Wells Fargo 2015 Annual Report Download - page 116

Current Accounting Developments
Table 62 provides accounting pronouncements applicable to us
that have been issued by the FASB but are not yet effective.
Table 62: Current Accounting Developments – Issued Standards
Effective date and financial statement
Standard Description impact
Accounting Standards Update (ASU or Update)
2016-01 – Financial Instruments – Overall
(Subtopic 825-10): Recognition and
Measurement of Financial Assets and Financial
Liabilities
The Update amends the presentation and
accounting for certain financial instruments,
including liabilities measured at fair value
under the fair value option and equity
investments. The guidance also updates fair
value presentation and disclosure requirements
for financial instruments measured at
amortized cost.
The Update is effective for us in first quarter
2018 with prospective application to changes in
guidance related to nonmarketable equity
investments. The remaining amendments
should be applied with a cumulative-effect
adjustment to the balance sheet as of the
beginning of the adoption period. Early
application is only permitted for changes
related to liabilities measured at fair value
under the fair value option. Early adoption is
prohibited for the remaining amendments. We
are evaluating the impact of the Update on our
consolidated financial statements.
ASU 2015-16 – Business Combinations (Topic
805): Simplifying the Accounting for
Measurement-Period Adjustments
The Update eliminates the requirement for
companies to retrospectively adjust initial
amounts recognized in business combinations
when the accounting is incomplete at the
acquisition date. Under the new guidance,
companies should record adjustments in the
same reporting period in which the amounts
are determined.
The Update is effective for us in first quarter
2016 with prospective application. The Update
will not have a material impact on our
consolidated financial statements.
ASU 2015-07 – Fair Value Measurement (Topic
820): Disclosures for Investments in Certain
Entities that Calculate Net Asset Value per
Share (or Its Equivalent)
The Update eliminates the disclosure
requirement to categorize investments within
the fair value hierarchy that are measured at
fair value using net asset value as a practical
expedient.
The guidance is effective for us in first quarter
2016 with retrospective application. The
Update will not affect our consolidated financial
statements as it impacts only the fair value
disclosure requirements for certain
investments.
ASU 2015-03 – Interest – Imputation of
Interest (Subtopic 835-30): Simplifying the
Presentation of Debt Issuance Costs
The Update changes the balance sheet
presentation for debt issuance costs. Under the
new guidance, debt issuance costs should be
reported as a deduction from debt liabilities
rather than as a deferred charge classified as
The Update is effective for us in first quarter
2016 and will not have a material impact on
our consolidated financial statements since it is
limited to a reclassification on our balance
sheet.
an asset.
ASU 2015-02 – Consolidation (Topic 810):
Amendments to the Consolidation Analysis
The Update primarily amends the criteria
companies use to evaluate whether they
should consolidate certain variable interest
entities that have fee arrangements and the
criteria used to determine whether
partnerships and similar entities are variable
interest entities. The Update also excludes
certain money market funds from the
consolidation guidance.
These changes are effective for us in first
quarter 2016 and will be applied with a
cumulative-effect adjustment to opening
retained earnings. The Update will not have a
material impact on our consolidated financial
statements.
ASU 2015-01 – Income Statement – The Update removes the concept of The Update is effective for us in first quarter
Extraordinary and Unusual Items (Subtopic extraordinary items from GAAP and eliminates 2016 with prospective application. The Update
225-20): Simplifying Income Statement the requirement for extraordinary items to be will not have a material impact on our
Presentation by Eliminating the Concept of separately presented in the statement of consolidated financial statements.
Extraordinary Items income.
ASU 2014-16 – Derivatives and Hedging (Topic
815): 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
The Update clarifies that the nature of host
contracts in hybrid financial instruments that
are issued in share form should be determined
based on the entire instrument, including the
embedded derivative.
The Update is effective for us in first quarter
2016 with modified retrospective application.
The Update will not have a material impact on
our consolidated financial statements.
ASU 2014-13 – Consolidation (Topic 810):
Measuring the Financial Assets and the
Financial Liabilities of a Consolidated
Collateralized Financing Entity
The Update provides a measurement
alternative to companies that consolidate
collateralized financing entities (CFEs), such as
collateralized debt obligation and collateralized
loan obligation structures. Under the new
guidance, companies can measure both the
financial assets and financial liabilities of a CFE
using the more observable fair value of the
financial assets or of the financial liabilities.
These changes are effective for us in first
quarter 2016 and can be applied by a modified
retrospective approach. The Update will not
have a material impact on our consolidated
financial statements.
Wells Fargo & Company
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