SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	12 Months Ended
Dec. 31, 2019
Accounting Policies [Abstract]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation Our consolidated financial statements include our accounts and those of our subsidiaries which are wholly–owned, controlled by us or a variable interest entity (“VIE”) where we are the primary beneficiary. All intercompany accounts and transactions have been eliminated in consolidation. The noncontrolling interest attributed to these entities, if any, are presented as “Noncontrolling interest” on our consolidated balance sheets and “Net income attributable to noncontrolling interest” on our consolidated statements of operations. In the Notes to Consolidated Financial Statements, except for Note 15 and Note 22, all dollar and share amounts in tabulations are in thousands of dollars and shares, respectively, unless otherwise indicated. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates and judgments on historical experience and on various other assumptions and information that are believed to be reasonable under the circumstances. Estimates and assumptions about future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. While we believe that the estimates and assumptions used in the preparation of the consolidated financial statements are appropriate, actual results could materially differ from those estimates. Cash and Cash Equivalents We consider all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. All our cash and cash equivalents are maintained with several major financial institutions. Deposits with these financial institutions may exceed the amount of insurance provided on such deposits; however, we have not experienced any losses in such accounts and we believe we are not exposed to any significant default risk. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are recorded at the invoiced amount and do not bear interest. We monitor our customers’ payment history and current credit worthiness to determine that collectability is reasonably assured. We also consider the overall business climate in which our customers operate. We utilize the specific identification method for establishing and maintaining the allowance for doubtful accounts. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Property and Equipment Property and equipment is capitalized at historical cost or the relative fair value of assets acquired (see Note 4) and is depreciated using the straight–line method based on estimated economic lives. We expense costs for maintenance and repairs in the period incurred. Significant improvements and betterments are capitalized if they extend the useful life of the asset. Multiclient Seismic Data Library Alaskan Seismic Ventures, LLC (“ASV”), a related party VIE (see Note 13) that we consolidate, maintains a multiclient seismic data library that consists of completed seismic surveys that are primarily licensed on a nonexclusive basis. ASV capitalized costs directly incurred in acquiring and processing the multiclient seismic data and expenses these costs based on the percentage of the total costs to the estimated total revenue that ASV expects to receive from the sales of such data. However, under no circumstances will an individual survey carry a net book value greater than a five year, straight–line amortized value. Impairment of Long–Lived Assets We assess our long–lived assets, such and property and equipment, multiclient seismic data library and intangible assets, for possible impairment whenever events or circumstances indicate that the recorded carrying value of the long–lived asset may not be recoverable. If the carrying amount of the long–lived asset exceeds the sum of the estimated undiscounted future net cash flows, we recognize an impairment loss equal to the difference between the carrying value and the fair value of the long–lived asset, which is estimated through various valuation techniques including discounted cash flow models, quoted market prices and third–party appraisals. We assess our goodwill, all of which resides in our Canadian operations reporting unit (the “Reporting Unit”), at least annually for impairment, or more frequently if facts and circumstances indicate that it is more likely than not impairment has occurred. We have the option of first performing a qualitative assessment to determine if impairment may have occurred. If the qualitative assessment indicates that it is more likely than not that the fair value of the Reporting Unit is less than its carrying amount, then we would be required to perform the two–step impairment test. Under the first step in the impairment test, we compare the fair value of the Reporting Unit with its carrying amount, including goodwill. If the carrying amount of the Reporting Unit exceeds its fair value, the second step of the goodwill impairment test is performed. Under the second step in the impairment test, the implied fair value of goodwill is compared with its carrying amount. The implied fair value of goodwill is calculated by subtracting the estimated fair values of the Reporting Unit’s assets net of liabilities from the fair value of the Reporting Unit. If the carrying amount of goodwill exceeds its implied fair value, an impairment loss shall be recognized in an amount equal to that excess. We determine the fair value of the Reporting Unit using a combination of the market approach and the income approach. Under the market approach, the fair value of the Reporting Unit is based on the Guideline Public Company (“GPC”) methodology using GPCs that are considered to be similar to us and whose stock are actively traded. Under the income approach, the fair value of the Reporting Unit is based on the expected present value of the future net cash flows. Tax Credits Receivable The State of Alaska offers tax credits as incentives for oil and natural gas exploration and development. The tax credits are based on costs incurred by the explorer, and the tax credits must be approved by the Alaska Department of Revenue (the “DOR”). ASV earned tax credits related to the costs incurred in obtaining the data for its multiclient seismic data library. After the tax credit applications were submitted to and approved by the DOR, ASV recorded the tax credits as an offset to the capitalized costs of the multiclient seismic data library as the incentive’s usage is consistent with usage of the multiclient seismic data library. Future sales of licenses related to the multiclient seismic data library are subject to a 35% production tax by the State of Alaska. These production taxes are expensed in the period incurred and can be satisfied either through the usage of tax credits or, if there are no tax credits available, a cash payment. In 2019 and 2018, ASV used $1.1 million and $1.4 million, respectively, of tax credits to satisfy ASV’s production tax liability. The State of Alaska also allows for any unused tax credits to be purchased for cash from the State of Alaska (if and when funds are allocated for the purchase) or transferred or sold to other third parties to utilize against their production taxes. Treasury Stock We record the repurchase of shares of our common stock at cost based on the settlement date of the transaction. These repurchased shares are classified as treasury stock on our consolidated balance sheets. Shares of treasury stock are included in our authorized and issued shares but excluded from outstanding shares. Variable Interest Entities A VIE is defined as an entity in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. We consolidate a VIE when we are the primary beneficiary of such VIE. As primary beneficiary, we have both the power to direct the activities that most significantly impact the economic performance of the VIE and a right to receive benefits or absorb losses of the entity that could be potentially significant to the VIE. We reconsider our evaluation of whether to consolidate a VIE each reporting period based upon changes in the facts and circumstances pertaining to the VIE. Revenue Recognition Our services are provided under cancelable service contracts that typically have an original expected duration of one year or less. These contracts are either fixed price agreements that provide for a fixed fee per unit of measure (“Turnkey”) or variable price agreements that provide for a fixed hourly, daily or monthly fee during the term of the project (“Term”). Under both types of agreements, we recognize revenue as the services are performed. We recognize revenue based upon quantifiable measures of progress, such as square or linear kilometers surveyed, each unit of data recorded or other methods using the total estimated revenue for the service contract. We receive reimbursements for certain out–of–pocket expenses under the terms of the service contracts. The amounts billed to clients are included at their gross amount in the total estimated revenue for the service contract. Clients are billed as permitted by the service contract. Contract assets and contract liabilities are the result of timing differences between revenue recognition, billing and cash collections. If billing occurs prior to the revenue recognition or if billing exceeds the revenue recognized, the amount is considered deferred revenue and a contract liability. Conversely, if the revenue recognition exceeds the billing, the exceeded amount is considered unbilled receivable and a contract asset. As services are performed, those deferred revenue amounts are recognized as revenue. In some instances, third party permitting, surveying, drilling, helicopter, equipment rental and mobilization costs that directly relate to the contract are utilized to fulfill the contract obligations. These fulfillment costs are capitalized and amortized consistent with how the related revenue is recognized unless we determine the costs are no longer recoverable, at which time they are expensed. Estimates for our total revenue and total fulfillment cost on any service contract are based on significant qualitative and quantitative judgments. Our management considers a variety of factors such as whether various components of the performance obligation will be performed internally or externally, cost of third party services, and facts and circumstances unique to the performance obligation in making these estimates. As a significant change in one or more of these estimates could affect the profitability of our contracts, we review and update the estimates during each reporting period. We recognize these adjustments in revenues under the cumulative catch–up method which recognizes the impact of the adjustment on revenue to date in the period the adjustment is identified. Revenue in future periods of performance is recognized using the adjusted estimate. At times, we may also recognize revenue from licensing of data that has already been created and is available for delivery. This seismic data license represents a single performance obligation that is typically recognized at a point in time. We recognize this revenue upon the transfer of control to the customer at an amount that reflects the consideration we expect to receive in exchange for these licenses. We recognized $3.1 million and $4.1 million of revenues from the sale of licenses in 2019 and 2018, respectively. Foreign Exchange Gains and Losses Assets and liabilities of non–U.S. operations with a functional currency other than the U.S. dollar have been translated at exchange rates in effect at the balance sheet dates, and revenues, expenses and cash flows have been translated at average exchange rates for the respective periods. Any