NOTE 3

ACCOUNTING AND DISCLOSURE CHANGES

RECENTLY ADOPTED ACCOUNTING AND DISCLOSURE CHANGES

In January 2016, the Financial Accounting Standards Board (FASB) issued rules modifying certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The rules require equity investments, except for those accounted for as equity method or those that lead to consolidation of the investee, to be measured at fair value and any change to fair value be recognized through net income. If the equity investments do not have a readily determinable fair value, the entity can elect to measure at cost minus impairment plus or minus any changes in observable price for similar investments of the same issuer. In addition, the rules simplify the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to measure impairment. If the assessment indicates impairment exist, the entity is required to measure the investment at fair value. The rules become effective for interim and annual periods beginning after December 15, 2017. The rules are not expected to have a significant impact on Occidental’s financial statements upon adoption.

In November 2015, the FASB issued rules modifying how entities present deferred income tax liabilities. Under current GAAP, an entity is required to separate deferred income tax liabilities and assets into current and noncurrent amounts in the statement of financial position. In order to simplify presentation, the new rules require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The rules become effective for interim and annual periods beginning after December 15, 2016 and may be adopted earlier on a voluntary basis. Occidental adopted these rules prospectively as of December 31, 2015.

In September 2015, the FASB issued rules removing the obligation for a business acquirer to retrospectively recognize adjustments to provisional amounts that were identified during the measurement period of a business combination. Under the new rules, the acquirer is required to record in the same period’s financial statements the effect on earnings as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The rules become effective for interim and annual periods beginning after December 15, 2015. The rules do not have a material impact on Occidental’s financial statements upon adoption but will require assessment on an ongoing basis.

In August 2015, the FASB issued rules to defer the effective date of the new revenue recognition standard, previously issued in May 2014, to interim and annual periods beginning after December 15, 2017. Under the new rules, an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods and services. The new rules also require more detailed disclosures related to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Occidental is currently evaluating the impact of these rules on its financial statements.

In May 2015, the FASB issued rules modifying how entities measure certain investments at net asset value as well as how they are categorized within the fair value hierarchy. The new rules remove the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share. The update also removes the requirement for certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practice, and instead requires it for only those investments the entity elects to measure as such. The rules become effective for interim and annual periods beginning after December 15, 2015. The rules will not have a significant impact on Occidental’s financial statements.

In April 2015, the FASB issued rules simplifying the presentation of debt issuance costs. The new rules require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The rules become effective for interim and annual periods beginning after December 15, 2015. The rules will not have a significant impact on Occidental’s financial statements.

In February 2015, the FASB issued rules modifying how an entity should evaluate certain legal entities for consolidation. The modifications change how limited partnerships and similar legal entities are evaluated, eliminate the presumption that a general partner should consolidate limited partnerships, change the consolidation analysis for reporting entities that are involved with variable interest entities, and change the scope exception for certain legal entities, among other things. The rules become effective for interim and annual periods beginning after December 15, 2015. The rules do not have a material impact on Occidental’s financial statements upon adoption but will require assessment on an ongoing basis.

In January 2015, the FASB issued rules which eliminate from GAAP the concept of extraordinary item. The presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and will be expanded to include items that are both unusual in nature and infrequently occurring. The rules do not have an impact on Occidental’s financial statements upon adoption.

In June 2014, the FASB issued rules affecting entities that grant their employees share-based payment awards in which the terms of the awards provide that a performance target can be achieved after the requisite service period. The new rules require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. Entities may apply the update either: (a) prospectively to all awards granted or modified after the effective date; or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. These rules are effective for annual periods beginning on or after December 15, 2015. The rules do not have a material impact on Occidental’s financial statements upon adoption but will require assessment on an ongoing basis.