| SIGNIFICANT ACCOUNTING POLICIES | NOTE 2:- SIGNIFICANT ACCOUNTING
POLICIES
The consolidated financial statements are prepared in conformity
with United States generally accepted accounting principles
(“U.S. GAAP”).
a. Use of estimates:
The preparation of the consolidated financial statements in
conformity with U.S. GAAP requires management to make estimates,
judgments and assumptions. The Company’s management believes
that the estimates, judgments and assumptions used are reasonable
based upon information available at the time they are made. These
estimates, judgments and assumptions can affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the dates of the financial statements,
and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those
estimates.
b. Financial statements in United States
dollars:
Most of the Company’s revenues and costs are denominated in
United States dollars (“dollars”). The Company’s
management believes that the dollar is the primary currency of the
economic environment in which Check Point Ltd. and each of
subsidiaries operate. Thus, the dollar is the Company’s
functional and reporting currency.
Accordingly, non-dollar denominated transactions and balances have
been re-measured into the functional currency in accordance with
Accounting Standard Code (“ASC”) No. 830,
“Foreign Currency Matters”. All transaction gains and
losses of the re-measured monetary balance sheet items are
reflected in the statements of income as financial income or
expenses, as appropriate.
c. Principles of consolidation:
The consolidated financial statements include the accounts of Check
Point Ltd. and subsidiaries. Intercompany transactions and balances
have been eliminated upon consolidation.
d. Cash equivalents:
Cash equivalents are short-term unrestricted highly liquid
investments that are readily convertible to cash and with original
maturities of three months or less at acquisition.
e. Short-term bank deposits:
Bank deposits with maturities of more than three months at
acquisition but less than one year are included in short-term bank
deposits. Such deposits are stated at cost which approximates fair
values.
f. Investments in marketable
securities:
The Company accounts for investments in marketable securities in
accordance with ASC No. 320, “Investments - Debt and
Equity Securities”.
Management determines the appropriate classification of its
investments at the time of purchase and reevaluates such
determinations at each balance sheet date.
The Company classifies all of its marketable securities as
available-for-sale. Available-for-sale securities are carried at
fair value, with the unrealized gains and losses, net of tax,
reported in accumulated other comprehensive income (loss) in
shareholders’ equity. Realized gains and losses on sale of
investments are included in financial income, net and are derived
using the specific identification method for determining the cost
of securities sold.
The amortized cost of debt securities is adjusted for amortization
of premiums and accretion of discounts to maturity. Such
amortization together with interest on securities is included in
financial income, net.
The Company’s securities are reviewed for impairment in
accordance with ASC 320-10-65. If such assets are considered to be
impaired, the impairment charge is recognized in earnings when a
decline in the fair value of its investments below the cost basis
is judged to be other-than-temporary. Factors considered in making
such a determination include the duration and severity of the
impairment, the reason for the decline in value, the potential
recovery period and the Company’s intent to sell, including
whether it is more likely than not that the Company will be
required to sell the investment before recovery of cost basis. For
securities with an unrealized loss that the Company intends to
sell, or it is more likely than not that the Company will be
required to sell before recovery of their amortized cost basis, the
entire difference between amortized cost and fair value is
recognized in earnings. For securities that do not meet these
criteria, the amount of impairment recognized in earnings is
limited to the amount related to credit losses, while declines in
fair value related to other factors are recognized in other
comprehensive income (loss).
g. Property and equipment, net:
Property and equipment are stated at cost, net of accumulated
depreciation. Depreciation is calculated using the straight-line
method over the estimated useful lives of the assets at the
following annual rates:
%
Computers and peripheral equipment 33 - 50
Office furniture and equipment 10 - 20
Building 4
Leasehold improvements The shorter of term of the lease
or the useful life of the asset
h. Goodwill:
Goodwill has been recorded as a result of acquisitions. Goodwill
represents the excess of the purchase price in a business
combination over the fair value of identifiable net tangible and
intangible assets acquired. Goodwill is not amortized, but rather
is subject to an impairment test.
ASC No. 350, “Intangibles - Goodwill and other”
(“ASC No. 350”) requires goodwill to be tested for
impairment at the reporting unit level at least annually or between
annual tests in certain circumstances, and written down when
impaired.
