Dow Chemical 2015 Annual Report Download - page 89

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Accounting Guidance Issued But Not Adopted as of December 31, 2015
In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, "Revenue from Contracts with
Customers (Topic 606)," which is the new comprehensive revenue recognition standard that will supersede all existing revenue
recognition guidance under U.S. GAAP. The standard's core principle is that a company will recognize revenue when it
transfers promised goods or services to a customer in an amount that reflects the consideration to which the company expects to
be entitled in exchange for those goods or services. ASU 2015-14, "Revenue from Contracts with Customers (Topic 606):
Deferral of the Effective Date," which was issued in August 2015, revised the effective date for this ASU to annual and interim
periods beginning on or after December 15, 2017, with early adoption permitted, but not earlier than the original effective date
of annual and interim periods beginning on or after December 15, 2016, for public entities. Entities will have the option of
using either a full retrospective approach or a modified approach to adopt the guidance in ASU 2014-09. The Company is
currently evaluating the impact of adopting this guidance.
In February 2015, the FASB issued ASU 2015-02, "Consolidation (Topic 810): Amendments to the Consolidation Analysis,"
which makes changes to both the variable interest model and voting interest model and eliminates the indefinite deferral of
FASB Statement No. 167, included in ASU 2010-10, for certain investment funds. All reporting entities that hold a variable
interest in other legal entities will need to re-evaluate their consolidation conclusions as well as disclosure requirements. This
ASU is effective for annual periods beginning after December 15, 2015, and early adoption is permitted, including any interim
period. The Company does not expect the adoption of this guidance to have an impact on the consolidated financial statements.
In April 2015, the FASB issued ASU 2015-05, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40):
Customer's Accounting for Fees Paid in a Cloud Computing Arrangement," which provides guidance about whether a cloud
computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the
customer should account for the software license element of the arrangement consistent with the acquisition of other software
licenses. If a cloud computing arrangement does not include a software license, the customer should account for the
arrangement as a service contract. This ASU is effective for annual periods, including interim periods within those annual
periods, beginning after December 15, 2015, and early adoption is permitted. The Company is currently evaluating the impact
of adopting this guidance.
In May 2015, the FASB issued ASU 2015-07, "Fair Value Measurement (Topic 820): Disclosures for Investments in Certain
Entities That Calculate Net Asset Value per Share (or Its Equivalent)," which removes the requirement to categorize within the
fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient.
Further, the amendments remove the requirement to make certain disclosures for all investments that are eligible to be
measured at fair value using the net asset value per share practical expedient. This ASU is effective for annual periods,
including interim periods within those annual periods, beginning after December 15, 2015, and early adoption is permitted. The
new guidance should be applied on a retrospective basis to all periods presented. The Company is currently evaluating the
impact of adopting this guidance.
In July 2015, the FASB issued ASU 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory," which
applies to inventory that is measured using first-in, first-out ("FIFO") or average cost. Under the updated guidance, an entity
should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices
in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent
measurement is unchanged for inventory that is measured using last-in, first-out ("LIFO"). This ASU is effective for annual and
interim periods beginning after December 15, 2016, and should be applied prospectively with early adoption permitted at the
beginning of an interim or annual reporting period. The Company is currently evaluating the impact of adopting this guidance.
In November 2015, the FASB issued ASU 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred
Taxes," which simplifies the presentation of deferred income taxes by requiring that deferred tax liabilities and assets be
classified as noncurrent in a classified statement of financial position. This ASU is effective for financial statements issued for
annual periods beginning after December 16, 2016, and interim periods within those annual periods. The Company will early
adopt the new guidance in the first quarter of 2016 and apply the new guidance on a retrospective basis.
In January 2016, the FASB issued ASU 2016-01, "Financial Instruments--Overall (Subtopic 825-10): Recognition and
Measurement of Financial Assets and Financial Liabilities," which amends the guidance in U.S. GAAP on the classification and
measurement of financial instruments. Changes to the current guidance primarily affects the accounting for equity investments,
financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In
addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets
resulting from unrealized losses on available-for-sale debt securities. The new standard is effective for fiscal years and interim
periods beginning after December 15, 2017, and upon adoption, an entity should apply the amendments by means of a
cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is