Mattel 2014 Annual Report Download - page 75

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New Accounting Pronouncements
In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
(“ASU”) 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity,
which requires that a disposal of a component of an entity or a group of components of an entity to be reported in
discontinued operations if the disposal represents a strategic shift that has, or will have, a major effect on an
entity’s operations and financial results. The new guidance also requires additional disclosures for discontinued
operations to provide more information about the assets, liabilities, revenues, expenses, and cash flows of
discontinued operations. ASU 2014-08 will be effective for interim and annual reporting periods beginning after
December 15, 2014 for all new disposals, or new classifications as held for sale, of components of an entity that
occur within those years and all businesses that are classified as held for sale that occur within those years. Early
application is permitted only for disposals, or classifications as held for sale, that have not been reported in
financial statements previously issued or available for issuance. Mattel is currently evaluating the impact of the
adoption of ASU 2014-08 on its operating results and financial position.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which
supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605, Revenue
Recognition, and most industry-specific guidance. The core principle of the guidance is that an entity should
recognize 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
guidance establishes a five-step model to achieve that core principle and also requires additional disclosures
about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts.
ASU 2014-09 will be effective for interim and annual reporting periods beginning after December 15, 2016.
Early application is not permitted. Mattel is currently evaluating the impact of the adoption of ASU 2014-09 on
its operating results and financial position.
In June 2014, the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an
Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period, which requires
that a performance target that affects vesting and that could be achieved after the requisite service period be
treated as a performance condition. ASU 2014-12 will be effective for interim and annual reporting periods
beginning after December 15, 2015. Early application is permitted. Mattel is currently evaluating the impact of
the adoption of ASU 2014-12 on its operating results and financial position.
Note 2—Goodwill and Other Intangibles
Goodwill is allocated to various reporting units, which are at the operating segment level, for purposes of
evaluating whether goodwill is impaired. Mattel’s reporting units are: (i) North America, (ii) International, and
(iii) American Girl. Components of the operating segments have been aggregated into a single reporting unit as
the components have similar economic characteristics. The similar economic characteristics include the nature of
the products, the nature of the production processes, the customers, and the manner in which the products are
distributed.
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