ASC No. 350 allows an entity to first assess qualitative
factors to determine whether it is necessary to perform the
two-step quantitative goodwill impairment test. If the qualitative
assessment does not result in a more likely than not indication of
impairment, no further impairment testing is required. If it does
result in a more likely than not indication of impairment, the
two-step impairment test is performed. Alternatively, ASC
No. 350 permits an entity to bypass the qualitative assessment
for any reporting unit and proceed directly to performing the first
step of the goodwill impairment test.
The Company operates in one operating segment, and this segment
comprises its only reporting unit. The Company performs the first
step of the quantitative goodwill impairment test during the fourth
quarter of each fiscal year, or more frequently if impairment
indicators are present and compares the fair value of the reporting
unit with its carrying value.
During the years 2015, 2014 and 2013, no impairment losses have
been identified.
i. Other intangible assets, net:
Intangible assets that are not considered to have an indefinite
useful life are amortized over their estimated useful lives, which
range from 5 to 20 years. These intangible assets consist primarily
of core technology, trademarks and trade names which are amortized
over their estimated useful lives on a straight-line basis and
customer relationships which are amortized over their estimated
useful lives in proportion to the economic benefits realized.
j. Impairment of long-lived assets:
The Company’s long-lived assets are reviewed for impairment
in accordance with ASC No. 360, “Property, Plant and
Equipment,” whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of the assets to
the future undiscounted cash flows expected to be generated by the
assets. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets.
During the years 2015, 2014 and 2013, no impairment indicators have
been identified.
k. Research and development costs:
Research and development costs are charged to the statements of
income as incurred. ASC No. 985-20, “Software - Costs of
Software to Be Sold, Leased, or Marketed”, requires
capitalization of certain software development costs subsequent to
the establishment of technological feasibility.
Based on the Company’s product development process,
technological feasibility is established upon completion of a
working model. Costs incurred by the Company between completion of
the working models and the point at which the products are ready
for general release, have been insignificant. Therefore, all
research and development costs are expensed as incurred.
l. Revenue recognition:
The Company derives its revenues mainly from sales of products and
licenses, subscriptions and software updates and maintenance. The
Company’s products are generally integrated with software
that is essential to the functionality of the product. The Company
sells its products primarily through channel partners including
distributors, resellers, OEMs, system integrators and MSPs, all of
whom are considered end-users. The Company also sells certain
products directly to end users primarily through its website.
The Company’s subscriptions include security solutions that
are sold as a service or annuity.
The Company’s software updates and maintenance provide
customers with rights to unspecified software product upgrades
released during the term of the agreement and include maintenance
services to customers, primarily telephone access to technical
support personnel and hardware support services.
Revenues are recognized when persuasive evidence of an arrangement
exists, delivery has occurred or services are rendered, the amounts
are fixed or determinable and collection of the amount is
considered probable. Revenues from subscriptions and from software
updates and maintenance are recognized ratably over the term of the
agreement. Revenues from arrangements with payment terms extending
beyond customary payment terms are considered not to be fixed or
determinable, and therefore revenue is deferred and recognized when
payments become due, provided that all other revenue recognition
criteria have been met.
The Company’s products and services generally qualify as
separate units of accounting. As such, revenues from multiple
element arrangement that include products, subscriptions and
software updates and maintenance are separated into their various
elements using the relative selling price method. The estimated
selling price for each deliverable is based on its vendor specific
objective evidence (“VSOE”), if available, third party
evidence (“TPE”) if VSOE is not available, or estimated
selling price (“BESP”) if neither VSOE nor TPE is
available.
The Company determines the fair value of products based on BESP by
reviewing historical transactions, and considering several other
external and internal factors including, but not limited to,
pricing practices.
The Company established VSOE of fair value for subscriptions and
for software updates and maintenance based on the renewal prices
charged for such services.
Deferred revenues represent mainly the unrecognized revenue billed
for subscriptions and for software updates and maintenance. Such
revenues are recognized ratably over the term of the related
agreement.
The Company records a provision for estimated sales returns, stock
rotations and other rights to customers on product and service
related sales in the same period the related revenues are recorded.
These estimates are based on historical sales returns, analysis of
credit memo data, stock rotation and other known factors. Such
provisions amounted to $ 14,130 and $ 14,618 as of
December 31, 2015 and 2014, respectively.
m. Cost of revenues:
Cost of products and licenses is comprised of cost of software and
hardware production, manuals, packaging and shipping.
Cost of subscriptions is comprised of license fees paid to third
parties.
