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Financial Review
Pfizer Inc. and Subsidiary Companies
56
2015 Financial Report
NEW ACCOUNTING STANDARDS
Recently Issued Accounting Standards, Not Adopted as of December 31, 2015
See Notes to Consolidated Financial Statements—Note 1B. Basis of Presentation and Significant Accounting Policies: Adoption of New
Accounting Standards.
The following table provides a brief description of recently issued accounting standards, not yet adopted:
Standard Description Effective Date Effect on the Financial
Statements or Other
Significant Matters
In November 2014, the Financial
Accounting Standards Board
(FASB) issued amended guidance
related to accounting for hybrid
financial instruments issued or
held as investments.
The new guidance clarifies that for hybrid
financial instruments in the form of stock,
the assessment of whether the embedded
derivative is clearly and closely related to
the host instrument must consider the
economic characteristics and risks of the
entire hybrid financial instrument, including
the embedded derivative feature that is
being evaluated for separate accounting
from the host contract.
January 1, 2016. We do not expect that the
provisions of this new
standard will have any
material impact on our
consolidated financial
statements.
In August 2014, the FASB issued
amended guidance related to
disclosure of uncertainties about
the ability of an entity to continue as
a going concern.
The new guidance requires management of
all entities to evaluate whether there is
substantial doubt about the entity’s ability to
continue as a going concern and, as
necessary, to provide related footnote
disclosures.
December 31, 2016.
Earlier application is
permitted.
We do not expect that the
provisions of this new
standard will have any impact
on our consolidated financial
statements.
In July 2015, the FASB issued an
update related to inventory.
The new guidance requires that inventory be
measured at the lower of cost or net
realizable value.
January 1, 2017.
Earlier application is
permitted as of the
beginning of an
interim or annual
reporting period.
We do not expect the
provisions of this new
standard will have a material
impact on our consolidated
financial statements.
In May 2014, the FASB issued
amended guidance related to
revenue from contracts with
customers. In August 2014, the
FASB issued updated guidance
deferring the effective date of the
revenue recognition standard.
The new guidance introduces a new
principles-based framework for revenue
recognition and disclosure.
January 1, 2018.
Earlier application is
permitted only as of
annual reporting
periods beginning
after December 15,
2016, including
interim reporting
periods within that
reporting period.
We have not yet completed
our final review of the impact
of this guidance, although we
currently do not anticipate a
material impact on our
revenue recognition practices.
We continue to review
variable consideration,
potential disclosures, and our
method of adoption to
complete our evaluation of the
impact on our consolidated
financial statements. In
addition, we continue to
monitor additional changes,
modifications, clarifications or
interpretations being
undertaken by the FASB,
which may impact our current
conclusions.
In September 2015, the FASB
issued an update to its guidance on
business combinations.
The new guidance requires that an acquirer
recognize adjustments to provisional
amounts identified during the measurement
period be recorded in the reporting period
determined. The new guidance also requires
that the acquirer records, in the same
period’s financial statements, the effect on
earnings of changes in depreciation,
amortization, or other income effects, if any,
as a result of the change to the provisional
amounts. These are calculated as if the
accounting had been completed as of the
acquisition date. The new guidance also
requires separate presentation on the face
of the income statement, or disclosure within
the notes for the portion of the amount that
would have been recorded in previous
reporting periods if the adjustment to the
provisional amounts had been recognized
as of the acquisition date.
January 1, 2016.
Effective for all
adjustments made
to provisional
amounts reported
for acquisitions still
in the measurement
stage as of the
effective date.
We will use this guidance for
any adjustments made after
January 1, 2016 to any
provisional amounts reported
for acquisitions, but do not
expect it to have a material
impact on our consolidated
financial statements.