will be applied using a modified retrospective transition method with a cumulative adjustment to retained earnings. When is it effective? The guidance in this ASU is effective for public entities for fiscal years beginning after December 15, 2016, and interim periods within those years. The guidance is effective for all other entities for fiscal years beginning after December 15, 2017 and interim periods within fiscal years beginning after December 15, 2018. Early adoption is permitted but all guidance must be adopted in the same period. We expect this standard to affect most entities. Companies that issue share-based compensation awards should review the guidance and ensure all relevant simplifications are applied.

Accounting Standards Update ( ASU ) 2016-13, Measurement of Credit Losses on Financial Instruments What does this standard change? This guidance changes the impairment model for financial assets measured at amortized cost and available-for-sale equity securities. The new expected loss model will apply to instruments such as loans, held-to-maturity debt securities, loan commitments (including lines of credit), financial guarantees accounted for under ASC 460, guarantees, net investments in leases, reinsurance and trade receivables. This model generally will result in the earlier recognition of allowances for losses through the establishment of an allowance account. The estimate of expected credit losses should consider historical information, current information, and the reasonable and supportable forecasts of future events and circumstances, as well as estimates of prepayments. An expected credit loss estimate should be based on an asset s amortized cost (including premiums or discounts, net deferred fees and costs, foreign exchange and fair value hedge accounting adjustments). For available-for-sale debt securities with unrealized losses, losses will be recognized as allowances rather than reductions in amortized cost. Companies must determine if a decline in fair value below the amortized cost of the security is credit or non-credit related. An allowance is only required for creditrelated losses. The allowance should be assessed and adjusted each reporting period. This guidance requires new disclosures, including information about the calculation of the allowance, including the credit risk inherent in the portfolio and credit quality monitoring, models, inputs, and assumptions in estimating expected credit losses, and changes in the estimate of expected credit losses that have taken place during the period. Public business entities are required to disclose the amortized cost basis within each credit quality indicator by vintage year of origination for financing receivables and net investment in leases. When is it effective? The guidance in this ASU is effective for public entities that meet the definition of an SEC filer for fiscal years beginning after December 15, 2019, and interim periods within those years. The guidance is effective for other public business entities that are not SEC filers for fiscal years beginning after December 15, 2020 and interim periods therein. For all other entities, the guidance is effective for fiscal years beginning after December 15, 2020 and interim periods within fiscal years beginning after December 15, 2021. Early adoption is permitted in annual periods beginning after December 15, 2018. The standard requires entities to record a cumulative-effect adjustment to the statement of financial position as of the beginning of the first reporting period in which the guidance is effective. All entities should carefully evaluate this guidance to determine any effect on credit impairments, including the effects of using the required current expected credit loss (CECL) model for amounts due from customers, notes receivable, contract assets, or debt securities.

Accounting Standards Update ( ASU ) 2016-15, Classification of Certain Cash Receipts and Cash Payments What does this standard change? This guidance clarifies how certain cash receipts and cash payments should be presented on the statement of cash flows to reduce current diversity in practice. This guidance makes the following presentation required: Debt prepayment and extinguishment costs show as financing outflows Settlement of zero-coupon debt instruments or other debt instruments with coupon rates that are insignificant in relation to the effective interest rate of the borrowing portion attributable to interest will be shown as operating cash outflow, portion attributable to principal will be shown as financing cash outflow. If coupon rates are not insignificant in relation to the effective interest rate of borrowing, the entire cash outflow will be classified as financing Fees paid in debt restructuring creditor fees paid are classified as financing cash outflows whether the debt restructuring is an extinguishment or modification. Third party fees paid are classified as a financing cash outflow if a debt extinguishment and an operating cash outflow if a debt modification Contingent consideration in a business combination depends how soon the payment is made: o Settlement payment made soon after (i.e., a relatively short period of time such as three months or less) the consummation of a business combination investing cash outflows o Settlement payment not made soon after consummation financing cash outflow up to original contingent consideration liability (plus or minus measurement period adjustments); operating cash outflows for any excess Proceeds from the settlement of insurance claims based on the nature of the loss Corporate-owned life insurance settlement proceeds will be presented as cash inflows from investing activities and premium payments will be presented as cash outflows for investing, operating, or a combination of both Distributions received from equity method investees entities must elect either the cumulative earnings or nature of distribution approach to classify distributions as either operating or investing cash inflows. Generally, return on investment is operating cash inflow, return of investment is investing cash inflow Beneficial interests in securitization transactions beneficial interests obtained will be shown as noncash investing activities. Subsequent cash receipts will be shown as investing cash inflows When is it effective? The guidance in this ASU is effective for public entities for fiscal years beginning after December 15, 2017, and interim periods within those years. The guidance is effective for all other entities for fiscal years beginning after December 15, 2018 and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted but all guidance must be adopted in the same period. This guidance is to be applied retrospectively. Because of the current diversity in practice, this guidance may either be a significant change from how Companies are currently classifying these transactions, or Companies may be currently following this new guidance. We recommend entities carefully review this new guidance to determine what effect it will have.

