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Summary of Significant Accounting Policies (Policies)
 12 Months Ended
Dec. 31, 2018
Accounting Policies [Abstract]  
Basis of Presentation and Consolidation Basis of Presentation and Consolidation   We use accounting policies that conform to US GAAP. Significant policies are discussed below. Our consolidated accounts include our accounts and the accounts of our wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated upon consolidation. For the periods presented, net income or loss is materially consistent with comprehensive income or loss.
Segment Information  Accounting policies are consistent across geographical segments. Transfers between segments are accounted for at market value. We do not consider interest income or expense and income tax benefit or expense in our evaluation of the performance of geographical segments. See Note 3. Segment Information.
Consolidated Variable Interest Entity (VIE)  Noble Energy has determined that the partners with equity at risk in Noble Midstream Partners LP (Noble Midstream Partners) lack the authority, through voting rights or similar rights, to direct the activities that most significantly impact Noble Midstream Partners' economic performance; therefore, Noble Midstream Partners is considered a VIE. Through Noble Energy's ownership interest in Noble Midstream GP LLC (the General Partner to Noble Midstream Partners), Noble Energy has the authority to direct the activities that most significantly affect economic performance and the obligation to absorb losses or the right to receive benefits that could be potentially significant to Noble Midstream Partners. Therefore, Noble Energy is considered the primary beneficiary and consolidates Noble Midstream Partners.
Noncontrolling Interests In third quarter 2016, Noble Midstream Partners, a subsidiary of Noble Energy, completed its initial public offering of common units. As a result, we present our consolidated financial statements with a noncontrolling interest section representing the public's ownership in Noble Midstream Partners. We also present third-party ownership in Noble Midstream Partners' consolidated non-wholly owned subsidiaries as noncontrolling interests.
Equity Method of Accounting Equity Method of Accounting We use the equity method of accounting for investments in entities that we do not control but over which we exert significant influence. Our equity investees own and operate various midstream assets which we consider an essential component of our business and a necessary and integral element to our value chain involving the monetization of natural gas. With our partners, we engage in joint strategic operational and financial decision making for these entities.
In order to reflect the economics associated with our integrated upstream value chain described above, we include income from equity method investees as a component of revenues in our consolidated statements of operations.
We carry equity method investments at our share of net assets of the equity investees plus loans and advances, and include the investments in other noncurrent assets on our consolidated balance sheets. Within our consolidated statements of cash flows, activity is reflected within cash flows provided by operating activities and cash flows used in investing activities. Differences in the basis of the investment and the separate net asset value of the investee, if any, are amortized into income over the remaining useful life of the underlying assets. Our share of income taxes incurred directly by the equity method investees is reported in income from equity method investees and is not included in our income tax provision in our consolidated statements of operations.
Foreign Currency Foreign Currency  The US dollar is considered the functional currency for each of our international operations. Transactions that are completed in foreign currencies are remeasured into US dollars and recorded in the financial statements at prevailing foreign exchange rates. Transaction gains or losses are included in other non-operating (income) expense, net in the consolidated statements of operations.
Use of Estimates Use of Estimates   The preparation of consolidated financial statements in conformity with US GAAP requires us to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.
Estimated quantities of crude oil, NGL and natural gas reserves are the most significant of our estimates. All of the reserves data included in this Annual Report Form 10-K are estimates. Reservoir engineering is a subjective process of estimating underground accumulations of crude oil, NGLs and natural gas. There are numerous uncertainties inherent in estimating quantities of proved crude oil, NGL and natural gas reserves. The accuracy of any reserves estimate is a function of the quality
of available data and of engineering and geological interpretation and judgment. As a result, reserves estimates may be different from the quantities of crude oil, NGLs and natural gas that are ultimately recovered. Qualified petroleum engineers in our Houston and Denver offices prepare all reserves estimates for our different geographical regions. These reserves estimates are reviewed and approved by senior engineering staff and division management with final approval by the Senior Vice President – Corporate Development and certain members of senior management. See Supplemental Oil and Gas Information (Unaudited).
Other items subject to estimates and assumptions include the carrying amounts of inventory, property, plant and equipment, goodwill, exit costs and AROs, valuation allowances for receivables and deferred income tax assets, and valuation of derivative instruments, among others. Management evaluates estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic and commodity price environment. The volatility of commodity prices results in increased uncertainty inherent in such estimates and assumptions. Declines in commodity prices could result in a reduction in our fair value estimates and cause us to perform analyses to determine if our oil and gas properties are impaired. As future commodity prices cannot be determined accurately, actual results could differ significantly from our estimates.
