Time Magazine 2015 Annual Report Download - page 76

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TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
2014, the Company began using the SICAD 2 rate to remeasure its VEF-denominated transactions and balances and, for the
three months and year ended December 31, 2014, recognized a pretax foreign exchange loss of $173 million in the
Consolidated Statement of Operations.
On February 10, 2015, Venezuelan government officials announced changes to Venezuela’s foreign currency exchange
system. Those changes included the elimination of the SICAD 2 exchange due to the merger of the SICAD 1 and SICAD 2
exchanges into a single SICAD exchange as well as the creation of the Simadi exchange, which is a free market foreign
currency exchange. On their initial date of activity, the exchange rates published by the Central Bank of Venezuela were 12
VEF to each U.S. Dollar for the SICAD exchange and 170 VEF to each U.S. Dollar for the Simadi exchange. Given the
restrictions associated with the official government rate and the SICAD exchange, starting on February 10, 2015, the
Company began to use the Simadi exchange rate to remeasure its VEF-denominated transactions and balances and
recognized a pretax foreign exchange loss of $22 million in the Consolidated Statement of Operations during the quarter
ended March 31, 2015. Approximately $15 million of such loss related to cash balances.
Accounting Guidance Adopted in 2015
Deferred Income Taxes
During the fourth quarter of 2015, the Company early adopted guidance that requires deferred tax assets and liabilities,
along with any related valuation allowance, to be classified as noncurrent assets or liabilities, as applicable, on the balance
sheet. The adoption of this guidance was on a prospective basis, and, accordingly, prior periods have not been retroactively
adjusted.
Consolidation
During the fourth quarter of 2015, the Company early adopted guidance on a retrospective basis that changes how
companies evaluate entities for consolidation. The changes primarily relate to (i) the identification of variable interests
related to fees paid to decision makers or service providers, (ii) how companies determine whether limited partnerships or
similar entities are variable interest entities, (iii) how related parties and de facto agents are considered in the primary
beneficiary determination, and (iv) the elimination of the presumption that a general partner controls a limited partnership.
The adoption of this guidance did not have a material effect on the Company’s consolidated financial statements.
Accounting for Fees Paid in a Cloud Computing Arrangement
During the fourth quarter of 2015, the Company early adopted guidance on a prospective basis that clarifies how fees
paid by a customer in a cloud computing arrangement are accounted for. The guidance provides that if a cloud computing
arrangement includes a software license, the arrangement should be accounted for in a manner consistent with the acquisition
of other software licenses. The guidance also provides that if a cloud computing arrangement does not include a software
license, the arrangement should be accounted for as a service contract. The adoption of this guidance did not have a material
effect on the Company’s consolidated financial statements.
Debt Issuance Costs
During the third quarter of 2015, the Company early adopted guidance on a retrospective basis that requires debt
issuance costs related to a recognized debt liability to be presented in the balance sheet as a deduction from the carrying
amount of such debt. The adoption of the guidance resulted in decreases to long-term debt and other noncurrent assets as of
December 31, 2014 of $113 million.
Fair Value Measurement
During the second quarter of 2015, the Company early adopted guidance that eliminated the requirement to categorize
within the fair value hierarchy all investments for which net asset value per share was used as a practical expedient to
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