Recent Accounting Pronouncements
|9 Months Ended|
Jun. 30, 2019
|New Accounting Pronouncements and Changes in Accounting Principles [Abstract]|
|Recent Accounting Pronouncements||Recent Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842). The new standard requires that assets and liabilities arising under leases be recognized on the balance sheet. The standard also requires additional quantitative and qualitative disclosures that provide the amount, timing and uncertainty of cash flows relating to lease arrangements. Additionally, the modified retrospective adoption approach provides practical expedients related to leases that commenced prior to the effective date and allows the use of hindsight when evaluating lease options. Further, in July 2018, the FASB issued ASU No. 2018-11 Leases (Topic 842), Targeted Improvements, which provided an alternative transition method permitting the recognition of a cumulative adjustment to the balance sheet on the date of adoption rather than restating comparative periods in transition.
This standard is effective for us on October 1, 2019. We will adopt this standard using a modified retrospective approach while recording a cumulative adjustment to the balance sheet. We plan to elect the package of practical expedients which, among other things, allows us to carry forward the historical lease classification. We plan to also elect the practical expedient not to separate lease and non-lease components, which allows us to combine the components if certain criteria are met. Further, we plan to elect the optional transition method, which allows us to recognize a cumulative adjustment to the balance sheet at the date of adoption and to not recast our comparative periods. We do not plan to elect the hindsight practical expedients, which would have allowed us to use hindsight in determining the reasonably certain lease term.
We continue to work towards the adoption of the standard including an evaluation of our existing lease portfolio, designing and implementing internal controls over both the implementation of the change and the ongoing transactions and the implementation of a new software solution. We expect the adoption of the standard to have a significant effect on our balance sheet but less effect on our other consolidated financial statements. We do not anticipate that the standard will affect our compliance with our existing contracts, including our credit facility.
In August 2018, the FASB issued ASU No. 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. This accounting guidance requires customers in cloud-computing arrangements to identify and defer certain implementation costs in a manner broadly consistent with that of existing guidance on the costs to develop or obtain internal-use software. We are required to adopt this guidance on October 1, 2020. The guidance may be adopted early and we may adopt using either a prospective or retroactive methodology. We are currently assessing the future impact of this update on its consolidated financial statements and related disclosures.
In June 2016, the FASB issued ASU No. 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This update introduces a new model for recognizing credit losses on financial instruments, including losses on accounts receivable. We will adopt this guidance on October 1, 2020 and any changes will be recorded as a cumulative adjustment to retained earnings. We are still assessing the effect of this standard on our financial statements.
Other recent accounting pronouncements are not expected to have a material effect on our financial statements.
The entire disclosure of changes in accounting principles, including adoption of new accounting pronouncements, that describes the new methods, amount and effects on financial statement line items.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef