Callaway 2015 Annual Report Download - page 80

F-10
principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly
provided by organizations today in the financial statement footnotes. Until the issuance of this ASU, U.S. GAAP lacked
guidance about management’s responsibility to evaluate whether there is substantial doubt about the organization’s ability to
continue as a going concern or to provide related footnote disclosures. The amendments are effective for annual periods ending
after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early application is
permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The
Company does not expect that the adoption of this amendment will have a material impact on its consolidated financial
statements and disclosures.
In June 2014, the FASB issued ASU No. 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." This ASU requires that a performance target that affects vesting and that could be achieved after the requisite
service period, be treated as a performance condition. The performance target should not be reflected in estimating the grant-
date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the
performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the
requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of
the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the
remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service
period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that
ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest
in the award if the performance target is achieved. This ASU is effective for annual periods and interim periods within those
annual periods beginning after December 15, 2015. Earlier adoption is permitted. Based on the Company's evaluation of this
ASU, it will not have a material impact on the Company's consolidated financial statements.
In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers: (Topic 606)." This ASU
affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the
transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease
contracts). This ASU will supersede the revenue recognition requirements in Topic 605, "Revenue Recognition," and most
industry-specific guidance. In addition, the existing requirements for the recognition of a gain or loss on the transfer of
nonfinancial assets that are not in a contract with a customer (e.g., assets within the scope of Topic 360, "Property, Plant, and
Equipment," and intangible assets within the scope of Topic 350, "Intangibles-Goodwill and Other") are amended to be
consistent with the guidance on recognition and measurement (including the constraint on revenue) in this ASU. The core
principle of the guidance is that an entity should recognize 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 amendments in this ASU are effective for annual reporting periods beginning after December 15, 2017,
including interim periods within that reporting period. Early adoption is permitted only as of annual reporting periods beginning
after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating
the impact this ASU will have on its consolidated financial statements and disclosures.
Revenue Recognition
Sales are recognized, in general, as products are shipped to customers, net of an allowance for sales returns and sales
programs in accordance with Accounting Standards Codification (“ASC”) Topic 605, “Revenue Recognition.” In certain cases,
the Company recognizes sales when products are received by customers. The criteria for recognition of revenue are met when
persuasive evidence that an arrangement exists and both title and risk of loss have passed to the customer, the price is fixed
or determinable and collectability is reasonably assured. Sales returns are estimated based upon historical returns, current
economic trends, changes in customer demands and sell-through of products. The Company also records estimated reductions
to revenue for sales programs such as incentive offerings. Sales program accruals are estimated based upon the attributes of
the sales program, management’s forecast of future product demand, and historical customer participation in similar programs.