John Deere 2015 Annual Report Download - page 38

sheet. The ASU was early adopted in the fourth quarter of fiscal customers about whether a cloud computing arrangement
year 2015 and was applied retrospectively (see pension and includes a software license. If an arrangement includes a
health care assets in Note 7). The adoption did not have a software license, the accounting for the license will be
material effect on the consolidated financial statements. consistent with licenses of other intangible assets. If the
arrangement does not include a license, the arrangement will be
New Accounting Standards to be Adopted accounted for as a service contract. The effective date will be
In May 2014, the FASB issued ASU No. 2014-09, Revenue from the first quarter of fiscal year 2017 and will be adopted
Contracts with Customers (Topic 606), which supersedes the prospectively. The adoption will not have a material effect on the
revenue recognition requirements in ASC 605, Revenue company’s consolidated financial statements.
Recognition. This ASU is based on the principle that revenue is
recognized to depict the transfer of goods or services to In May 2015, the FASB issued ASU No. 2015-09,
customers in an amount that reflects the consideration to which Disclosures about Short-Duration Contracts, which amends
the entity expects to be entitled in exchange for those goods or ASC 944, Financial Services – Insurance. This ASU requires
services. The ASU also requires additional disclosure about the disclosure of additional information about unpaid claims and
nature, amount, timing and uncertainty of revenue and cash claims adjustment expenses, including a rollforward of the
flows arising from customer contracts, including significant liability of the claims adjustment liability. The effective date will
judgments and changes in judgments and assets recognized be the fourth quarter of fiscal year 2017. The adoption will not
from costs incurred to obtain or fulfill a contract. In August have a material effect on the company’s consolidated financial
2015, the FASB issued ASU No. 2015-14, Deferral of the statements.
Effective Date, which amends ASU No. 2014-09. As a result, the In July 2015, the FASB issued ASU No. 2015-11, Simplifying
effective date will be the first quarter of fiscal year 2019 with the Measurement of Inventory, which amends ASC 330,
early adoption permitted in the first quarter of fiscal year 2018. Inventory. This ASU simplifies the subsequent measurement of
The adoption will use one of two retrospective application inventory by using only the lower of cost or net realizable value.
methods. The company has not determined the potential effects The ASU does not apply to inventory measured using the last-in,
on the consolidated financial statements. first-out method. The effective date will be the first quarter of
In June 2014, the FASB issued ASU No. 2014-12, fiscal year 2018 with early adoption permitted. The adoption will
Accounting for Share-Based Payments When the Terms of an not have a material effect on the company’s consolidated
Award Provide That a Performance Target Could Be Achieved financial statements.
after the Requisite Service Period, which amends ASC 718, In August 2015, the FASB issued ASU No. 2015-15,
Compensation – Stock Compensation. This ASU requires that a Presentation and Subsequent Measurement of Debt Issuance
performance target that affects vesting and that could be Costs Associated with Line-of-Credit Arrangements, which
achieved after the requisite service period be treated as a amends ASC 835-30, Interest – Imputation of Interest. This ASU
performance condition. Therefore, the performance target clarifies the presentation and subsequent measurement of debt
should not be reflected in estimating the grant-date fair value of issuance costs associated with lines of credit. These costs may
the award. Compensation cost should be recognized in the be presented as an asset and amortized ratably over the term of
period in which it becomes probable that the performance target the line of credit arrangement, regardless of whether there are
will be achieved and should represent the compensation cost outstanding borrowings on the arrangement. The effective date
attributable to the period(s) for which the requisite service has will be the first quarter of fiscal year 2017 and will be applied
already been rendered. The total compensation cost recognized retrospectively. The adoption will not have a material effect on
during and after the requisite service period should reflect the the company’s consolidated financial statements.
number of awards that are expected to vest and should be 4. DISPOSITIONS
adjusted to reflect those awards that ultimately vest. The
In March 2015, the company closed the sale of all of the stock
effective date will be the first quarter of fiscal year 2017. The
of its wholly-owned subsidiaries, John Deere Insurance Company
adoption will not have a material effect on the company’s
and John Deere Risk Protection, Inc. (collectively the Crop
consolidated financial statements.
Insurance operations) to Farmers Mutual Hail Insurance Company
In April 2015, the FASB issued ASU No. 2015-03, of Iowa. These operations were included in the company’s
Simplifying the Presentation of Debt Issuance Costs, which financial services operating segment. At January 31, 2015, the
amends ASC 835-30, Interest – Imputation of Interest. This ASU total assets of $381 million and liabilities of $267 million were
requires that debt issuance costs related to borrowings be classified as held for sale in the consolidated financial
presented in the balance sheet as a direct deduction from the statements, which consisted of $13 million of cash and cash
carrying amount of the borrowing. This treatment is consistent equivalents, $79 million of marketable securities, $265 million of
with debt discounts. The ASU does not affect the amount or other receivables, $4 million of other intangible assets-net and
timing of expenses for debt issuance costs. The effective date $20 million of other assets. The related liabilities held for sale
will be the first quarter of fiscal year 2017 and will be applied consisted of accounts payable and accrued expenses. The total
retrospectively. The adoption will not have a material effect on amount of proceeds from the sale was approximately
the company’s consolidated financial statements. $154 million, including $5 million of cash and cash equivalents
In April 2015, the FASB issued ASU No. 2015-05, sold, with a gain recorded in other income of $42 million pretax
Customer’s Accounting for Fees Paid in a Cloud Computing and $40 million after-tax. The tax expense was partially offset by
Arrangement, which amends ASC 350-40, Intangibles-Goodwill a change in a valuation allowance on a capital loss carryforward.
and Other-Internal-Use Software. This ASU provides guidance to
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