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PAYCHEX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Reclassifications: Certain prior period amounts have been reclassified to conform to the current period
presentation and had no effect on reported consolidated earnings.
Recently adopted accounting pronouncements: In March 2016, the Company adopted the Financial
Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2015-17 “Income Taxes
(Topic 740) — Balance Sheet Classification of Deferred Taxes.” This guidance requires deferred tax assets and
liabilities be classified as non-current in a classified statement of financial position. This guidance is effective for
public business entities for annual periods, including interim periods within those annual periods, beginning after
December 15, 2016, with early application permitted as of the beginning of an interim or annual reporting period.
With the adoption, the Company’s deferred tax assets and liabilities were classified as non-current on its
Consolidated Balance Sheet and prior period amounts have been reclassified to conform with current year
presentation. Adoption of this guidance did not materially impact its consolidated financial statements.
Recently issued accounting pronouncements: In May 2014, the FASB issued ASU No. 2014-09,
“Revenue from Contracts with Customers (Topic 606).” This guidance supersedes current guidance on revenue
recognition in Topic 605, “Revenue Recognition.” In addition, there are disclosure requirements related to the
nature, amount, timing, and uncertainty of revenue recognition. This guidance will be effective for annual
reporting periods beginning after December 15, 2017, including interim reporting periods. Early application of
the guidance is permitted for annual reporting periods beginning after December 31, 2016. Additional ASUs have
been issued to amend or clarify this ASU as follows:
• ASU No. 2016-12 “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements
and Practical Expedients” was issued in May 2016. ASU No. 2016-12 amends the new revenue
recognition standard to clarify the guidance on assessing collectability, presenting sales taxes, measuring
noncash consideration, and certain transition matters.
• ASU No. 2016-10 “Revenue from Contracts with Customers (Topic 606): Identifying Performance
Obligations and Licensing” was issued in April 2016. ASU No. 2016-10 addresses implementation issues
identified by the FASB-International Accounting Standards Board Joint Transition Resource Group for
Revenue Recognition (TRG).
• ASU No. 2016-08 “Revenue from Contracts with Customers (Topic 606) — Principal versus Agent
Considerations (Reporting Revenue Gross versus Net)” was issued in March 2016. ASU No. 2016-08
requires an entity to determine whether the nature of its promise to provide goods or services to a
customer is performed in a principal or agent capacity and to recognize revenue in a gross or net manner
based on its principal/agent designation.
This guidance in these ASUs for revenue recognition is applicable to the Company’s fiscal year beginning
June 1, 2018. The Company has substantially completed its initial analysis identifying the areas that will be
impacted by the new guidance and is currently analyzing the impact to its consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13 “Financial Instruments — Credit Losses (Topic 326):
Measurement of Credit Losses on Financial Instruments.” ASU No. 2016-13 requires an organization to measure
all expected credit losses for financial assets held at the reporting date based on historical experience, current
conditions, and reasonable and supportable forecasts. ASU No. 2016-13 is effective for public business entities
for annual periods, including interim periods within those annual periods, beginning after December 15, 2019.
This guidance is applicable to the Company’s fiscal year beginning June 1, 2020. The Company is currently
evaluating this guidance to determine the potential impact on its consolidated financial statements.
In March 2016, the FASB issued ASU No. 2016-09 “Compensation — Stock Compensation (Topic 718):
Improvements to Employee Share-Based Payment Accounting.” ASU No. 2016-09 simplifies several aspects of
the accounting for share-based payment award transactions, including income tax consequences, classification of
awards as either equity or liabilities, and classification on the statement of cash flows. ASU No. 2016-09 is
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