Accounting Standards Update ( ASU ) 2016-16, Intra-Entity Transfers of Assets Other Than Inventory What does this standard change? This guidance requires companies to recognize the income tax effects of intercompany sales and transfers of assets other than inventory in the period in which the transfer occurs. Current guidance requires companies to defer the income tax effects of intercompany transfers of assets until the asset has been sold to an outside party or otherwise recognized (e.g., depreciated, amortized, impaired). Companies will be required to recognize the income tax effects of intercompany sales or transfers of assets, other than inventory, in the income statement as income tax expense (or benefit) in the period the sale or transfer occurs, which will increase the volatility of income tax expense but will align the tax effect of intercompany transfers with the requirements for other sales of assets. This guidance is applied to transfers of assets other than inventory, including tangible (e.g., fixed assets) and intangible assets (e.g., intellectual property). Long-term assets subject to depreciation (or amortization) accounting, or goods that, when put into use, will be classified as long-term assets, do not meet the definition of inventory and the income tax effects of intercompany sales and transfers will be recognized when it occurs. When is it effective? The guidance in this ASU is effective for public entities for fiscal years beginning after December 15, 2017, and interim periods within those years. The guidance is effective for all other entities for fiscal years beginning after December 15, 2018 and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted. If an entity issues interim financial statements, it may only early adopt in the first interim period of each year. This guidance is to be applied using a modified retrospective approach with a cumulative catch-up adjustment to opening retained earnings in the period of adoption. Companies should determine if they have any intercompany sales or transfers of assets other than inventory for which accounting will need to be adjusted under this new guidance.

Accounting Standards Update ( ASU ) 2016-18, Restricted Cash What does this standard change? This guidance clarifies how entities should present restricted cash and restricted cash equivalents in the statement of cash flows. This guidance requires entities to present the change in restricted cash and restricted cash equivalents with cash and cash equivalents to reconcile amounts on the balance sheet to the statement of cash flows. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. Entities will be required to disclose the nature of the restrictions, as well as reconcile the totals in the statement of cash flows to cash, cash equivalents, restricted cash, and restricted cash equivalents on the balance sheet when these are shown in more than one line item. When is it effective? The guidance in this ASU is effective for public entities for fiscal years beginning after December 15, 2017, and interim periods within those years. The guidance is effective for all other entities for fiscal years beginning after December 15, 2018 and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted. This guidance is to be applied retrospectively. We expect most entities will need to revise the statement of cash flows to include restricted cash and recommend Companies review this new guidance to evaluate the effect and the appropriate timing to make this change.

Accounting Standards Update ( ASU ) 2017-01, Clarifying the Definition of a Business What does this standard change? This guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is not a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs by more closely aligning it with how outputs are described in the new revenue recognition guidance. ASC 805 states that not all processes are required to be included in a set for it to be considered a business and this ASU provides guidance on the types of processes that should be included, requiring that, to be a business, the set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. In addition, this ASU, states that even when a set has outputs, an acquirer does not presume that a set with a continuing revenue stream includes a substantive process unless it meets the requirements in the ASU for having a substantive process. ASC 805 currently defines an output as the result of inputs and processes applied to those inputs that provide or have the ability to provide a return in the form of dividends, lower costs, or other economic benefits directly to investors or other owners, members, or participants. This ASU defines an output as the result of inputs and processes applied to those inputs that provide goods or services to customers, investment income (such as dividends or interest), or other revenues. This definition more closely aligns the definition of outputs with how they are described in the ASC 606, the new revenue guidance, and focuses on revenue-generating activities. When is it effective? The guidance in this ASU is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those years. For all other entities, it is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted. This amendment made to the definition of a business will likely result in more acquisitions being accounted for as asset acquisitions rather than business combinations. Companies with acquisitions should carefully review this new guidance to determine if purchase accounting is required.

