Pier 1 2016 Annual Report Download - page 50

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
equivalent returns of total shareholder return targets are achieved in comparison to a peer group. The fair value for these
performance-based shares was determined using a lattice valuation model in accordance with accounting guidelines.
The Company estimates forfeitures based on its historical forfeiture experience, and adjusts forfeiture estimates based on actual
forfeiture experience for all awards with service conditions. The effect of any forfeiture adjustments was not material.
Adoption of new accounting standards — In April 2015, the Financial Accounting Standards Board issued Accounting
Standards Update 2015-03, “Interest — Imputation of Interest.” To simplify presentation of debt issuance costs, the
amendments in this standard would require that debt issuance costs be presented in the balance sheet as a direct deduction
from the carrying amount of debt, consistent with debt discounts or premiums. The recognition and measurement guidance for
debt issuance costs would not be affected by the amendments in this standard. This Accounting Standards Update is the final
version of Proposed Accounting Standards Update 2014-250, “Interest — Imputation of Interest (Subtopic 835-30),” which has
been deleted. The Company early adopted the provisions of this guidance during the fiscal year ended February 27, 2016 and
applied it retrospectively to all periods presented. The required presentation is included in the Consolidated Balance Sheets and
Note 4 of the Notes to Consolidated Financial Statements.
In April 2015, the Financial Accounting Standards Board issued Accounting Standards Update 2015-05, “Customers Accounting
for Cloud Computing Costs.” The standard provides more specific guidance related to how companies account for cloud
computing costs. The standard is effective for the Company prospectively beginning in fiscal 2017. The Company has evaluated
the impact of this new guidance, and it has determined this new guidance does not currently have a material impact on its
financial statements.
In July 2015, the Financial Accounting Standards Board issued Accounting Standards Update 2015-11, “Inventory (Topic 330):
Simplifying the Measurement of Inventory.” The standard requires entities to measure most inventory “at the lower of cost and net
realizable value,” thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or
market (market in this context is defined as one of three different measures, one of which is net realizable value). The standard is
effective for the Company prospectively beginning in fiscal 2018. The Company is currently evaluating the impact of the adoption
of this guidance on its financial statements.
In August 2015, the Financial Accounting Standards Board issued Accounting Standards Update 2015-14, “Revenue from
Contracts with Customers (Topic 606): Deferral of the Effective Date.” The standard defers the effective date of revenue standard
Accounting Standards Update 2014-09 by one year for all entities and permits early adoption on a limited basis. The standard is
effective for the Company beginning in fiscal 2019. Early adoption is permitted in fiscal 2018 for the Company. The Company is
continuing to evaluate the impact of the adoption of this guidance on its financial statements.
In November 2015, the Financial Accounting Standards Board issued Accounting Standards Update 2015-17, “Income Taxes
(Topic 740): Balance Sheet Classification of Deferred Taxes.” The standard requires companies to classify all deferred tax
liabilities and assets as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent
amounts. The Company early adopted the provisions of this guidance during the fiscal year ended February 27, 2016 and
applied it retrospectively to all periods presented. The required presentation is included in the Consolidated Balance Sheets and
Note 7 of the Notes to Consolidated Financial Statements.
In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-02, “Leases (Topic
842),” which provides new guidance on accounting for leases. The guidance will require lessees to reflect most leases on the
balance sheet. The standard is effective for the Company beginning in fiscal 2020. Early adoption is permitted. The standard
must be adopted using a modified retrospective transition, with the new guidance applied to the beginning of the earliest
comparative period presented. The Company is evaluating the impact of the adoption of this guidance on its financial statements.
In March 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-09, “Compensation —
Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” which outlines new provisions
intended to simplify various aspects related to accounting for share-based payments and their presentation in the financial
statements. The standard is effective for the Company beginning in fiscal 2018. Early adoption is permitted. The Company is
evaluating the impact of the adoption of this guidance on its financial statements.
44 PIER 1 IMPORTS, INC. 2016 Form 10-K