Accounting Standards and Significant Accounting Policies | Accounting Standards and Significant Accounting Policies Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (FASB) issued ASU No. 2016-02, Leases (ASC 842) , which requires lessees to record a right-of-use asset and a corresponding lease liability on their balance sheet for most leases. The Company adopted the requirements of ASC 842 as of February 1, 2019, using the modified retrospective method for leases that existed as of February 1, 2017, or were entered into thereafter. The modified retrospective method provides a method for recording existing leases at adoption and in comparative periods that approximates the results of a full retrospective approach. In order to simplify an entity’s transition, ASC 842 provides a package of three practical expedients, which must be elected together and applied consistently to all of an entity’s leases. The Company elected to utilize the package of practical expedients and, therefore, did not reassess: • whether contractual arrangements that expired prior to or existed as of February 1, 2017, are or contain leases, • the classification of leases that expired prior to or existed as of February 1, 2017, and • initial direct costs for leases that existed as of February 1, 2017. As of the later of February 1, 2017 or each lease’s respective commencement date, the Company recorded lease liabilities equal to the present value of the remaining minimum lease payments and right-of-use assets equal to the corresponding lease liability adjusted for (i) any prepaid or accrued lease payments, (ii) the remaining balance of any lease incentives received, (iii) unamortized initial direct costs and (iv) any impairments. The Company adjusted its condensed consolidated balance sheet from amounts previously reported due to the adoption of ASC 842. Select condensed consolidated balance sheet line items, which reflect the adoption of ASC 842, are as follows (in thousands): As of January 31, 2019 As Reported Adoption of ASC 842 As Adjusted (unaudited) Assets Current assets: Prepaid expenses and other current assets $ 29,451 $ (1,214 ) $ 28,237 Total current assets 709,330 (1,214 ) 708,116 Operating lease right-of-use assets — 121,389 121,389 Other noncurrent assets 15,286 (197 ) 15,089 Total assets $ 864,335 $ 119,978 $ 984,313 Liabilities and stockholders’ equity Current liabilities: Accrued expenses and other liabilities $ 24,740 $ 8,913 $ 33,653 Total current liabilities 564,191 8,913 573,104 Other noncurrent liabilities 38,999 (35,981 ) 3,018 Operating lease liabilities, noncurrent — 147,046 147,046 Total liabilities 611,958 119,978 731,936 Total liabilities and stockholders’ equity $ 864,335 $ 119,978 $ 984,313 The Company’s condensed consolidated statement of cash flows reflects the adoption of ASC 842. The adoption of ASC 842 did not have an impact on cash provided by or used in operating, investing, or financing activities or on the Company’s condensed consolidated statements of operations. Significant Accounting Policies The Company’s significant accounting policies are discussed in “Note 2. Summary of Significant Accounting Policies” in Item 8. Financial Statements and Supplementary Data of its Form 10-K for the fiscal year ended January 31, 2019. Except for the accounting policies for operating leases that were updated below as a result of adopting ASC 842, there have been no significant changes to these policies for the three months ended April 30, 2019 . Operating Leases and Incremental Borrowing Rate The Company leases office space under operating leases with expiration dates through 2028. The Company determines whether an arrangement constitutes a lease and records lease liabilities and right-of-use assets on its consolidated balance sheets at lease commencement. Lease liabilities are measured based on the present value of the total lease payments not yet paid discounted based on the more readily determinable of the rate implicit in the lease or the Company’s incremental borrowing rate, which is the estimated rate the Company would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease. The estimation of the incremental borrowing rate is based on an analysis of publicly traded debt securities of companies with similar credit and financial profiles. Right-of-use assets are measured based on the corresponding lease liability adjusted for (i) payments made to the lessor at or before the commencement date, (ii) initial direct costs incurred and (iii) tenant incentives under the lease. Recognition of rent expense begins when the lessor makes the underlying asset available to the Company. The Company does not assume renewals or early terminations of its leases unless it is reasonably certain to exercise these options at commencement and does not allocate consideration between lease and non-lease components. For short-term leases, the Company records rent expense in its condensed consolidated statements of operations on a straight-line basis over the lease term and records variable lease payments as incurred. Recently Issued Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses. This guidance is effective for the Company on February 1, 2020 with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard on its condensed consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (ASU 2018-15), which requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in Accounting Standards Codification 350-40 to determine which implementation costs to defer and recognize as an asset. This guidance is effective for the Company on February 1, 2020 with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard on its condensed consolidated financial statements. |