Reclassification Reclassifications The revenues and expenses associated with mitigating Marcellus Shale retained firm transportation contracts, including costs associated with exiting certain of those contracts, were reclassified from our oil and gas exploration and production segment to Corporate as these items are not representative of retained upstream operations. See Note 3. Segment Information.Certain other prior-period amounts have been reclassified to conform to the current period presentation.
Fair Value Measurements Fair Value Measurements   Fair value measurements are based on a hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three levels. The fair value hierarchy is as follows:
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Level 1 measurements are fair value measurements which use quoted market prices (unadjusted) in active markets for identical assets or liabilities.
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Level 2 measurements are fair value measurements which use inputs, other than quoted prices included within Level 1, which are observable for the asset or liability, either directly or indirectly.
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Level 3 measurements are fair value measurements which use unobservable inputs.
The fair value hierarchy gives the highest priority to Level 1 measurements and the lowest priority to Level 3 measurements.  We use Level 1 inputs when available, as Level 1 inputs generally provide the most reliable evidence of fair value.
Cash and Cash Equivalents Cash and Cash Equivalents  For purposes of reporting cash flows, cash and cash equivalents include unrestricted cash on hand and investments with original maturities of three months or less at the time of purchase.
Accounts Receivable and Allowance for Doubtful Accounts Accounts Receivable and Allowance for Doubtful Accounts  Our accounts receivable result from sales of crude oil, NGL and natural gas production and joint interest billings to our partners for their share of expenses on joint venture projects for which we are the operator. The majority of these receivables have payment terms of 30 days or less. Our accounts receivable reflect a broad national and international customer base, which limits our exposure to concentrations of credit risk. We continually monitor the creditworthiness of the counterparties and we have obtained credit enhancements from some parties in the form of parental guarantees or letters of credit. We routinely assess the recoverability of all material receivables to determine their collectibility. We accrue a reserve on a receivable when, based on management’s judgment, it is probable that a receivable will not be collected and the amount of such reserve may be reasonably estimated.
Inventories Inventories  Inventories consist primarily of tubular goods and production equipment used in our oil and gas operations and crude oil produced but not yet sold. Materials and supplies inventories are stated at the lower of cost or net realizable value. The assets will be reduced to their fair value if the carrying amount exceeds net realizable value. The cost of crude oil inventory includes production costs and depreciation, depletion and amortization (DD&A) of oil and gas properties.
Property, Plant and Equipment Property, Plant and Equipment   Significant accounting policies for our property, plant and equipment are as follows:
Oil and Gas Properties (Successful Efforts Method of Accounting)   We account for crude oil and natural gas properties under the successful efforts method of accounting. Under this method, costs to acquire mineral interests in crude oil and natural gas properties, drill and equip exploratory wells that find proved reserves, and drill and equip development wells are capitalized. Capitalized costs of producing crude oil and natural gas properties, along with support equipment and facilities, are amortized to expense by the unit-of-production method based on proved crude oil, NGL and natural gas reserves on a field-by-field basis, as estimated by our qualified petroleum engineers. Costs of certain gathering facilities or processing plants serving a number of properties or used for third-party processing are depreciated using the straight-line method over the useful lives of the assets ranging from three to thirty years. Upon sale or retirement of depreciable or depletable property, the cost and related
accumulated DD&A are eliminated from the accounts and the resulting gain or loss is recognized. Costs related to repair and maintenance activities are expensed as incurred.
Proved Property Impairment   For our proved properties, we routinely assess whether impairment indicators arise during any given quarter and have processes in place to ensure that we become aware of such indicators. Impairment indicators include, but are not limited to, sustained decreases in commodity prices, negative revisions of proved reserves, and increases in development or operating costs. In the event that impairment indicators exist, we conduct an impairment test. Under such test, we estimate future net cash flows expected in connection with the property and compare such future net cash flows to the carrying amount of the property to determine if the carrying amount is recoverable. Other long-lived assets, such as our midstream assets, are evaluated in a manner consistent with our policy for proved property.
