Estee Lauder 2014 Annual Report Download - page 82

80 THE EST{E LAUDER COMPANIES INC.
requisite service period, be treated as a performance
condition. As such, the performance target should not be
reflected in estimating the grant-date fair value of the
award and compensation cost should be recognized in
the period in which it becomes probable that the perfor-
mance target will be achieved. This guidance becomes
effective for the Company’s fiscal 2017 first quarter, with
early adoption permitted. The guidance will permit an
entity to apply the amendments in the update either
(a) prospectively to all awards granted or modified after
the effective date or (b) retrospectively to all awards with
performance targets that are outstanding as of the
beginning of the earliest annual period presented in the
consolidated financial statements and to all new or modi-
fied awards thereafter. The Company will apply this new
guidance when it becomes effective, and is currently eval-
uating the impact of adoption on its consolidated finan-
cial statements.
In May 2014, the FASB issued authoritative guidance
that defines how companies should report revenues from
contracts with customers. The standard requires an entity
to 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. It pro-
vides companies with a single comprehensive five-step
principles-based model to use in accounting for revenue
and supersedes current revenue recognition require-
ments, including most industry-specific and transaction -
specific revenue guidance. This guidance becomes
effective for the Company’s fiscal 2018 first quarter and
early adoption is not permitted. The guidance permits an
entity to apply the standard retrospectively to all prior
periods presented, with certain practical expedients, or
apply the requirements in the year of adoption, through a
cumulative adjustment. The Company will apply this new
guidance when it becomes effective and has not yet
selected a transition method. The Company is currently
evaluating the impact of adoption on its consolidated
financial statements.
In April 2014, the FASB issued authoritative guidance
which changes the criteria for a disposal to qualify as
a discontinued operation. This revised standard defines a
discontinued operation as (i) a component of an entity or
group of components that has been disposed of or is clas-
sified as held for sale that represents a strategic shift that
has or will have a major effect on an entity’s operations
and financial results or (ii) an acquired business or non-
profit activity that is classified as held for sale on the date
of acquisition. The standard also requires expanded
the adoption of this disclosure-only guidance did not have
a significant impact on the Company’s consolidated finan-
cial statements.
In July 2012, the FASB amended its authoritative guid-
ance related to testing indefinite-lived intangible assets for
impairment. Under the revised guidance, entities testing
their indefinite-lived intangible assets for impairment have
the option of performing a qualitative assessment before
performing further impairment testing. If entities
determine, on the basis of qualitative factors, that it is
more-likely-than-not that the asset is impaired, a quantita-
tive test is required. This guidance became effective in the
beginning of the Company’s fiscal 2014 first quarter and
the adoption of this guidance did not have an impact on
the Company’s consolidated financial statements.
In December 2011, the FASB issued authoritative guid-
ance that creates new disclosure requirements about the
nature of an entity’s rights of offset and related arrange-
ments associated with its financial instruments and deriv-
ative instruments. This revised guidance helps reconcile
differences in the offsetting requirements under U.S.
GAAP and International Financial Reporting Standards
(“IFRS”). These requirements mandate that entities dis-
close both gross and net information about instruments
and transactions eligible for offset in the statement of
financial position as well as instruments and transactions
subject to an agreement similar to a master netting
arrangement. In January 2013, the FASB issued an update
that limits the scope of these disclosures to recognized
derivative instruments, repurchase agreements and
reverse repurchase agreements, and securities borrowing
and lending transactions to the extent they are offset in
the balance sheet or subject to an enforceable master net-
ting arrangement or similar agreement. This disclo-
sure-only guidance became effective for the Company’s
fiscal 2014 first quarter, with retrospective application
required. The Company currently does not hold any
financial or derivative instruments within the scope of
this guidance that are offset in its consolidated
balance sheets or are subject to an enforceable master
netting arrangement. The adoption of this guidance did
not have an impact on the Company’s consolidated
financial statements.
Recently Issued Accounting Standards
In June 2014, the FASB amended its authoritative guid-
ance on accounting for certain share-based payment
awards. The amended guidance requires that share-based
compensation awards with terms of a performance target
that affects vesting, and that could be achieved after the