Recent Accounting Pronouncements

6 Months Ended

Oct. 02, 2020

Accounting Standards Update and Change in Accounting Principle [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

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 (“ASU 2016-13”). The guidance, along with related amendments, changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Perspecta adopted the standard on April 1, 2020. The adoption of ASU 2016-13 did not have a material impact on Perspecta’s financial statements given the Company’s historically high collection results due to a concentration of receivables with the U.S. government.

In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350- 40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). ASU 2018-15 provides guidance for determining when a cloud computing arrangement includes a software license and makes changes to the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract. The Company adopted ASU 2018-15 on April 1, 2020 and will apply it to implementation costs incurred after the date of adoption. The adoption of ASU 2018-15 has not had a material impact thus far, and the future impact on Perspecta's financial statements and disclosures will depend on the volume of cloud-based solutions implemented.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides companies with optional expedients and exceptions to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. The optional expedients may be applied to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of the reference rate reform. The amendments in this update are effective for all entities as of March 12, 2020 and may be adopted using a prospective approach through December 31, 2022. The guidance in ASU 2020-04 is expected to have an impact on hedge designation as contract modifications and other changes occur while LIBOR is phased out, but is not expected to have a material impact on Perspecta’s financial statements. The Company is evaluating the expedients and reviewing its financial contracts that utilize LIBOR as the reference rate and will continue its assessment during the LIBOR transition period.

Recently Issued Accounting Pronouncements Not Yet Adopted

Other recently issued ASUs effective after October 2, 2020 are not expected to have a material impact on Perspecta’s financial statements.