Cost of software updates and maintenance is mainly comprised of
cost of post-sale customer support.
Amortization of technology is comprised of amortization of core
technology assets which are used in the Company’s operations,
and is presented separately as part of cost of revenues.
n. Severance pay:
The Company’s liability for severance pay for periods prior
to January 1, 2007, is calculated pursuant to Israeli
severance pay law based on the most recent salary of the employees
multiplied by the number of years of employment as of the balance
sheet date. The Company recorded as expenses the increase in the
severance liability, net of earnings (losses) from the related
investment fund. Employees were entitled to one month’s
salary for each year of employment, or a portion thereof. Until
January 1, 2007, the Company’s liability was partially
funded by monthly payments deposited with insurers; any unfunded
amounts are covered by a provision established by the Company.
The carrying value of deposited funds in respect to the severance
liability for services prior to January 1, 2007, includes
profits (losses) accumulated up to the balance sheet date. The
deposited funds may be withdrawn only upon the fulfillment of the
obligation pursuant to Israeli severance pay law or labor
agreements.
Effective January 1, 2007, the Company’s agreements with
employees in Israel, are under Section 14 of the Severance Pay
Law, 1963. The Company’s contributions for severance pay have
replaced its severance obligation. Upon contribution of the full
amount of the employee’s monthly salary for each year of
service, no additional calculations is conducted between the
parties regarding the matter of severance pay and no additional
payments is made by the Company to the employee. Further, the
related obligation and amounts deposited on behalf of the employee
for such obligation are not stated on the balance sheet, as the
Company is legally released from the obligation to employees once
the deposit amounts have been paid. Severance expenses for the
years ended December 31, 2015, 2014 and 2013, were $ 7,140, $
6,726 and $ 5,987, respectively.
o. Employee benefit plan:
The Company has a 401(K) defined contribution plan covering certain
employees in the U.S. In 2015, all eligible employees may elect to
contribute up to 50%, but generally not greater than $ 18 per
year (and an additional amount of $ 6 for employees aged 50
and over), of their annual compensation to the plan through salary
deferrals, subject to IRS limits. The Company matches 50% of
employee contributions to the plan up to a limit of 3% of their
eligible compensation. In 2015, 2014 and 2013, the Company’s
matching contribution to the plan amounted to $ 1,397, $ 1,148
and $ 1,073, respectively.
p. Income taxes:
The Company accounts for income taxes in accordance with ASC
No. 740, “Income Taxes” (“ASC
No. 740”). ASC No. 740 prescribes the use of the
liability method whereby deferred tax asset and liability account
balances are determined for temporary differences between financial
reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when
the differences are expected to reverse. The Company provides a
valuation allowance, if necessary, to reduce deferred tax assets to
amounts more likely than not to be realized.
ASC No. 740 contains a two-step approach to recognizing and
measuring a liability for uncertain tax positions. The first step
is to evaluate the tax position taken or expected to be taken in a
tax return by determining if the weight of available evidence
indicates that it is more likely than not that, on an evaluation of
the technical merits, the tax position will be sustained on audit,
including resolution of any related appeals or litigation
processes.
The second step is to measure the tax benefit as the largest amount
that is more than 50% (cumulative basis) likely to be realized upon
ultimate settlement. The Company classifies interest related to
unrecognized tax benefits in taxes on income.
q. Advertising costs:
Advertising costs are expensed as incurred. Advertising expenses
for the years ended December 31, 2015, 2014 and 2013, were $
2,311, $ 2,837 and $ 4,260, respectively.
r. Concentrations of credit risk:
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash and cash
equivalents, short-term bank deposits, marketable securities, trade
receivables and foreign currency derivative contracts.
The majority of the Company’s cash and cash equivalents and
short-term bank deposits are deposited in major banks in the U.S.,
Israel and Europe. Deposits in the U.S. may be in excess of insured
limits and are not insured in other jurisdictions. Generally, these
deposits may be withdrawn upon demand and therefore bear low risk.
Marketable securities are held mainly by the Company’s
Singaporean subsidiary, the U.S. subsidiary and Check Point Ltd.,
and are invested in securities denominated in U.S. dollar.
The Company’s marketable securities consist of investments in
government, corporate and government sponsored enterprises
debentures. The Company’s investment policy, approved by the
Board of Directors, limits the amount that the Company may invest
in any one type of investment or issuer, thereby reducing credit
risk concentrations.