resulting translation gains and losses are included in accumulated other comprehensive loss. Gains and losses from foreign currency transactions, such as those resulting from transactions denominated in a currency other than the functional currency of the entity involved and those resulting from remeasurements of monetary items, are included in our consolidated statements of operations. In addition, as we have not designated our intercompany transactions as being of a long–term nature, gains and losses on these transactions are included in our consolidated statements of operations. Income Taxes We use the liability method to determine our income tax provisions, under which current and deferred tax liabilities and assets are recorded in accordance with enacted tax laws and rates. Under this method, the amounts of deferred tax liabilities and assets at the end of each period are determined using the tax rate expected to be in effect when taxes are actually paid or recovered. Valuation allowances are established to reduce deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Concentration of Credit Risk Our revenues are derived from a concentrated customer base; however, we are not substantially dependent on any one customer. Based on the nature of our contracts and customer projects, our significant customers can and typically do change from year to year and the largest customers in any one year may not be indicative of the largest customers in the future. In both 2019 and 2018, we had three customers that each individually exceeded 10% of our consolidated revenue from services and that together represented approximately 56% and 75%, respectively, of our consolidated revenue from services. Recently Adopted Accounting Pronouncements On January 1, 2019, we adopted Accounting Standards Update (“ASU”) No. 2016–02, Leases, as amended by ASU 2018–10, Codification Improvements to Topic 842, ASU 2018–11, Targeted Improvements, and 2019–01, Codification Improvements. These ASUs required the recognition of lease assets and lease liabilities for virtually all leases and required disclosure of key information about leasing arrangements. We elected to adopt these new standards using the modified retrospective method of transition for all leases existing at or commencing after the date of initial application. The new standards provide for certain practical expedients when adopting the new guidance. We have elected the practical expedient package outlined in ASU No. 2016–02 under which we can carryforward our previous classification of a lease as either an operating or capital lease, and we do not have to reassess previously recorded initial direct costs. Additionally, we made policy elections allowing us to exclude leases with original terms of 12 months or less from lease assets and liabilities and to not separate nonlease components from the associated lease component and instead account for both as a single lease component for all asset classes. We did not elect the practical expedient allowing us to use hindsight to determine the lease term and to assess any impairment of lease assets during the lookback period. The adoption of the new standards had a material impact on our consolidated balance sheet, with the most significant being the recognition of operating lease right–of-use (“ROU”) assets and operating lease liabilities of $9.9 million and $9.9 million, respectively. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. The standard did not materially impact our consolidated statement of operations and consolidated statement of cash flows. New Accounting Standards to be Adopted In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016–03, Measurement of Credit Losses on Financial Instruments, as amended by ASU 2019–10, Effective Dates. The updated accounting guidance replaces the incurred loss impairment methodology with an expected loss methodology for financial instruments not accounted for at fair value. The expected loss methodology generally will result in the earlier recognition of allowance for losses. As a public business entity eligible to be a smaller reporting company, the new standard is effective for annual and interim reporting periods beginning after December 15, 2022. We will adopt adopted ASU 2016–03 on January 1, 2023, and we do not expect the adoption to have a material impact on our consolidated financial statements. In January 2017, the FASB issued ASU 2017–04, Simplifying the Test for Goodwill Impairment. ASU 2017–04 simplifies how an entity is required to test goodwill for impairment by eliminating step two from the goodwill impairment test, which measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount. Under the new guidance, if a reporting unit’s carrying amount exceeds its fair value, an entity 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. We adopted ASU 2017–04 on January 1, 2020 to our goodwill impairment tests beginning in 2020 and we do not expect the adoption of ASU 2017–04 to have a material impact on our consolidated financial statements. In December 2019, the FASB issued ASU 2019–12, Simplifying the Accounting for Income Taxes. The new standard removes certain exceptions for performing intraperiod allocation and calculating income taxes in interim periods and also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. ASU 2019–12 is effective for annual and interim periods beginning after December 15, 2020. We will adopt the new standard effective January 1, 2021, and we do not expect the adoption to have a material impact on our consolidated financial statements. No other new accounting pronouncements issued or effective during the year ended December 31, 2019 have had or are expected to have a material impact on our consolidated financial statements.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2019