When the carrying amount of a property exceeds its estimated undiscounted future net cash flows, the carrying amount is reduced to estimated fair value. Fair value may be estimated using comparable market data, a discounted cash flow method, or a combination of the two. In the discounted cash flow method, estimated future cash flows are based on management’s expectations for the future and include estimates of future crude oil and natural gas production, commodity prices based on published forward commodity price curves or contract prices as of the date of the estimate, operating and development costs, and a risk-adjusted discount rate.
We recorded impairment charges in 2018, 2017 and 2016 and it is possible that other assets could become impaired in the future. See Note 14. Fair Value Measurements and Disclosures.
Unproved Property Impairment  Our unproved properties consist of leasehold costs and allocated value to probable and possible reserves resulting from acquisitions. We assess individually significant unproved properties for impairment on a quarterly basis and recognize a loss at the time of impairment by providing an impairment allowance. In determining whether a significant unproved property is impaired, we consider numerous factors including, but not limited to, current exploration plans, favorable or unfavorable exploration activity on the property being evaluated and/or adjacent properties, our geologists' evaluation of the property, and the remaining months in the lease term for the property.
When we have allocated fair value to an unproved property as the result of a transaction accounted for as a business combination, we use a future cash flow analysis to assess the unproved property for impairment. Cash flows used in the impairment analysis are determined based on management’s estimates of crude oil, NGL and natural gas reserves, future commodity prices and future costs to produce the reserves. Cash flow estimates related to probable and possible reserves are reduced by additional risk-weighting factors.
It is possible that unproved oil and gas properties, including undeveloped leases, could become impaired in the future if commodity prices decline or if there are changes in exploration plans or the timing and extent of development activities. See Note 7. Capitalized Exploratory Well Costs and Undeveloped Leasehold Costs.
Properties Acquired in Business Combinations  When sufficient market data is not available, we determine the fair values of proved and unproved oil and gas properties acquired in transactions accounted for as business combinations by preparing estimates of cash flows from the production of crude oil, NGL and natural gas reserves. We estimate future prices to apply to the estimated reserves quantities acquired, and estimate future operating and development costs, to arrive at estimates of future net cash flows. For the fair value assigned to proved reserves, future net cash flows are discounted using a market-based weighted average cost of capital rate determined appropriate at the time of the business combination. When estimating and valuing unproved reserves, discounted future net cash flows of probable and possible reserves are reduced by additional risk-weighting factors.
For other assets acquired in business combinations, we use a combination of available cost and market data and/or estimated cash flows to determine the fair values.
Assets Held for Sale We occasionally market oil and gas properties for sale. At the end of each reporting period, we evaluate properties being marketed to determine whether any should be reclassified as held for sale. The held-for-sale criteria include: a commitment to a plan to sell; the asset is available for immediate sale; an active program to locate a buyer exists; the sale of the asset is probable and expected to be completed within one year; the asset is being actively marketed for sale; and it is unlikely that significant changes to the plan will be made. If each of these criteria is met, the property is reclassified as held for sale on our consolidated balance sheets and will be valued at the lower of net book value or anticipated sales proceeds less costs to sell. Impairment expense would be recorded for any excess of net book value over anticipated sales proceeds less costs to sell.
Exploration Costs   Geological and geophysical costs, delay rentals, amortization of unproved leasehold costs, and costs to drill exploratory wells that do not find proved reserves are expensed as oil and gas exploration. We carry the costs of an exploratory well as an asset if the well finds a sufficient quantity of reserves to justify its capitalization as a producing well and as long as we are making sufficient progress assessing the reserves and the economic and operating viability of the project. For certain capital-intensive international projects, it may take us more than one year to evaluate the future potential of the exploratory well
and make a determination of its economic viability. Our ability to move forward on a project may be dependent on gaining access to transportation or processing facilities or obtaining permits and government or partner approval, the timing of which is beyond our control. In such cases, exploratory well costs remain suspended as long as we are actively pursuing access to necessary facilities, permits and approvals and we believe they will be obtained. We assess the status of suspended exploratory well costs on a quarterly basis. See Note 7. Capitalized Exploratory Well Costs and Undeveloped Leasehold Costs.
Property, Plant and Equipment, Other   Other property includes automobiles, trucks, airplanes, office furniture, computer equipment, buildings, leasehold improvements and other fixed assets. These items are recorded at cost and are depreciated using the straight-line method based on expected lives of the individual assets or group of assets, ranging from three to thirty years. Other property also includes linefill, which is recorded at cost to produce into the production line. Linefill is not subject to depreciation but is reviewed for impairment.
