Xerox 2015 Annual Report Download - page 91

Other Updates
In 2015 and 2014, the FASB also issued the following Accounting Standards Updates which are not expected to
have a material impact on our financial condition, results of operations or cash flows when adopted in future periods.
Those updates are as follows:
• Business Combinations: ASU 2015-16, Accounting for Measurement Period Adjustments in a Business
Combination, which is effective for our fiscal year beginning January 1, 2016.
• Inventory: ASU 2015-11, Simplifying the Subsequent Measurement of Inventory, which is effective for our
fiscal year beginning January 1, 2017.
• Fair Value Measurements: ASU 2015-07, Disclosures for Investments in Certain Entities That Calculate
Net Asset Value per Share (or its Equivalent), which is effective for our fiscal year beginning January 1,
2016.
• Intangibles - Goodwill and Other - Internal Use Software: ASU 2015-05, Intangibles-Goodwill and Other-
Internal Use Software - Customer's Accounting for Fees Paid in a Cloud Computing Arrangement, which is
effective for our fiscal year beginning January 1, 2016.
• Consolidation: ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. This
update is effective for our fiscal year beginning January 1, 2016 with early adoption permitted, and is applied
on a modified retrospective basis.
• Income Statement: ASU 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic
225-20) - Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. The
standard primarily involves presentation and disclosure.
• Derivatives and Hedging: 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, which is effective for our fiscal year beginning January 1, 2016.
• Disclosures of Going Concern Uncertainties: ASU 2014-15, Presentation of Financial Statements -
Going Concern (Subtopic 205-40); Disclosure of Uncertainties about an Entity’s Ability to Continue as a
Going Concern, which is effective for our fiscal year beginning January 1, 2016.
• Stock Compensation: 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, which is effective for our fiscal year beginning January 1, 2016.
Summary of Accounting Policies
Revenue Recognition
We generate revenue through services, the sale and rental of equipment, supplies and income associated with the
financing of our equipment sales. Revenue is recognized when it is realized or realizable and earned. We consider
revenue realized or realizable and earned when we have persuasive evidence of an arrangement, delivery has
occurred, the sales price is fixed or determinable and collectibility is reasonably assured. Delivery does not occur
until equipment has been shipped or services have been provided to the customer, risk of loss has transferred to the
customer, and either customer acceptance has been obtained, customer acceptance provisions have lapsed, or the
company has objective evidence that the criteria specified in the customer acceptance provisions have been
satisfied. The sales price is not considered to be fixed or determinable until all contingencies related to the sale have
been resolved. More specifically, revenue related to services and sales of our products is recognized as follows:
Equipment-Related Revenues
Equipment: Revenues from the sale of equipment, including those from sales-type leases, are recognized at the
time of sale or at the inception of the lease, as appropriate. For equipment sales that require us to install the product
at the customer location, revenue is recognized when the equipment has been delivered and installed at the
customer location. Sales of customer installable products are recognized upon shipment or receipt by the customer
according to the customer's shipping terms. Revenues from equipment under other leases and similar arrangements
are accounted for by the operating lease method and are recognized as earned over the lease term, which is
generally on a straight-line basis.
Technical Services: Technical service revenues are derived primarily from maintenance contracts on the equipment
sold to our customers and are recognized over the term of the contracts. A substantial portion of our products are
sold with full service maintenance agreements for which the customer typically pays a base service fee plus a
variable amount based on usage. As a consequence, other than the product warranty obligations associated with
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