International Paper 2015 Annual Report Download - page 68

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In connection with potential future closures or redesigns
of certain production facilities, it is possible that the
Company may be required to take steps to remove
certain materials from these facilities. Applicable
regulations and standards provide that the removal of
certain materials would only be required if the facility
were to be demolished or underwent major renovations.
At this time, any such obligations have an indeterminate
settlement date, and the Company believes that
adequate information does not exist to apply an
expected-present-value technique to estimate any
such potential obligations. Accordingly, the Company
does not record a liability for such remediation until a
decision is made that allows reasonable estimation of
the timing of such remediation.
TRANSLATION OF FINANCIAL STATEMENTS
Balance sheets of international operations are
translated into U.S. dollars at year-end exchange rates,
while statements of operations are translated at
average rates. Adjustments resulting from financial
statement translations are included as cumulative
translation adjustments in Accumulated other
comprehensive loss.
NOTE 2 RECENT ACCOUNTING DEVELOPMENTS
Other than as described below, no new accounting
pronouncement issued or effective during the fiscal
year has had or is expected to have a material impact
on the consolidated financial statements.
CLASSIFICATION OF DEFERRED TAXES
In November 2015, the Financial Accounting Standards
Board (FASB) issued Accounting Standards Update
(ASU) 2015-17, "Balance Classification of Deferred
Taxes." This ASU requires entities to offset all deferred
tax assets and liabilities (and valuation allowances) for
each tax-paying jurisdiction within each tax-paying
component. The net deferred tax must be presented as
a single noncurrent amount. This ASU is effective for
annual reporting periods beginning after December 15,
2016, and interim periods within those years. Early
adoption is permitted. The application of the
requirements of this guidance is not expected to have
a material effect on the consolidated financial
statements.
BUSINESS COMBINATIONS
In September 2015, the FASB issued ASU 2015-16,
"Business Combinations - Simplifying the Accounting
for Measurement Period Adjustments." This ASU
provides that an acquirer must recognize adjustments
to provisional amounts that are identified during the
measurement period in the reporting period in which
the adjustment amounts are determined. The ASU also
requires acquirers to present separately on the face of
the income statement, or disclose in the notes, the
portion of the amount recorded in current-period
earnings by line item that would have been recorded in
previous reporting periods if the adjustment to the
provisional amounts had been recognized at the
acquisition date. This ASU is effective for annual
reporting periods beginning after December 15, 2016,
and interim periods within fiscal years beginning after
December 15, 2017. This ASU must be applied
prospectively to adjustments to provisional amounts
that occur after the effective date. Early adoption is
permitted for financial statements that have not been
issued. The Company is currently evaluating the
provisions of this guidance.
INVENTORY
In July 2015, the FASB issued ASU 2015-11,
"Simplifying the Measurement of Inventory." This ASU
provides that entities should measure inventory at the
lower of cost and net realizable value. Net realizable
value 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 measure
using LIFO or the retail inventory method. This ASU is
effective for annual reporting periods beginning after
December 15, 2016, and interim periods within those
years. Early adoption is permitted. The Company is
currently evaluating the provisions of this guidance.
CLOUD COMPUTING ARRANGEMENTS
In April 2015, the FASB issued ASU 2015-05,
"Customer's Accounting for Fees Paid in a Cloud
Computing Arrangement." This ASU provides
clarification on whether a cloud computing arrangement
includes a software license. If a software license is
included, the customer should account for the license
consistent with its accounting of other software
licenses. If a software license is not included, the
arrangement should be accounted for as a service
contract. This ASU is effective for annual reporting
periods beginning after December 15, 2015, and interim
periods within those years. Early adoption is permitted.
The application of the requirements of this guidance is
not expected to have a material effect on the
consolidated financial statements.
DEBT ISSUANCE COSTS
In April 2015, the FASB issued ASU 2015-03, "Interest
- Imputation of Interest (Subtopic 835-30: Simplifying
the Presentation of Debt Issuance Costs)," which
simplifies the balance sheet presentation of the costs
for issuing debt. This ASU is effective for annual
reporting periods beginning after December 15, 2015,
and interim periods within those years; however, early
adoption is allowed. An entity should apply the new
guidance on a retrospective basis, wherein the balance
sheet of each individual period presented should be