The Company’s trade receivables are geographically dispersed
and derived from sales to channel partners mainly in the United
States, Europe and Asia. Concentration of credit risk with respect
to trade receivables is limited by credit limits, ongoing credit
evaluation and account monitoring procedures. The Company performs
ongoing credit evaluations of its channel partners and establishes
an allowance for doubtful accounts based on factors that may affect
a customers’ ability to pay, such as age of the receivable
balance and past experience. Allowance for doubtful accounts
amounted to $ 2,101 and $ 3,928 as of December 31,
2015 and 2014, respectively. The Company writes off receivables
when they are deemed uncollectible, having exhausted all collection
efforts. Actual collection experience may not meet expectations and
may result in increased bad debt expense. Bad debt income amounted
to ($ 1,834), $ (1,932) and $ (1,090) in 2015, 2014 and
2013, respectively. Total write offs during 2015, 2014 and 2013
amounted to $ 123, $ 1,537 and $ 668, respectively.
The Company utilizes forward contracts to protect against the risk
of overall changes in exchange rates. The derivative instruments
hedge a portion of the Company’s non-dollar currency
exposure. Counterparties to the Company’s derivative
instruments are all major financial institutions.
s. Derivatives and hedging:
The Company accounts for derivatives and hedging based on ASC
No. 815, “Derivatives and Hedging” (“ASC
No. 815”). ASC No. 815 requires the Company to
recognize all derivatives on the balance sheet at fair value. The
accounting for changes in the fair value (i.e., gains or losses) of
a derivative instrument depends on whether it has been designated
and qualifies as part of a hedging relationship, as well as the
type of hedging relationship. For those derivative instruments that
are designated and qualify as hedging instruments, the Company must
designate the hedging instrument, based upon the exposure being
hedged, as a fair value hedge, cash flow hedge, or a hedge of a net
investment in a foreign operation. If the derivatives meet the
definition of a hedge and are designated as such, depending on the
nature of the hedge, changes in the fair value of such derivatives
will either be offset against the change in fair value of the
hedged assets, liabilities, or firm commitments through earnings,
or recognized in other comprehensive income until the hedged item
is recognized in earnings. The ineffective portion of a
derivative’s change in fair value is recognized in financial
income, net.
The Company entered into forward contracts to hedge the fair value
of assets and liabilities denominated in New Israeli Shekels,
Euros, British Pounds, Swedish Krona, Japanese Yen, Czech Koruna
and Canadian Dollar. As of December 31, 2015 and 2014, the
Company had outstanding forward contracts that did not meet the
requirement for hedge accounting, in the notional amount of $
319,380 and $ 250,946, respectively. The Company measured the
fair value of the contracts in accordance with ASC No. 820,
“Fair Value Measurement” (“ASC
No. 820”) (classified as level 2). The net gains
(losses) resulting from these forward contracts recognized in
financial income, net during 2015, 2014 and 2013 were $ 378,
$ (21,970) and $ 20,306, respectively. The fair value of
the Company’s outstanding forward contracts at
December 31, 2015 and 2014 amounted to liabilities of $ 52 and
$ 88, respectively.
The Company entered into forward contracts to hedge against the
risk of overall changes in future cash flow from payments of
payroll and related expenses denominated in New Israeli Shekels. As
of December 31, 2015 and 2014, the Company had outstanding
forward contracts in the notional amount of $ 25,732 and
$ 38,784, respectively. These contracts were for a period of
up to twelve months. The Company measured the fair value of the
contracts in accordance with ASC No. 820 (classified as level
2). These contracts met the requirement for cash flow hedge
accounting and, as such, gains (losses) on the contracts are
recognized initially in OCI and reclassified to the statement of
income in the period the related hedged items affect earnings.
During 2015, 2014 and 2013 gains (losses) in the amount of $
(1,585), $ (3,009) and $ 2,366, respectively, were
reclassified when the related expenses were incurred and recognized
in operating expenses. The fair value of the Company’s
outstanding forward contracts at December 31, 2015 and 2014
amounted to assets (liabilities) of $ 8 and $ (2,854),
respectively.
t. Basic and diluted earnings per
share:
Basic earnings per share are computed based on the weighted average
number of ordinary shares outstanding during each year. Diluted
earnings per share is computed based on the weighted average number
of ordinary shares outstanding during each year, plus dilutive
potential ordinary shares outstanding during the year, in
accordance with ASC No. 260, “Earnings Per
Share”.
