Alcoa 2015 Annual Report Download - page 127

Statement of Consolidated Operations. The Statement of Consolidated Cash Flows is also reclassified for assets and
liabilities of operations held for sale and discontinued operations for all periods presented. Additionally, segment
information does not include the assets or operating results of businesses classified as discontinued operations for all
periods presented. These businesses are expected to be disposed of within one year.
For businesses classified as held for sale that do not qualify for discontinued operations treatment, the balance sheet
and cash flow amounts are reclassified from their historical presentation to assets and liabilities of operations held for
sale for all periods presented. The results of operations continue to be reported in continuing operations. The gains or
losses associated with these divested businesses are recorded in restructuring and other charges on the Statement of
Consolidated Operations. The segment information includes the assets and operating results of businesses classified as
held for sale for all periods presented. Management expects that Alcoa will have continuing involvement with these
businesses following their divestiture, primarily in the form of equity participation, or ongoing aluminum or other
significant supply contracts.
Recently Adopted Accounting Guidance. On January 1, 2015, Alcoa adopted changes issued by the Financial
Accounting Standards Board (FASB) to reporting discontinued operations and disclosures of disposals of components
of an entity. These changes require a disposal of a component to meet a higher threshold in order to be reported as a
discontinued operation in an entity’s financial statements. The threshold is defined as a strategic shift that has, or will
have, a major effect on an entity’s operations and financial results such as a disposal of a major geographical area or a
major line of business. Additionally, the following two criteria have been removed from consideration of whether a
component meets the requirements for discontinued operations presentation: (i) the operations and cash flows of a
disposal component have been or will be eliminated from the ongoing operations of an entity as a result of the disposal
transaction, and (ii) an entity will not have any significant continuing involvement in the operations of the disposal
component after the disposal transaction. Furthermore, equity method investments now may qualify for discontinued
operations presentation. These changes also require expanded disclosures for all disposals of components of an entity,
whether or not the threshold for reporting as a discontinued operation is met, related to profit or loss information and/or
asset and liability information of the component. The adoption of these changes had no impact on the Consolidated
Financial Statements. This guidance will need to be considered in the event Alcoa initiates a disposal of a component.
In September 2015, the FASB issued changes to the accounting for measurement-period adjustments related to business
combinations. Currently, an acquiring entity is required to retrospectively adjust the balance sheet amounts of the acquiree
recognized at the acquisition date with a corresponding adjustment to goodwill during the measurement period, as well as
revise comparative information for prior periods presented within financial statements as needed, including revising
income effects, such as depreciation and amortization, as a result of changes made to the balance sheet amounts of the
acquiree. Such adjustments are required when new information is obtained about facts and circumstances that existed as of
the acquisition date that, if known, would have affected the measurement of the amounts initially recognized or would
have resulted in the recognition of additional assets or liabilities. The measurement period is the period after the
acquisition date during which the acquirer may adjust the balance sheet amounts recognized for a business combination
(generally up to one year from the date of acquisition). The changes eliminate the requirement to make such retrospective
adjustments, and, instead require the acquiring entity to record these adjustments in the reporting period they are
determined. Additionally, the changes require the acquiring entity to present separately on the face of the income
statement or disclose in the notes to the financial statements the portion of the amount recorded in current-period income
by line item that would have been recorded in previous reporting periods if the adjustment to the balance sheet amounts
had been recognized as of the acquisition date. These changes were to become effective for Alcoa on January 1, 2016;
however, early adoption is permitted. As such, Alcoa elected to early adopt these changes upon issuance and applied the
new requirements to three acquisitions (see Note F). In 2015, Alcoa recognized adjustments to the original balance sheet
amounts of these three acquisitions, resulting in the recognition of amounts in current period operations that would have
been recorded in previous reporting periods had the adjustments to the balance sheet amounts been recognized as of the
respective acquisition date. Such amounts recorded in current period operations were not material to the Statement of
Consolidated Operations for the year ended December 31, 2015.
In November 2015, the FASB issued changes to the balance sheet classification of deferred taxes, which Alcoa
immediately adopted. These changes simplify the presentation of deferred income taxes by requiring all deferred
103