Recent Accounting Pronouncements

12 Months Ended

Dec. 31, 2019

Accounting Changes and Error Corrections [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Measurement of Credit Losses on Financial Instruments

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("Topic 326"). This ASU introduced a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. The estimate required considerations of historical information, current information and reasonable and supportable forecasts. This ASU also expanded the disclosure requirements to enable users of financial statements to understand the assumptions, models and methods for estimating expected credit losses.

The Company established a cross-functional implementation team to analyze the effect of Topic 326. The analysis included identifying pools of receivables, developing and assessing estimation methodologies, assessing policy elections, and evaluating its business processes and internal controls to meet the accounting, reporting and disclosure requirements. On January 1, 2020, the Company adopted and applied Topic 326 using the modified retrospective method. The adoption of Topic 326, as well as the adjustment to retained earnings for the cumulative effect, was not significant to the Company's Consolidated Financial Statements.

Accounting for Leases

On January 1, 2019, the Company adopted and applied ASU 2016-02 Leases (Topic 842), resulting in the recognition of right-of-use assets and additional lease liabilities of $81 million as of January 1, 2019, mainly related to operating leases for the Company's real estate portfolio. As part of the adoption, financial information and disclosures are not updated for comparative reporting periods. Additionally, the Company elected the transition package of practical expedients upon adoption which, among other things, allows an entity to not reassess the historical lease classification. For additional information regarding the impact to the Company's Consolidated Balance Sheets from adopting this standard, see Note 11 (Leases).