Wells Fargo 2015 Annual Report Download - page 117

Effective date and financial statement
Standard Description impact
ASU 2014-12 – Compensation – Stock
Compensation (Topic 718): Accounting for
Share-Based Payments When the Terms of an
Award Provide That a Performance Target Could
Be Achieved after the Requisite Service Period
The Update provides accounting guidance for
employee share-based payment awards with
specific performance targets. The Update
clarifies that performance targets should be
treated as performance conditions if the
targets affect vesting and could be achieved
after the requisite service period.
The Update is effective for us in first quarter
2016 and can be applied prospectively. The
Update will not have a material impact on our
consolidated financial statements.
ASU 2014-09 – Revenue from Contracts With
Customers (Topic 606)
The Update modifies the guidance companies
use to recognize revenue from contracts with
customers for transfers of goods or services
and transfers of nonfinancial assets, unless
those contracts are within the scope of other
standards. The guidance also requires new
qualitative and quantitative disclosures,
including information about contract balances
and performance obligations.
In August 2015, the FASB issued ASU 2015-14
(Revenue from Contracts with Customers
(Topic 606): Deferral of the Effective Date),
which defers the effective date of ASU 2014-09
to first quarter 2018. The Update can be
applied retrospectively to prior periods
presented or as a cumulative-effect adjustment
in the period of adoption. Early adoption is
permitted in first quarter 2017. Our revenue is
balanced between net interest income on
financial assets and liabilities, which is
explicitly excluded from the scope of the new
guidance, and noninterest income. We continue
to evaluate the impact of the Update to our
noninterest income and on our presentation
and disclosures. We expect to adopt the
Update in first quarter 2018 with a cumulative-
effect adjustment to opening retained
earnings.
Table 63 provides proposed accounting pronouncements
that could materially affect our consolidated financial statements
when finalized by the FASB.
Table 63: Current Accounting Developments – Proposed Standards
Proposed Standard
Financial Instruments – Credit Losses (Subtopic
825-15)
Description
The proposed Update would change the
accounting for credit losses on loans and debt
securities. For loans, the proposal would
require an expected credit loss model rather
than the current incurred loss model to
determine the allowance for credit losses. The
expected credit loss model would estimate
losses for the estimated life of the financial
asset. In addition, the proposed guidance
would modify the other-than-temporary
impairment model for available-for-sale debt
securities to require an allowance for credit
impairment instead of a direct write-down,
which would allow for reversal of credit
impairments in future periods.
Expected Issuance
The FASB expects to issue a final standard in
2016.
Leases (Topic 842) The proposed Update would require lessees to
recognize leases on the balance sheet with
lease liabilities and corresponding right-of-use
assets based on the present value of lease
payments. Additionally, lessors would largely
continue current accounting with lease
financings and operating lease assets
depending on the nature of the leases. The
proposed Update would also eliminate
leveraged lease accounting, but would allow
existing leveraged leases to continue their
current accounting until maturity or
termination.
The FASB expects to issue a final standard in
2016.
Forward-Looking Statements
This document contains “forward-looking statements” within the “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,”
meaning of the Private Securities Litigation Reform Act of 1995. “expects,” “target,” “projects,” “outlook,” “forecast,” “will,”
In addition, we may make forward-looking statements in our “may,” “could,” “should,” “can” and similar references to future
other documents filed or furnished with the SEC, and our periods. In particular, forward-looking statements include, but
management may make forward-looking statements orally to are not limited to, statements we make about: (i) the future
analysts, investors, representatives of the media and others. operating or financial performance of the Company, including
Forward-looking statements can be identified by words such as our outlook for future growth; (ii) our noninterest expense and
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