Western Union 2015 Annual Report Download - page 207

THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
105
The details of each designated hedging relationship are formally documented at the inception of the arrangement, including
the risk management objective, hedging strategy, hedged item, specific risks being hedged, the derivative instrument, how
effectiveness is being assessed and how ineffectiveness, if any, will be measured. The derivative must be highly effective in
offsetting the changes in cash flows or fair value of the hedged item, and effectiveness is evaluated quarterly on a retrospective
and prospective basis.
Legal Contingencies
The Company is a party to certain legal and regulatory proceedings with respect to a variety of matters. The Company records
an accrual for these contingencies to the extent that a loss is both probable and reasonably estimable. If some amount within a
range of loss appears to be a better estimate than any other amount within the range, that amount is accrued. When no amount
within a range of loss appears to be a better estimate than any other amount, the lowest amount in the range is accrued.
Stock-Based Compensation
The Company currently has a stock-based compensation plan that provides for grants of Western Union stock options, restricted
stock awards and restricted and unrestricted stock units to employees and non-employee directors of the Company.
All stock-based compensation to employees is required to be measured at fair value and expensed over the requisite service
period and also requires an estimate of forfeitures when calculating compensation expense. The Company recognizes compensation
expense on awards on a straight-line basis over the requisite service period for the entire award. Refer to Note 16 for additional
discussion regarding details of the Company's stock-based compensation plans.
Severance and Other Related Expenses
The Company records severance-related expenses once they are both probable and estimable in accordance with the provisions
of the applicable accounting guidance for severance provided under an ongoing benefit arrangement. One-time, involuntary benefit
arrangements and other costs are generally recognized when the liability is incurred. The Company also evaluates impairment
issues associated with restructuring and other activities when the carrying amount of the assets may not be fully recoverable, in
accordance with the appropriate accounting guidance.
New Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board issued a new accounting pronouncement regarding revenue from
contracts with customers. This new standard provides guidance on recognizing revenue, including a five step model to determine
when revenue recognition is appropriate. The standard requires that an entity recognizes 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. The Company is required to adopt the new standard on January 1, 2018. Management is currently
evaluating the potential impact that the adoption of this standard will have on the Company's financial position, results of operations,
and related disclosures.
In April 2015, the Financial Accounting Standards Board issued guidance on the financial statement presentation of debt
issuance costs. This update requires capitalized debt issuance costs to be presented as a reduction to the carrying value of debt
instead of being classified as a deferred charge, as currently required. The Company is required to adopt the new standard on
January 1, 2016, with adoption retroactive for all periods presented. This update will not have a material impact on the presentation
of the Company’s financial position, results of operations, and related disclosures.
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