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Our consolidated financial statements include our accounts and those of our subsidiaries which are wholly–owned, controlled by us or a variable interest entity (“VIE”) where we are the primary beneficiary. All intercompany accounts and transactions have been eliminated in consolidation. The noncontrolling interest attributed to these entities, if any, are presented as “Noncontrolling interest” on our consolidated balance sheets and “Net income attributable to noncontrolling interest” on our consolidated statements of operations.

In the Notes to Consolidated Financial Statements, except for Note 15 and Note 22, all dollar and share amounts in tabulations are in thousands of dollars and shares, respectively, unless otherwise indicated.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates and judgments on historical experience and on various other assumptions and information that are believed to be reasonable under the circumstances. Estimates and assumptions about future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. While we believe that the estimates and assumptions used in the preparation of the consolidated financial statements are appropriate, actual results could materially differ from those estimates.

Cash and Cash Equivalents

We consider all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. All our cash and cash equivalents are maintained with several major financial institutions. Deposits with these financial institutions may exceed the amount of insurance provided on such deposits; however, we have not experienced any losses in such accounts and we believe we are not exposed to any significant default risk.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at the invoiced amount and do not bear interest. We monitor our customers’ payment history and current credit worthiness to determine that collectability is reasonably assured. We also consider the overall business climate in which our customers operate. We utilize the specific identification method for establishing and maintaining the allowance for doubtful accounts. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Property and Equipment

Property and equipment is capitalized at historical cost or the relative fair value of assets acquired (see Note 4) and is depreciated using the straight–line method based on estimated economic lives. We expense costs for maintenance and repairs in the period incurred. Significant improvements and betterments are capitalized if they extend the useful life of the asset.

Multiclient Seismic Data Library

Alaskan Seismic Ventures, LLC (“ASV”), a related party VIE (see Note 13) that we consolidate, maintains a multiclient seismic data library that consists of completed seismic surveys that are primarily licensed on a nonexclusive basis. ASV capitalized costs directly incurred in acquiring and processing the multiclient seismic data and expenses these costs based on the percentage of the total costs to the estimated total revenue that ASV expects to receive from the sales of such data. However, under no circumstances will an individual survey carry a net book value greater than a five year, straight–line amortized value.

Impairment of Long–Lived Assets

We assess our long–lived assets, such and property and equipment, multiclient seismic data library and intangible assets, for possible impairment whenever events or circumstances indicate that the recorded carrying value of the long–lived asset may not be recoverable. If the carrying amount of the long–lived asset exceeds the sum of the estimated undiscounted future net cash flows, we recognize an impairment loss equal to the difference between the carrying value and the fair value of the long–lived asset, which is estimated through various valuation techniques including discounted cash flow models, quoted market prices and third–party appraisals.

We assess our goodwill, all of which resides in our Canadian operations reporting unit (the “Reporting Unit”), at least annually for impairment, or more frequently if facts and circumstances indicate that it is more likely than not impairment has occurred. We have the option of first performing a qualitative assessment to determine if impairment may have occurred. If the qualitative assessment indicates that it is more likely than not that the fair value of the Reporting Unit is less than its carrying amount, then we would be required to perform the two–step impairment test.

Under the first step in the impairment test, we compare the fair value of the Reporting Unit with its carrying amount, including goodwill. If the carrying amount of the Reporting Unit exceeds its fair value, the second step of the goodwill impairment test is performed. Under the second step in the impairment test, the implied fair value of goodwill is compared with its carrying amount. The implied fair value of goodwill is calculated by subtracting the estimated fair values of the Reporting Unit’s assets net of liabilities from the fair value of the Reporting Unit. If the carrying amount of goodwill exceeds its implied fair value, an impairment loss shall be recognized in an amount equal to that excess.

We determine the fair value of the Reporting Unit using a combination of the market approach and the income approach. Under the market approach, the fair value of the Reporting Unit is based on the Guideline Public Company (“GPC”) methodology using GPCs that are considered to be similar to us and whose stock are actively traded. Under the income approach, the fair value of the Reporting Unit is based on the expected present value of the future net cash flows.

