Invacare 2015 Annual Report Download - page 82

INVACARE CORPORATION AND SUBSIDIAIRIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
FS-10
Reclassifications: In May 2015, the company's board of directors authorized the sale of the company's former rentals
businesses. Accordingly, the rentals businesses were treated as held for sale. The company's December 31, 2014 Balance Sheet
was restated to reflect this treatment. See Operations Held for Sale in the Notes to the Consolidated Financial Statements for a
description of the impact on the consolidated balance sheet.
Recent Accounting Pronouncements: In April 2014, the FASB issued ASU 2014-08 changing the presentation of discontinued
operations on the statements of income and other requirements for reporting discontinued operations. Under the new standard, a
disposal of a component or a group of components of an entity is required to be reported in discontinued operations if the disposal
represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the component
meets the criteria to be classified as held for sale or is disposed. The amendments in this update also require additional disclosures
about discontinued operations and disposal of an individually significant component of an entity that does not qualify for
discontinued operations. This standard must be prospectively applied to all reporting periods presented in financial reports issued
after the effective date. Early adoption was permitted for disposals that were not reported in financial statements previously issued
or available for issuance. The new accounting guidance was effective for interim and annual periods beginning after December
15, 2014. This standard can impact the presentation of the company's financial statements but does not affect the calculation of
net income, comprehensive income or earnings per share. The company adopted ASU 2014-08 effective January 1, 2015 which
impacted the company’s Condensed Consolidated Statement of Comprehensive Income (Loss), Balance Sheets and Statement of
Cash Flows. Specifically, the disposal of the United States Rentals businesses, in the third quarter of 2015, was not deemed to be
a discontinued operation.
In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers." ASU 2014-09 requires a company
to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration
to which the company expects to be entitled in exchange for those goods and services. The guidance requires five steps to be
applied: 1) identify the contract(s) with customers, 2) identify the performance obligations in the contract, 3) determine the
transaction price, 4) allocate the transaction price to the performance obligation in the contract and 5) recognize revenue when (or
as) the entity satisfies a performance obligation. The guidance also requires both quantitative and qualitative disclosures, which
are more comprehensive than existing revenue standards. The disclosures are intended to enable financial statement users to
understand the nature, timing and uncertainty of revenue and the related cash flow. An entity can apply the new revenue standard
retrospectively to each prior reporting period presented or retrospective with the cumulative effect of initially applying the standard
recognized at the date of initial application in retained earnings. The new accounting guidance is effective for annual periods
beginning after December 15, 2017, due to an approved one-year deferral, and early adoption is not permitted. The company is
currently reviewing the impact of the adoption of ASU 2014-09 on the company's financial statements.
In April 2015, the FASB issued ASU 2015-03, "Simplifying the Presentation of Debt Issuance Costs." ASU 2015-03 requires
debt issuance costs to be presented on the balance sheet as a direct deduction from the carrying amount of the related debt liability,
which is similar presentation of debt discounts or premiums. Debt issuance costs are currently reported on the balance sheet as
assets and amortized as interest expense. ASU 2015-03 does not change the recognition and measurement guidance for debt
issuance costs and requires retrospective application to all periods presented upon adoption. The new accounting guidance is
effective for fiscal periods beginning after December 15, 2015 and early adoption is permitted. The company has determined the
adoption of ASU 2015-03 will not have a material impact on the company's financial statements.
In July 2015, the FASB issued ASU 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory,” to simplify
the subsequent measurement of inventory. Entities are now required to subsequently measure inventory at the lower of cost or net
realizable value rather than at the lower of cost or market. This update is effective for annual reporting periods beginning after
December 15, 2016, including interim periods within those annual periods, and early adoption is permitted. The company is
currently reviewing the impact of the adoption of ASU 2015-11 on the company's financial statements.
In November 2015, the FASB issued ASU 2015-17, "Balance Sheet Classification of Deferred Taxes." ASU 2015-17 requires
deferred tax assets and liabilities to be classified as noncurrent amounts on the balance sheet. The new accounting guidance is
effective for fiscal periods beginning after December 15, 2016 and early adoption is permitted. The company adopted ASU 2015-17,
on a prospective basis, effective October 1, 2015 and thus the company's deferred tax assets and liabilities have been classified as
long-term in its Balance Sheet as of December 31, 2015. No prior periods were retrospectively adjusted.
In February 2016, the FASB issued ASU 2016-02, "Leases." ASU 2016-02 requires lessees to put most leases on their balance
sheet while recognizing expense in a manner similar to existing accounting. The new accounting guidance is effective for fiscal
periods beginning after December 15, 2018 and early adoption is permitted. The company is currently reviewing the impact of the
adoption of ASU 2016-02 on the company's financial statements.