Sears 2015 Annual Report Download - page 69

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continued to report unamortized debt issuance costs related to the Revolving Facility of $49 million and $16 million
at January€30, 2016 and January€31, 2015, respectively, within other assets.
Consolidation
In February 2015, the FASB issued an accounting standards update which revises the consolidation model.
Specifically, the amendments modify the evaluation of whether limited partnerships and similar legal entities are
variable interest entities (VIEs) or voting interest entities, eliminate the presumption that a general partner should
consolidate a limited partnership, affect the consolidation analysis of reporting entities that are involved with VIEs,
particularly those that have fee arrangements and related party relationships, and provide a scope exception from
consolidation guidance for reporting entities with interests in legal entities that are required to comply with or
operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of
1940 for registered money market funds. This update was effective and adopted by the Company in the first quarter
of 2015. The adoption of the new standard did not have a material impact on the Company’s consolidated financial
position, results of operations, cash flows or disclosures.
Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More
Akin to Debt or to Equity
In November 2014, the FASB issued an accounting standards update which clarifies how current GAAP should
be interpreted in evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument
that is issued in the form of a share. Specifically, the amendments clarify that an entity should consider all relevant
terms and features-including the embedded derivative feature being evaluated for bifurcation-in evaluating the
nature of the host contract. Furthermore, the amendments clarify that no single term or feature would necessarily
determine the economic characteristics and risks of the host contract. Rather, the nature of the host contract depends
upon the economic characteristics and risks of the entire hybrid financial instrument. This update was effective for
the Company in the first quarter of 2015. The adoption of the new standard did not have a material impact on the
Company’s consolidated financial position, results of operations, cash flows or disclosures.
Presentation of Financial Statements - Going Concern
In August 2014, the FASB issued an accounting standards update which requires management to assess
whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s
ability to continue as a going concern within one year after the financial statements are issued.€If substantial doubt
exists, additional disclosures are required. This update will be effective for the Company in the first quarter of 2017.
The adoption of the new standard is not expected to have a material impact on the Company’s consolidated financial
position, results of operations, cash flows or disclosures.
Revenue from Contracts with Customers
In May 2014, the FASB issued an accounting standards update which replaces the current revenue recognition
standards. The new revenue recognition standard provides a five-step analysis of transactions to determine when and
how revenue is recognized. The core principle is that a company 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. This standard was initially released as effective for fiscal years
beginning after December 15, 2016, however, the FASB has decided to defer the effective date of this accounting
standard update for one year. Early adoption of the update is permitted, but not before the original date for fiscal
years beginning after December 15, 2016. The update may be applied retrospectively for each period presented or as
a cumulative-effect adjustment at the date of adoption. The Company is evaluating the effect of adopting this new
standard.
SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
69