HP 2015 Annual Report Download - page 98

Table of Contents
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In April 2015, the FASB amended the existing accounting standards for imputation of interest. The amendments require that debt issuance costs related
to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt
discounts. The recognition and measurement guidance for debt issuance costs are not affected by these amendments. HP is required to adopt the guidance in
the first quarter of fiscal 2017. Early adoption is permitted. The amendments should be applied retrospectively with the adjusted balance sheet of each
individual period presented, in order to reflect the period-specific effects of applying the new guidance. HP is currently evaluating the timing and the impact
of these amendments on its Consolidated Financial Statements.
In May 2014, the FASB amended the existing accounting standards for revenue recognition. The amendments are based on the principle that revenue
should be recognized 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. In August 2015, the FASB issued an accounting standard update for a one-year deferral of the effective
date, with an option of applying the standard on the original effective date, which for HP is the first quarter of fiscal 2018. In accordance with this deferral, HP
is required to adopt these amendments in the first quarter of fiscal 2019. The amendments may be applied retrospectively to each prior period presented or
retrospectively with the cumulative effect recognized as of the date of initial application. HP is continuing to evaluate the impact of these amendments and
the transition alternatives on its Consolidated Financial Statements.
In April 2014, the FASB issued guidance which changes the criteria for identifying a discontinued operation. The guidance limits the definition of a
discontinued operation to the disposal of a component or group of components that is disposed of or is classified as held for sale and represents a strategic
shift that has, or will have, a major effect on an entity's operations and financial results. HP is required to adopt the guidance in the first quarter of fiscal 2016.
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HP recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services are rendered, the sales price or fee is fixed or
determinable, and collectability is reasonably assured. Additionally, HP recognizes hardware revenue on sales to channel partners, including resellers,
distributors or value-added solution providers at the time of delivery when the channel partners have economic substance apart from HP, and HP has
completed its obligations related to the sale. HP generally recognizes revenue for its standalone software sales to channel partners on receipt of evidence that
the software has been sold to a specific end user. HP limits the amount of revenue recognized for delivered elements to the amount that is not contingent on
the future delivery of products or services, future performance obligations or subject to customer-specified refund or return rights.
HP reduces revenue for customer and distributor programs and incentive offerings, including price protection, rebates, promotions, other volume-based
incentives and expected returns, at the later of the date of revenue recognition or the date the sales incentive is offered. Future market conditions and product
transitions may require HP to take actions to increase customer incentive offerings, possibly resulting in an incremental reduction of revenue at the time the
incentive is offered. For certain
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Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠
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