Accounting Standards Update ( ASU ) 2017-04, Simplifying the Test for Goodwill Impairment What does this standard change? This guidance eliminates the requirement to calculate the implied fair value of goodwill (i.e., Step 2 of today s goodwill impairment test) to measure a goodwill impairment charge. Under today s guidance, if the fair value of a reporting unit is lower than its carrying amount (Step 1), the company calculates the impairment charge by comparing the implied fair value of goodwill to its carrying amount (Step 2). The implied fair value of goodwill is calculated by deducting the fair value of all assets and liabilities (including unrecognized intangible assets such as in-process research and development) of the reporting unit from the reporting unit s fair value as determined in Step 1. Under the new guidance, if a reporting unit s carrying amount exceeds its fair value, a company will record an impairment charge based on that difference. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. This ASU eliminates today s requirement to calculate a goodwill impairment charge using Step 2 as described above. In addition, under the new guidance, reporting units with zero or negative carrying amounts will generally be expected to pass the simplified impairment test and companies with these reporting units will no longer be required to perform the current qualitative assessment. When is it effective? The guidance in this ASU is effective for annual and interim impairment tests performed in the following periods: for public entities that meet the definition of an SEC filer, for fiscal years beginning after December 15, 2019; for other public business entities that are not SEC filers, for fiscal years beginning after December 15, 2020; and for all other entities, for fiscal years beginning after December 15, 2021. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The standard requires the guidance to be applied prospectively. With the elimination of Step 2, this amendment is likely to result in an increase in goodwill impairment charges. However, as the calculation for impairment has been significantly simplified companies should consider if early adoption would be appropriate.

Accounting Standards Update ( ASU ) 2017-08, Premium Amortization on Purchased Callable Debt Securities What does this standard change? This guidance shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date. Currently, companies generally amortize the premium as a yield adjustment over the entire contractual life of the security, even if it can be called prior to maturity. The accounting for purchased callable debt securities held at a discount does not change under this new guidance. This guidance applies to all premiums on purchased callable debt securities, regardless of how they were generated, and only to instruments that have explicit, noncontingent call features callable at a fixed price and preset date. A debt security with a contingent call feature will be in the scope of the guidance when the contingency is resolved and the security is callable at a fixed price and preset date. If the call option is not exercised at the earliest call date, the yield is reset to the effective yield using the payment terms of the security. If the security has more than one call date and the premium was amortized to a call price greater than the next call price, any excess of the amortized cost basis over the amount repayable at the next call date will be amortized to that date. If there are no other call dates, any excess of the amortized cost basis over par is then amortized to maturity. Discounts on purchased callable debt securities will continue to be amortized to the security s maturity date, as required by current guidance. When is it effective? The guidance in this ASU is effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those years. For all other entities, it is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted and the guidance is adopted using a modified retrospective transition approach under which a cumulative effect adjustment is made to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. This change in guidance addresses concerns that today s accounting results in the recognition of too much interest income before such a security is called and requires a loss to be recorded equal to the unamortized premium (i.e., the excess interest income) on the call date. Companies should determine if they hold any purchased callable debt securities held at a premium, which is callable at a fixed price and preset date. If so, an adjustment will need to be made upon adoption.

Accounting Standards Update ( ASU ) 2017-09, Scope of Modification Accounting What does this standard change? This guidance clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as a modification. Companies will apply the modification accounting guidance if the value, vesting conditions, or classification of the award changes, but not if the change is non-substantive. If all of the following are the same immediately before and after the change, the change is determined to be non-substantive: The award s fair value (or calculated value or intrinsic value, if those measurement methods are used) The award s vesting conditions The award s classification as an equity or liability instrument The new guidance also states that a company is not required to estimate the value of the award immediately before and after the change (which is the methodology for accounting for a modification under current guidance) if the change doesn t affect any of the inputs to the model used to value the award. In the ASU s Background Information and Basis for Conclusions, the FASB provides examples of changes to awards that generally will not require modification accounting, including: changes that are administrative in nature, such as a change to the company name, company address or plan name, and changes in an award s net settlement provisions related to tax withholdings that do not affect the classification of the award. Examples of changes to awards that generally will require modification accounting include: repricing of share options that changes the value of the options, changing service conditions, performance conditions or market conditions, changing terms that result in a reclassification of the award (equity to liability or vice versa), and adding an involuntary termination provision in anticipation of a sale of a business unit that accelerates the vesting of the award. When is it effective? This guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017 for all entities. Early adoption is permitted. Prospective application of the guidance is required. Companies should evaluate if any changes to the terms or conditions of share-based payment awards are substantive or non-substantive. If non-substantive, the guidance in this ASU means that modification accounting is not required.