Tax Credits Receivable

The State of Alaska offers tax credits as incentives for oil and natural gas exploration and development. The tax credits are based on costs incurred by the explorer, and the tax credits must be approved by the Alaska Department of Revenue (the “DOR”). ASV earned tax credits related to the costs incurred in obtaining the data for its multiclient seismic data library. After the tax credit applications were submitted to and approved by the DOR, ASV recorded the tax credits as an offset to the capitalized costs of the multiclient seismic data library as the incentive’s usage is consistent with usage of the multiclient seismic data library.

Future sales of licenses related to the multiclient seismic data library are subject to a 35% production tax by the State of Alaska. These production taxes are expensed in the period incurred and can be satisfied either through the usage of tax credits or, if there are no tax credits available, a cash payment. In 2019 and 2018, ASV used $1.1 million and $1.4 million, respectively, of tax credits to satisfy ASV’s production tax liability.

The State of Alaska also allows for any unused tax credits to be purchased for cash from the State of Alaska (if and when funds are allocated for the purchase) or transferred or sold to other third parties to utilize against their production taxes.

Treasury Stock

We record the repurchase of shares of our common stock at cost based on the settlement date of the transaction. These repurchased shares are classified as treasury stock on our consolidated balance sheets. Shares of treasury stock are included in our authorized and issued shares but excluded from outstanding shares.

Variable Interest Entities

A VIE is defined as an entity in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. We consolidate a VIE when we are the primary beneficiary of such VIE. As primary beneficiary, we have both the power to direct the activities that most significantly impact the economic performance of the VIE and a right to receive benefits or absorb losses of the entity that could be potentially significant to the VIE. We reconsider our evaluation of whether to consolidate a VIE each reporting period based upon changes in the facts and circumstances pertaining to the VIE.

Revenue Recognition

Our services are provided under cancelable service contracts that typically have an original expected duration of one year or less. These contracts are either fixed price agreements that provide for a fixed fee per unit of measure (“Turnkey”) or variable price agreements that provide for a fixed hourly, daily or monthly fee during the term of the project (“Term”). Under both types of agreements, we recognize revenue as the services are performed. We recognize revenue based upon quantifiable measures of progress, such as square or linear kilometers surveyed, each unit of data recorded or other methods using the total estimated revenue for the service contract.

We receive reimbursements for certain out–of–pocket expenses under the terms of the service contracts. The amounts billed to clients are included at their gross amount in the total estimated revenue for the service contract.

Clients are billed as permitted by the service contract. Contract assets and contract liabilities are the result of timing differences between revenue recognition, billing and cash collections. If billing occurs prior to the revenue recognition or if billing exceeds the revenue recognized, the amount is considered deferred revenue and a contract liability. Conversely, if the revenue recognition exceeds the billing, the exceeded amount is considered unbilled receivable and a contract asset. As services are performed, those deferred revenue amounts are recognized as revenue.

In some instances, third party permitting, surveying, drilling, helicopter, equipment rental and mobilization costs that directly relate to the contract are utilized to fulfill the contract obligations. These fulfillment costs are capitalized and amortized consistent with how the related revenue is recognized unless we determine the costs are no longer recoverable, at which time they are expensed.

Estimates for our total revenue and total fulfillment cost on any service contract are based on significant qualitative and quantitative judgments. Our management considers a variety of factors such as whether various components of the performance obligation will be performed internally or externally, cost of third party services, and facts and circumstances unique to the performance obligation in making these estimates. As a significant change in one or more of these estimates could affect the profitability of our contracts, we review and update the estimates during each reporting period. We recognize these adjustments in revenues under the cumulative catch–up method which recognizes the impact of the adjustment on revenue to date in the period the adjustment is identified. Revenue in future periods of performance is recognized using the adjusted estimate.

At times, we may also recognize revenue from licensing of data that has already been created and is available for delivery. This seismic data license represents a single performance obligation that is typically recognized at a point in time. We recognize this revenue upon the transfer of control to the customer at an amount that reflects the consideration we expect to receive in exchange for these licenses. We recognized $3.1 million and $4.1 million of revenues from the sale of licenses in 2019 and 2018, respectively.

Foreign Exchange Gains and Losses

Assets and liabilities of non–U.S. operations with a functional currency other than the U.S. dollar have been translated at exchange rates in effect at the balance sheet dates, and revenues, expenses and cash flows have been translated at average exchange rates for the respective periods. Any resulting translation gains and losses are included in accumulated other comprehensive loss.