The total weighted average number of shares related to the
outstanding options excluded from the calculations of diluted
earnings per share, since it would have an anti-dilutive effect,
was 1,594,082, 1,746,613 and 5,694,945 for 2015, 2014 and 2013,
respectively.
u. Accounting for stock-based
compensation:
The Company accounts for stock-based compensation in accordance
with ASC No. 718, “Compensation-Stock
Compensation” (“ASC No. 718”). ASC
No. 718 requires companies to estimate the fair value of
equity-based payment awards on the grant date using an
option-pricing model. The value of the portion of the award that is
ultimately expected to vest is recognized as an expense over the
requisite service periods in the Company’s consolidated
statements of income.
The Company recognizes compensation expenses for the value of
awards granted, based on the straight line method for service based
awards and based on the accelerated method for performance-based
awards. Compensation expense is recognized over the requisite
service period of the awards, net of estimated forfeitures. ASC
No. 718 requires forfeitures to be estimated at the time of
grant and revised, if necessary, in subsequent periods if actual
forfeitures differ from those estimates. Estimated forfeitures are
based on actual historical pre-vesting forfeitures.
The Company selected the Black-Scholes-Merton option pricing model
as the most appropriate model for determining the fair value method
for its stock options awards and Employee Stock Purchase Plan,
whereas the fair value of restricted stock units is based on the
market value of the underlying shares at the date of grant. The
option-pricing model requires a number of assumptions, the most
significant of which are the expected stock price volatility and
the expected option term. Expected volatility was calculated based
upon actual historical stock price movements over the most recent
periods ending on the grant date, equal to the expected term of the
options. The expected term of options granted is based upon
historical experience and represents the period of time between
when the options are granted and when they are expected to be
exercised. The risk-free interest rate is based on the yield from
U.S. treasury bonds with an equivalent term to the expected term of
the options. The Company has historically not paid dividends and
has no plans to pay dividends in the foreseeable future.
The fair value of options granted and Employee Stock Purchase Plan
in 2015, 2014 and 2013 is estimated at the date of grant using the
following weighted average assumptions:
Year ended
December 31,
2015 2014 2013
Employee Stock Options
Expected volatility 25.14 % 29.30 % 30.14 %
Risk-free interest rate 1.59 % 1.48 % 1.72 %
Dividend yield 0.0 % 0.0 % 0.0 %
Expected term (years) 5.59 5.51 6.00
Employee Stock Purchase Plan
Expected volatility 21.89 % 21.47 % 26.98 %
Risk-free interest rate 0.07 % 0.06 % 0.06 %
Dividend yield 0.0 % 0.0 % 0.0 %
Expected term (years) 0.5 0.5 0.5
v. Fair value of financial
instruments:
The Company measures its investments in money market funds
classified as cash equivalents, marketable securities and its
foreign currency derivative contracts at fair value. Fair value is
an exit price, representing the amount that would be received to
sell an asset or paid to transfer a liability in an orderly
transaction between market participants. A three-tier fair value
hierarchy is established as a basis for considering such
assumptions and for inputs used in the valuation methodologies in
measuring fair value:
Level 1 - Valuations based on quoted prices in active
markets for identical assets that the Company has the ability to
access. Since valuations are based on quoted prices that are
readily and regularly available in an active market, valuation of
these products does not entail a significant degree of
judgment.
Level 2 - Valuations based on one or more quoted prices
in markets that are not active or for which all significant inputs
are observable, either directly or indirectly.
Level 3 - Valuations based on inputs that are
unobservable and significant to the overall fair value
measurement.
The fair value hierarchy also requires an entity to maximize the
use of observable inputs and minimize the use of unobservable
inputs when measuring fair value.
w. Comprehensive income:
The Company accounts for comprehensive income in accordance with
ASC No. 220, “Comprehensive Income”. Comprehensive
income generally represents all changes in shareholders’
equity during the period except those resulting from investments
by, or distributions to, shareholders. The Company determined that
its items of other comprehensive income relate to gains and losses
on hedging derivative instruments and unrealized gains and losses
on available-for-sale marketable securities.
