Rosetta Stone 2014 Annual Report Download - page 74

Table of Contents
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

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40) ("ASU 2014-15"). ASU
2014-15 addresses management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to
provide related footnote disclosures. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable
at the date that the financial statements are issued. ASU 2014-15 will be effective for the first interim period within annual reporting periods beginning after
December 15, 2016. Early adoption is permitted. The Company does not expect to early adopt this guidance and does not believe that the adoption of this
guidance will have a material impact on the Company's financial statements and disclosures.
In June 2014, the FASB issued ASU No. 2014-12, 
 ("ASU 2014-12"). ASU 2014-12 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 is effective for annual reporting periods and interim
periods within those annual reporting periods beginning after December 15, 2015. Early adoption is permitted. The Company does not expect to early adopt
this guidance and does not believe that the adoption of this guidance will have a material impact on the Company's financial statements and disclosures.
In May 2014, the FASB issued ASU No. 2014-09,  ("ASU 2014-09"), which replaces the current
revenue accounting guidance. ASU 2014-09 is effective for annual periods beginning after December 15, 2016. The core principle of ASU 2014-09 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. To achieve that core principle, an entity should apply a five step model to 1) identify
the contract(s) with a customer, 2) identify the performance obligations in the contract, 3) determine the transaction price, 4) allocate the transaction price to
the performance obligations in the contract and 5) recognize revenue when (or as) the entity satisfies a performance obligation. Entities may choose from two
adoption methods, with certain practical expedients. The Company is in the process of evaluating the impact of the new guidance on the Company's financial
statements and disclosures and the adoption method.
In April 2014, the FASB issued ASU No. 2014-08 
 ("ASU 2014-08"), which amends the definition of a
discontinued operation and requires entities to provide additional disclosures about discontinued operations as well as disposal transactions that do not meet
the discontinued operations criteria. The new guidance changes the definition of a discontinued operation and requires discontinued operations treatment for
disposals of a component or group of components that represents a strategic shift that has or will have a major impact on an entity’s operations or financial
results. ASU 2014-08 is effective prospectively for all disposals (except disposals classified as held for sale before the adoption date) or components initially
classified as held for sale in periods beginning on or after December 15, 2014; earlier adoption is permitted. The adoption of this guidance affects prospective
presentation of disposals and therefore, is not expected to have a material impact on the Company's consolidated financial condition, results of operations or
cash flows.
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Inventory consisted of the following (in thousands):






Raw materials
$ 3,163
$ 3,267
Finished goods
3,337
3,372
Total inventory
$ 6,500
$ 6,639

Property and equipment consisted of the following (in thousands):
F-17