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Table of Contents
EARTHLINK HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Fair Value of Financial Instruments
The carrying amounts of the Company's cash, cash equivalents, trade receivables and trade payables approximate their fair values because of their nature and
respective durations.
Recently Issued Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (the "FASB") issued authoritative guidance on revenue from contracts with customers. The new guidance
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, including industry-specific guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of
promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or
services. The new standard requires significantly expanded disclosures about revenue contract assets and liabilities. In August 2015, the FASB issued guidance that
deferred the effective date by one year. The standard is now required to be adopted by public business entities in annual periods beginning on or after December 15,
2017, and interim periods within those annual periods, and may be applied on a full retrospective or modified retrospective approach. Early adoption at the original
effective date is permitted. The Company is evaluating the impact of the implementation of this standard on its financial statements.
In August 2014, the FASB issued authoritative guidance related to the disclosure of uncertainties about an entity's ability to continue as a going concern. The new
guidance requires management to evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going
concern within one year after the financial statements and to provide related footnote disclosures if so. The new standard is effective for fiscal years, and interim
periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. The adoption of this standard is not expected to have a material
impact on the Company's financial statements.
In April 2015, the FASB issued authoritative guidance to simplify the presentation of debt issuance costs. The new guidance requires an entity to present debt
issuance costs as a direct deduction from the related debt liability rather than as an asset. Entities are required to apply the new guidance retrospectively to all prior
periods. The new standard is effective for financial statements issued for fiscal years beginning after December 15, 2015. Early adoption is permitted. The
Company adopted this new standard for its fiscal year 2015 financial statements and applied the new guidance retrospectively for all periods presented. As a result,
the Company reclassified $11.0 million and $7.0 million of debt issuance costs from other long-term assets to a direct deduction of long-term debt and capital lease
obligations in its Consolidated Balance Sheets as of December 31, 2014 and 2015, respectively.
In April 2015, the FASB issued authoritative guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud
computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the
acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a
service contract. Entities can apply the new guidance either prospectively or retrospectively to all prior periods. The adoption of this standard is not expected to
have a material impact on the Company's financial statements.
In November 2015, the FASB issued authoritative guidance on the balance sheet classification of deferred tax assets. The new guidance requires that deferred tax
assets and liabilities be classified as non-current on the balance sheet, as opposed to current guidance which requires a net current asset or liability and net non-
current asset or liability on the balance sheet. The new standard is effective for financial statements issued for fiscal years beginning after December 15, 2016. The
new standard may be applied either prospectively or retrospectively to all periods presented. Early adoption is permitted. The Company adopted this new standard
for its fiscal year 2015 financial statements and applied the new guidance retrospectively for all periods presented. As a result, the Company reclassified $0.8
million and $0.7 million of net deferred tax liabilities from deferred income taxes, net, to long-term deferred income taxes, net, in its Consolidated Balance Sheets
as of December 31, 2014 and 2015, respectively.
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