CarMax 2016 Annual Report Download - page 53
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periods within those fiscal years, beginning after December 15, 2015. We will adopt this pronouncement for our fiscal year
beginning March 1, 2016. We do not expect this pronouncement to have a material effect on our consolidated financial statements.
In May 2015, the FASB issued an accounting pronouncement (FASB ASU 2015-7), which eliminates the requirement for entities
to categorize within the fair value hierarchy investments for which fair values are measured at net asset value (“NAV”) per share
(FASB ASC Subtopic 820-10). This standard also removes the requirement to make certain disclosures for all investments that
are eligible to be measured at fair value using the NAV per share practical expedient, instead limiting disclosures to investments
for which the entity has elected the expedient. This pronouncement is effective for fiscal years, and for interim periods within
those fiscal years, beginning after December 15, 2015, and retrospective adoption is required. We will adopt this pronouncement
for our fiscal year beginning March 1, 2016. We do not expect this pronouncement to have a material effect on our consolidated
financial statements.
In July 2015, the FASB issued an accounting pronouncement (FASB ASU 2015-11), which simplifies the subsequent measurement
of inventory by replacing the lower of cost or market test with a lower of cost or net realizable value (“NRV”) test. NRV is calculated
as the estimated selling price less reasonably predictable costs of completion, disposal and transportation. This pronouncement
is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2016, and prospective
adoption is required. We will adopt this pronouncement for our fiscal year beginning March 1, 2017. We do not expect this
pronouncement to have a material effect on our consolidated financial statements.
In August 2015, the FASB issued an accounting pronouncement (FASB ASU 2015-14), which deferred the effective date of FASB
ASU 2014-09, Revenue from Contracts with Customers, for all entities by one year. As a result, that accounting standard is now
effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December
15, 2017. Based on this amendment, we will adopt FASB ASU 2014-09 for our fiscal year beginning March 1, 2018. We do not
expect this pronouncement to have a material effect on our consolidated financial statements.
In August 2015, the FASB issued an accounting pronouncement (FASB ASU 2015-15) related to the presentation of debt issuance
costs. This standard clarifies the guidance set forth in FASB ASU 2015-03, which required that debt issuance costs related to a
recognized debt liability be presented on the balance sheet as a direct deduction from the debt liability rather than as an asset. The
new pronouncement clarifies that debt issuance costs related to line-of-credit arrangements could continue to be presented as an
asset and be subsequently amortized over the term of the line-of-credit arrangement, regardless of whether there are any outstanding
borrowings on the arrangement. We will consider this clarification in conjunction with our adoption of FASB ASU 2015-03, which
will occur for our fiscal year beginning March 1, 2016 and do not expect it to have a material impact on our consolidated financial
statements.
In January 2016, the FASB issued an accounting pronouncement (FASB ASU 2016-01) related to financial instruments (FASB
ASC Subtopic 825-10). This pronouncement requires that most equity investments be measured at fair value, with subsequent
changes in fair value recognized in net income. The pronouncement also impacts financial liabilities under the fair value option
and the presentation and disclosure requirements for financial instruments. The pronouncement is effective for fiscal years, and
for interim periods within those fiscal years, beginning after December 15, 2017. We will adopt this pronouncement for our fiscal
year beginning March 1, 2018 and are currently evaluating the effect on our consolidated financial statements.
In February 2016, the FASB issued an accounting pronouncement (FASB ASU 2016-02) related to the accounting for leases. This
pronouncement requires lessees to record most leases on their balance sheet, while expense recognition on the income statement
remains similar to current lease accounting guidance. The guidance also eliminates real estate-specific provisions and modifies
certain aspects of lessor accounting. Under the new guidance, lease classification as either a finance lease or an operating lease
will determine how lease-related revenue and expense are recognized. The pronouncement is effective for fiscal years, and for
interim periods within those fiscal years, beginning after December 15, 2018. We will adopt this pronouncement for our fiscal
year beginning March 1, 2019 and are currently evaluating the effect on our consolidated financial statements.
In March 2016, the FASB issued an accounting pronouncement (FASB ASU 2016-06) related to the embedded derivative analysis
for debt instruments with contingent call or put options. This pronouncement clarifies that an exercise contingency does not need
to be evaluated to determine whether it relates only to interest rates or credit risk. Instead, the contingent put or call option should
be evaluated for possible bifurcation as a derivative in accordance with the four-step decision sequence detailed in FASB ASC
815-15, without regard to the nature of the exercise contingency. The pronouncement is effective for fiscal years, and for interim
periods within those fiscal years, beginning after December 15, 2016. We are currently in the process of evaluating the effects of
this pronouncement on our consolidated financial statements, including potential early adoption.
In March 2016, the FASB issued an accounting pronouncement (FASB ASU 2016-08) related to reporting revenue gross versus
net, or principal versus agent considerations. This pronouncement is meant to clarify the guidance in FASB ASU 2014-09, Revenue
from Contracts with Customers, as it pertains to principal versus agent considerations. Specifically, the guidance addresses how