Gains and losses from foreign currency transactions, such as those resulting from transactions denominated in a currency other than the functional currency of the entity involved and those resulting from remeasurements of monetary items, are included in our consolidated statements of operations. In addition, as we have not designated our intercompany transactions as being of a long–term nature, gains and losses on these transactions are included in our consolidated statements of operations.

Income Taxes

We use the liability method to determine our income tax provisions, under which current and deferred tax liabilities and assets are recorded in accordance with enacted tax laws and rates. Under this method, the amounts of deferred tax liabilities and assets at the end of each period are determined using the tax rate expected to be in effect when taxes are actually paid or recovered. Valuation allowances are established to reduce deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Concentration of Credit Risk

Our revenues are derived from a concentrated customer base; however, we are not substantially dependent on any one customer. Based on the nature of our contracts and customer projects, our significant customers can and typically do change from year to year and the largest customers in any one year may not be indicative of the largest customers in the future.

In both 2019 and 2018, we had three customers that each individually exceeded 10% of our consolidated revenue from services and that together represented approximately 56% and 75%, respectively, of our consolidated revenue from services.

Recently Adopted Accounting Pronouncements

On January 1, 2019, we adopted Accounting Standards Update (“ASU”) No. 2016–02, Leases, as amended by ASU 2018–10, Codification Improvements to Topic 842, ASU 2018–11, Targeted Improvements, and 2019–01, Codification Improvements. These ASUs required the recognition of lease assets and lease liabilities for virtually all leases and required disclosure of key information about leasing arrangements. We elected to adopt these new standards using the modified retrospective method of transition for all leases existing at or commencing after the date of initial application.

The new standards provide for certain practical expedients when adopting the new guidance. We have elected the practical expedient package outlined in ASU No. 2016–02 under which we can carryforward our previous classification of a lease as either an operating or capital lease, and we do not have to reassess previously recorded initial direct costs. Additionally, we made policy elections allowing us to exclude leases with original terms of 12 months or less from lease assets and liabilities and to not separate nonlease components from the associated lease component and instead account for both as a single lease component for all asset classes. We did not elect the practical expedient allowing us to use hindsight to determine the lease term and to assess any impairment of lease assets during the lookback period.

The adoption of the new standards had a material impact on our consolidated balance sheet, with the most significant being the recognition of operating lease right–of-use (“ROU”) assets and operating lease liabilities of $9.9 million and $9.9 million, respectively. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. The standard did not materially impact our consolidated statement of operations and consolidated statement of cash flows.

New Accounting Standards to be Adopted

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016–03, Measurement of Credit Losses on Financial Instruments, as amended by ASU 2019–10, Effective Dates. The updated accounting guidance replaces the incurred loss impairment methodology with an expected loss methodology for financial instruments not accounted for at fair value. The expected loss methodology generally will result in the earlier recognition of allowance for losses. As a public business entity eligible to be a smaller reporting company, the new standard is effective for annual and interim reporting periods beginning after December 15, 2022. We will adopt adopted ASU 2016–03 on January 1, 2023, and we do not expect the adoption to have a material impact on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017–04, Simplifying the Test for Goodwill Impairment. ASU 2017–04 simplifies how an entity is required to test goodwill for impairment by eliminating step two from the goodwill impairment test, which measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount. Under the new guidance, if a reporting unit’s carrying amount exceeds its fair value, an entity 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. We adopted ASU 2017–04 on January 1, 2020 to our goodwill impairment tests beginning in 2020 and we do not expect the adoption of ASU 2017–04 to have a material impact on our consolidated financial statements.

In December 2019, the FASB issued ASU 2019–12, Simplifying the Accounting for Income Taxes. The new standard removes certain exceptions for performing intraperiod allocation and calculating income taxes in interim periods and also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. ASU 2019–12 is effective for annual and interim periods beginning after December 15, 2020. We will adopt the new standard effective January 1, 2021, and we do not expect the adoption to have a material impact on our consolidated financial statements.

No other new accounting pronouncements issued or effective during the year ended December 31, 2019 have had or are expected to have a material impact on our consolidated financial statements.