ACCOUNTING AND DISCLOSURE CHANGES

6 Months Ended

Jun. 30, 2017

ACCOUNTING AND DISCLOSURE CHANGES

ACCOUNTING AND DISCLOSURE CHANGES

NOTE 2        ACCOUNTING AND DISCLOSURE CHANGES

Recently Issued Accounting and Disclosure Changes

In 2016, the Financial Accounting Standards Board (FASB) issued rules clarifying the revenue recognition standard issued in 2014.  Under the new rules, an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services.  The new rules also require more detailed disclosures related to the nature, timing, amount and uncertainty of revenue and cash flows arising from contracts with customers.  We are currently reviewing the provisions of these rules, analyzing the impact on our revenue contracts, reviewing current accounting policies and practices to identify potential differences that would result from applying these rules to our revenue contracts and assessing their potential impact on our financial statements and disclosures.  Based on our assessment to date, we have not identified any changes to the timing of revenue recognition based on the requirements of the new rules.  We will adopt these rules in the first quarter of 2018 and expect to apply the modified retrospective approach upon adoption with the cumulative effect of applying the rules, if any, recognized as of the date of initial application.

In January 2017, the FASB issued rules that changed the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. The rules are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted.  We do not expect the adoption of these rules to have a significant impact on our financial statements.

In March 2017, the FASB issued rules requiring employers that sponsor defined benefit plans for pensions and postretirement benefits to present the service cost component of net periodic benefit cost in the same income statement line item as other employee compensation costs arising from services rendered during the period.  Only the service cost component will be eligible for capitalization in assets.  Employers will present the other components of the net periodic benefit cost separately from the line item that includes the service cost and outside of any subtotal of operating income.  The rules are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted.  We do not expect the adoption of these rules to have a significant impact on our financial statements.

In May 2017, the FASB issued rules to simplify the guidance on the modification of share-based payment awards.  The amendments provide clarity on which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting prospectively.  The rules are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. The new guidance will be applied prospectively to any awards modified on or after the adoption date.

Recently Adopted Accounting and Disclosure Changes

In July 2015, the FASB issued rules requiring entities to measure inventory at the lower of cost or net realizable value. We adopted these rules in the first quarter of 2017 with no changes to our financial statements.