AMD 2015 Annual Report Download - page 82

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The application of the lattice-binomial option-pricing model requires the use of extensive actual employee
exercise behavior data and the use of a number of complex assumptions including expected volatility of the
Company’s common stock, risk-free interest rate and expected dividends. Significant changes in any of these
assumptions could materially affect the fair value of stock options granted in the future.
Forfeiture rates are estimated at the time of grant and revised, if necessary, in subsequent periods if actual
forfeitures differ from those estimates in order to derive the Company’s best estimate of awards ultimately
expected to vest.
Recently Issued Accounting Standards
Income Tax. In November 2015, the Financial Accounting Standards Board (FASB) issued Accounting
Standards Update (ASU) 2015-17, Balance Sheet Classification of Deferred Taxes, which simplifies the
presentation of deferred income taxes by requiring that all deferred tax assets and liabilities to be classified as
non-current on the consolidated balance sheet. ASU 2015-17 will be effective in the first quarter of 2017, with
early adoption permitted. ASU 2015-17 may be adopted either prospectively or retrospectively. The Company is
currently evaluating the impact of its pending adoption of ASU 2015-17 on its consolidated financial statements.
Inventory. In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory, which
simplifies the measurement of inventory by requiring certain inventory to be measured at the lower of cost or net
realizable value. ASU 2015-11 will be effective in the first quarter of 2017, with early adoption permitted. The
Company is currently evaluating the impact of its pending adoption of ASU 2015-11 on its consolidated financial
statements.
Interest—Imputation of Interest. In April 2015, the FASB issued ASU 2015-03, Simplifying the
Presentation of Debt Issuance Costs, which requires an entity to present such costs in the balance sheet as a
direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to
be reported as interest expense. ASU 2015-03 will be effective for annual reporting periods beginning after
December 15, 2015 and interim periods within fiscal years beginning after December 15, 2016, with early
adoption permitted. The new guidance will be applied retrospectively to each prior period presented. The
Company plans to adopt ASU 2015-03 in the first quarter of 2016, at which time the Company will reclassify
approximately $30 million of debt issuance costs associated with the Company’s long-term debt from other non-
current assets to long-term debt. A reclassification will also be applied retrospectively to each prior period
presented.
Disclosure of Going Concern Uncertainties. In August 2014, the FASB issued ASU 2014-15, Disclosure
of Uncertainties about an Entity’s Ability to Continue as a Going Concern (ASU 2014-15), which provides
guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s
ability to continue as a going concern and to provide related footnote disclosures. ASU 2014-15 will be effective
in the fourth quarter of 2016, with early adoption permitted. The Company is currently evaluating the impact of
its pending adoption of ASU 2014-15 on its consolidated financial statements.
Share-Based Payments with Performance Targets. In June 2014, the FASB issued ASU 2014-12,
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 requires that a performance target be treated as a
performance condition if it affects vesting and could be achieved after the requisite service period is rendered.
ASU 2014-12 will be effective in the first quarter of 2016, with early adoption permitted. The Company may use
either of two methods: (i) prospective application to all awards granted or modified after the effective date or
(ii) retrospective application to all awards with performance targets that are outstanding as of the beginning of
the earliest annual period presented in the financial statements and to all new or modified awards thereafter, with
the cumulative effect of applying ASU 2014-12 as an adjustment to the opening retained earnings balance as of
the beginning of the earliest annual period presented in the financial statements. The Company evaluated the
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