The following table shows the components of accumulated other
comprehensive income (loss), net of taxes, for the year ended
December 31, 2015:
Year ended December 31,
2015
Unrealized on marketable Unrealized on cash flow Total
Beginning balance $ 969 $ (2,039 ) $ (1,070 )
Other comprehensive loss before reclassifications (5,209 ) 716 (4,493 )
Amounts reclassified from accumulated other comprehensive
income *)(19) **)1,332 1,313
Net current-period other comprehensive income (loss) (5,228 ) 2,048 (3,180 )
Ending balance $ (4,259 ) $ 9 $ (4,250 )
*) The reclassification out of
accumulated other comprehensive income during the year ended
December 31, 2015 for realized gains on marketable securities
are included within financial income, net.
**) The reclassification out of
accumulated other comprehensive income during the year ended
December 31, 2015 for realized losses on cash flow hedges are
included mostly within research and development expenses as well as
other operating expenses.
x. Treasury shares:
The Company repurchases its ordinary shares from time to time on
the open market and holds such shares as treasury shares. The
Company presents the cost to repurchase treasury stock as a
separate component of shareholders’ equity.
The Company reissues treasury shares under the stock purchase plan,
upon exercise of options and upon vesting of restricted stock
units. Reissuance of treasury shares is accounted for in accordance
with ASC No. 505-30 whereby gains are credited to additional
paid-in capital and losses are charged to additional paid-in
capital to the extent that previous net gains are included therein;
otherwise to retained earnings.
y. Legal contingencies:
The Company is currently involved in various claims and legal
proceedings. The Company reviews the status of each matter and
assesses its potential financial exposure. If the potential loss
from any claim or legal proceeding is considered probable and the
amount can be reasonably estimated, the Company accrues a liability
for the estimated loss.
z. Impact of recently issued accounting
standards:
In May 2014, the Financial Accounting Standards Board
(“FASB”) issued an ASU No. 2014-09 on revenue from
contracts with customers, which outlines a single comprehensive
model for entities to use in accounting for revenue arising from
contracts with customers and supersedes most current revenue
recognition guidance. In 2015, the FASB issued guidance to defer
the effective date to fiscal years beginning after
December 15, 2017 with early adoption for fiscal years
beginning after December 15, 2016. The Company is currently
evaluating the method of adoption, as well as the effect that
adoption of this ASU will have on its consolidated financial
statements.
In November 2015, the FASB issued ASU No. 2015-17 related to
balance sheet classification of deferred taxes. The new
guidance requires that deferred tax assets and liabilities be
classified as noncurrent in a classified statement of financial
position. The new guidance is effective for fiscal years, and
interim periods within those fiscal years, beginning after
December 15, 2016. Early adoption is permitted. The Company
early adopted this guidance on a retrospective basis as of
December 31, 2015. As a result, the Company’s current
deferred tax assets as of December 31, 2014 in an amount of
$34,175 were reclassified to noncurrent assets to conform to the
current year presentation.
February 2016, the FASB issued ASU 2016-02, “Leases”
(Topic 842), whereby, lessees will be required to recognize for all
leases at the commencement date a lease liability, which is a
lessee‘s obligation to make lease payments arising from a
lease, measured on a discounted basis; and a right-of-use asset,
which is an asset that represents the lessee’s right to use,
or control the use of, a specified asset for the lease term. Under
the new guidance, lessor accounting is largely unchanged. A
modified retrospective transition approach for leases existing at,
or entered into after, the beginning of the earliest comparative
period presented in the financial statements must be applied. The
modified retrospective approach would not require any transition
accounting for leases that expired before the earliest comparative
period presented. Companies may not apply a full retrospective
transition approach. ASU 2016-02 is effective for annual and
interim periods beginning after December 15, 2018. Early
application is permitted. The Company is evaluating the potential
impact of this pronouncement.
In March 2016, the FASB issued Accounting Standards Update
No. 2016-09, “Compensation — Stock Compensation
(Topic 718): Improvements to Employee Share-Based Payment
Accounting” (“ASU 2016-09”). ASU 2016-09
simplifies several aspects of the accounting for share-based
payment transactions, including the income tax consequences,
classification of awards as either equity or liabilities, and
classification on the statement of cash flows. For public entities,
ASU 2016-09 is effective for fiscal years beginning after
December 15, 2016, and interim periods within those fiscal
years. Early adoption is permitted. We are currently evaluating the
potential impact of adopting this guidance on our consolidated
financial statements. |