Capitalization of Interest   We capitalize interest costs associated with the development and construction of significant properties or projects to bring them to a condition and location necessary for their intended use, which for crude oil and natural gas assets is at first production from the field. Interest is capitalized using an interest rate equivalent to the weighted average interest rate we pay on long-term debt, including our unsecured revolving credit facilities and bonds. Capitalized interest is included in the cost of oil and gas assets and is amortized with other costs on a unit-of-production basis. Capitalized interest totaled $73 million in 2018, $49 million in 2017, and $84 million in 2016.
Asset Retirement Obligations   Asset Retirement Obligations (AROs) consist of estimated costs of dismantlement, removal, site reclamation and similar activities associated with our oil and gas properties. We recognize the fair value of a liability for an ARO in the period in which we have an existing legal obligation associated with the retirement that can reasonably be estimated. The associated asset retirement cost is capitalized as part of the carrying value of the oil and gas asset. The asset retirement cost is recorded at estimated fair value, measured by the expected future cash outflows required to satisfy the obligation discounted at our credit-adjusted risk-free rate. After initial recording, the liability is increased for the passage of time, with the increase being reflected as accretion expense included in DD&A expense in the consolidated statements of operations. Subsequent adjustments in the cost estimate are reflected in the liability and the amounts continue to be amortized over the useful life of the related long-lived asset.
Goodwill Goodwill Goodwill is not amortized to earnings but is assessed for impairment at the reporting unit level on an annual basis, or more frequently as circumstances require. We use qualitative and quantitative assessments to determine whether goodwill is impaired. If we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, an impairment charge is recognized for the amount by which the carrying amount exceeds the fair value.
We conducted our annual goodwill impairment assessment as of September 30, 2018. As of that date, our consolidated balance sheet included goodwill of $1.4 billion, of which $1.3 billion was allocated to our Texas reporting unit, included within our oil and gas exploration and production segment, and $110 million was allocated to our Midstream reporting unit. At that time, we concluded that goodwill was not impaired. During fourth quarter 2018, we considered changes to facts and circumstances, particularly the decline in WTI strip pricing, increase in operating and capital costs, as well as our development plan, and concluded that the goodwill allocated to the Texas reporting unit was fully impaired and recorded a charge of $1.3 billion. See Note 6. Goodwill Impairment.
Intangible Assets Intangible Assets Intangible assets consist of customer contracts and relationships acquired by Noble Midstream Partners through Black Diamond in its acquisition of Saddle Butte Rockies Midstream, LLC and affiliates (collectively, Saddle Butte). We recorded the intangible assets at their estimated fair values at the date of acquisition. Amortization is calculated using the straight-line method, which reflects the pattern in which the estimated economic benefit is expected to be received over the estimated useful life of the intangible assets, which is currently over periods of seven to 13 years. As of December 31, 2018, the net book value of our intangible assets was $310 million. Amortization expense, which is equivalent to accumulated amortization for 2018, of $30 million is included in DD&A expense in our consolidated statements of operations and statements of cash flows. Intangible assets with finite useful lives are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.
Exit Costs Exit Costs   In accordance with Accounting Standards Codification (ASC) 420 – Exit or Disposal Cost Obligations, we recognize the fair value of a liability for an exit cost in the period in which a liability is incurred. The recognition and fair value estimation of an exit cost liability requires that management take into account certain estimates and assumptions including: the determination of whether a cease-use date has occurred (defined as the date the entity ceases using the right conveyed by the contract, for example, the right to use a leased property or to receive future goods or services); the amount, if any, of economic benefit that is expected to be obtained from a contract through partial use or release; and our estimate of costs that will continue to be incurred under the contract. We record exit cost liabilities at estimated fair value, based on expected future cash outflows required to satisfy the obligation, net of estimated recoveries, and discounted. In periods subsequent to initial measurement,
changes to an exit cost liability, including changes resulting from revisions to either the timing or the amount of estimated cash flows over the future contract period, will be recognized as an adjustment to the liability in the period of the change.
Exit cost liabilities are included in other current and other noncurrent liabilities on our consolidated balance sheets. Exit costs, and associated accretion expense, are included in other operating expense, net in our consolidated statements of operations.
Accrued exit costs at December 31, 2018 and 2017 relate primarily to estimated costs associated with Marcellus Shale contracts.
Derivative Instruments and Hedging Activities Derivative Instruments and Hedging Activities   All derivative instruments (including certain derivative instruments embedded in other contracts) are recorded on our consolidated balance sheets as either an asset or liability and are measured at fair value. We account for our commodity derivative instruments using mark-to-market accounting and recognize all gains and losses in earnings during the period in which they occur. Our consolidated statements of cash flows include the non-cash portion of gain and loss on commodity derivative instruments, which represents the difference between the total gain and loss on commodity derivative instruments and the cash received or paid on settlements of commodity derivative instruments during the period.  We offset the fair value amounts recognized for derivative instruments against the fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral. The cash collateral (commonly referred to as a “margin”) must arise from derivative instruments recognized at fair value that are executed with the same counterparty under a master agreement with netting clauses.
Stock-Based Compensation Stock-Based Compensation Restricted stock and stock options issued to employees and directors are recorded on grant-date at fair value. Expense is recognized on a straight-line basis over the employee’s and director’s requisite service period (generally the vesting period of the award) in the consolidated statements of operations.
Pension and Other Postretirement Benefit Plans Other Postretirement Benefit Plans We recognize the funded status (the difference between the fair value of plan assets and the projected benefit obligation) of restoration and other postretirement benefit plans in the consolidated balance sheets, with a corresponding adjustment to accumulated other comprehensive loss (AOCL), net of tax. The amount remaining in AOCL at December 31, 2018 represents unrecognized net actuarial loss and unrecognized prior service cost related to our restoration plan. These amounts are currently being recognized as net periodic benefit cost pursuant to our historical accounting policy for amortizing such amounts. Any actuarial gains and losses that arise during the plan year, but which are not required to be recognized as net periodic benefit cost in the same period, are recognized as a component of AOCL.
Contingencies Contingencies  We are subject to legal proceedings, claims and liabilities that arise in the ordinary course of business. We accrue for losses associated with legal claims when such losses are considered probable and the amounts can be reasonably estimated. See Note 11. Commitments and Contingencies.We self-insure the medical and dental coverage provided to certain employees, and the deductibles for workers’ compensation, automobile liability and general liability coverage. Liabilities are accrued for self-insured claims, or when estimated losses exceed coverage limits, and when sufficient information is available to reasonably estimate the amount of the loss.
Income Taxes and Impact of Tax Reform Legislation Income Taxes and Impact of Tax Reform Legislation We are subject to income and other taxes in numerous taxing jurisdictions worldwide. For financial reporting purposes, we provide taxes at rates applicable for the appropriate tax jurisdictions.
We account for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized when items of income and expense are recognized in the financial statements in different periods than when recognized in the applicable tax return. Deferred tax assets arise when expenses are recognized in the financial statements before the tax return or when income items are recognized in the tax return prior to the financial statements. Deferred tax assets also arise when operating losses or tax credits are available to offset tax payments due in future years. Deferred tax liabilities arise when income items are recognized in the financial statements before the tax returns or when expenses are recognized in the tax return prior to the financial statements.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date when the change in the tax rate was enacted.
Treasury Stock Treasury Stock  We record treasury stock purchases at cost, which includes incremental direct transaction costs. Amounts are recorded as reductions in shareholders’ equity in the consolidated balance sheets.
Basic and Diluted Earnings (Loss) Per Share Basic and Diluted Earnings (Loss) Per Share Attributable to Noble Energy  Basic earnings (loss) per share (EPS) of our common stock is computed on the basis of the weighted average number of shares outstanding during each period. The diluted EPS of our common stock includes the effect of outstanding common stock equivalents such as stock options, shares of restricted stock, and/or shares of our stock held in a rabbi trust, except in periods in which there is a net loss. In the event of a net loss, we exclude the effect of outstanding common stock equivalents from the calculation of diluted EPS as the inclusion would be anti-dilutive.
Recently Issued and Adopted Accounting Standards Recently Issued Accounting Standards
Leases In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2016-02 (ASU 2016-02): Leases. The standard requires lessees to recognize a right of use asset (ROU asset) and lease liability on the balance sheet for the rights and obligations created by leases. ASU 2016-02 also requires disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases. In July 2018, the FASB issued Accounting Standards Update No. 2018-11 (ASU 2018-11): Leases (Topic 842): Targeted Improvements, which provides for an alternative transition method by allowing entities to initially apply the new leases standard at the adoption date (January 1, 2019) and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption (comparative periods presented in the financial statements will continue to be in accordance with current GAAP (Topic 840, Leases)). The standard is effective for annual and interim periods beginning after December 15, 2018, with earlier application permitted.
