CHANGES IN ACCOUNTING POLICY

12 Months Ended

Dec. 31, 2016

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

CHANGES IN ACCOUNTING POLICY

3. CHANGES IN ACCOUNTING POLICY

Adoption of New Standards

Amendments to the Consolidation Analysis

Effective January 1, 2016, we adopted Accounting Standards Update, or ASU, No. 2015-02 on a modified retrospective basis, which amended and clarified the guidance on variable interest entities, or VIEs. There was a significant change in the assessment of limited partnerships and other similar legal entities as VIEs, including the removal of the presumption that the general partner should consolidate a limited partnership. As a result, we have determined that certain entities that we historically consolidated are VIEs. The amended guidance did not impact our accounting treatment of such entities. However, material disclosures for VIEs have been provided, as necessary.

 

Simplifying the Presentation of Debt Issuance Costs

Effective January 1, 2016, we adopted ASU No. 2015-03 on a retrospective basis which, as of December 31, 2015 resulted in a decrease in “Other assets, net” of $41.5 million and a corresponding decrease in long-term debt of $41.5 million. The new standard requires debt issuance costs related to a recognized debt liability to be presented in the consolidated statements of financial position as a direct deduction from the carrying amount of that debt liability, as consistent with the presentation of debt discounts or premiums. ASU No. 2015-15 was adopted in conjunction with the above standard. ASU No. 2015-15 clarifies presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements, whereby an entity may defer debt issuance costs as an asset and subsequently amortize them over the term of the line of credit.

Future Accounting Policy Changes

Restricted Cash Presentation on Statement of Cash Flows

ASU No. 2016-18, was issued in November 2016 with the intent to add or clarify guidance on the classification and presentation of changes in restricted cash and restricted cash equivalents within the cash flow statement. The amendments require that changes in restricted cash and restricted cash equivalents should be included within cash and cash equivalents when reconciling the opening and closing period amounts shown on the statement of cash flows. We are currently assessing the impact of the new standard on our consolidated financial statements. The accounting update is effective for fiscal years beginning after December 15, 2017 and is to be applied on a retrospective basis.

Recognition of Leases

ASU No. 2016-02 was issued in February 2016 with the intent to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the consolidated statements of financial position and disclosing additional key information about leasing arrangements. We are currently assessing the impact of the new standard on our consolidated financial statements. The accounting update is effective for fiscal years beginning after December 15, 2018, and is to be applied using a modified retrospective approach.

Recognition and Measurement of Financial Assets and Liabilities

ASU No. 2016-01 was issued in January 2016 with the intent to address certain aspects of recognition, measurement, presentation, and disclosure of financial assets and liabilities. The amendments revise accounting related to the classification and measurement of investments in equity securities, the presentation of certain fair value changes for financial liabilities measured at fair value, and the disclosure requirements associated with the fair value of financial instruments. We are currently assessing the impact of the new standard on our consolidated financial statements. The accounting update is effective for fiscal years beginning after December 15, 2017, and is to be applied by means of a cumulative-effect adjustment to the statements of financial position as of the beginning of the fiscal year of adoption.

Revenues from Contracts with Customers 

Since May 2014, ASU Nos. 2014-09, 2015-14, 2016-08, 2016-10 and 2016-12 were issued with the intent of significantly enhancing consistency and comparability of revenue recognition practices across entities and industries. The new standard establishes a single, principles-based five-step model to be applied to all contracts with customers and introduces new and enhanced disclosure requirements. The standard is effective January 1, 2018. The new revenue standard permits either a full retrospective method of adoption with restatement of all prior periods presented, or a modified retrospective method with the cumulative effect of applying the new standard recognized as an adjustment to opening retained earnings in the period of adoption. We are currently assessing which transition method to use.

We reviewed a sample of our revenue contracts in order to evaluate the effect of the new standard on our revenue recognition practices.  Based on our initial assessment, estimates of variable consideration which will be required under the new standard for certain contracts may result in changes to the pattern or timing of revenue recognition for those contracts.  While we have not yet completed our assessment, we tentatively do not expect these changes to have a material impact on our consolidated net income (loss). We are also developing processes to generate the disclosures required under the new standard.