In the normal course of business, we enter into capital and operating lease agreements to support our exploration and development operations and lease assets, such as drilling rigs, platforms, field services and well equipment, office space and other assets. We adopted the new standard on the effective date of January 1, 2019, using a modified retrospective approach as permitted under ASU 2018-11.
The new standard provides a number of optional practical expedients in transition. We expect to:
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elect the package of 'practical expedients', which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs;
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elect the practical expedient pertaining to land easements and plan to account for existing land easements under our current accounting policy;
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elect the short-term lease recognition exemption for all leases that qualify and, as such, no ROU asset or lease liability will be recorded on the balance sheet and no transition adjustment will be required for short-term leases; and
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elect the practical expedient to not separate lease and non-lease components for all of our leases.
We do not expect to elect the hindsight practical expedient in determining the lease term and assessing impairment of ROU assets when transitioning to ASC 842.
We continue to execute a project plan, which includes contract review and assessment, data collection, and evaluation of our systems, processes and internal controls. In addition, we have implemented a new lease accounting software which will facilitate the adoption of this standard.
While we are finalizing our assessment of the effect of adoption, we do not expect the adoption and implementation of this standard will have a material effect on our financial statements. We estimate the most significant impact will relate to the recognition of new ROU assets and lease liabilities on our balance sheet for operating leases, as well as additional disclosures. Consequently, with adoption, we expect to recognize additional operating liabilities ranging between $200 million to $350 million with corresponding ROU assets of the same amount based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases.
Financial Instruments: Credit Losses In June 2016, the FASB issued Accounting Standards Update No. 2016-13 (ASU 2016-13): Financial Instruments – Credit Losses, which replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses. The update is intended to provide financial statement users with more useful information about expected credit losses. The amended standard is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. From evaluation of our current credit portfolio, which includes receivables for commodity sales,
joint interest billings due from partners and other receivables, historical credit losses have been de minimis and we believe that our expected future credit losses would not be significant. As such, we do not believe adoption of the standard will have a material impact on our financial statements.
Derivatives and Hedging – Targeted Improvements to Accounting for Hedging Activities In August 2017, the FASB issued Accounting Standards Update No. 2017-12 (ASU 2017-12): Derivatives and Hedging – Targeted Improvements to Accounting for Hedging Activities. The update is intended to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. In addition to that main objective, ASU 2017-12 makes certain targeted improvements to simplify the application of the hedge accounting guidance in current US GAAP. The amended standard is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the provisions of ASU 2017-12.
Intangibles – Goodwill and Other – Internal-Use Software In August 2018, the FASB issued Accounting Standards Update No. 2018-15 (ASU 2018-15): Intangibles – Goodwill and Other – Internal-Use Software to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The amended standard is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the provisions of ASU 2018-15.
Recently Adopted Accounting Standards
Topic 606, Revenue from Contracts with Customers  In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (ASU 2014-09), which creates Topic 606, Revenue from Contracts with Customers (ASC 606). We adopted ASC 606 on January 1, 2018, using the modified retrospective method. See Note 4. Revenue from Contracts with Customers.
Statement of Cash Flows – Restricted Cash In November 2016, the FASB issued Accounting Standards Update No. 2016-18 (ASU 2016-18): Statement of Cash Flows – Restricted Cash. We adopted ASU 2016-18 in the first quarter of 2018, using the retrospective method. ASU 2016-18 requires that restricted cash and cash equivalents be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. There are no other impacts on our results of operations, financial condition or cash flows.
Intangibles – Goodwill and Other: Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued Accounting Standards Update No. 2017-04 (ASU 2017-04): Intangibles – Goodwill and Other – Simplifying the Test for Goodwill Impairment to simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Under the new standard, we will perform our goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, with an impairment charge being recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. ASU 2017-04 will be effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted. We early adopted this ASU in fourth quarter 2018. This adoption did not have a material impact on our financial statements.
Accumulated Other Comprehensive Income In February 2018, the FASB issued Accounting Standards Update No. 2018-02 (ASU 2018-02): Income Statement – Reporting Comprehensive Income to allow reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Reform Legislation. ASU 2018-02 is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. We early adopted this ASU in fourth quarter 2018, reclassifying the tax effect of approximately $6 million stranded in accumulated other comprehensive income to retained earnings. This adoption did not have a material impact on our financial statements.