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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
Leases: In February 2016, amended guidance was issued for lease arrangements. The amended standard will
require recognition on the balance sheet for all leases with terms longer than 12 months: a lease liability, which is
a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-
use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the
lease term. The amended guidance is effective for us commencing in the first quarter of 2020, on a modified
retrospective basis. Early adoption is permitted. We are currently evaluating the impact of this amended guidance
on our consolidated financial statements.
Financial Instruments: In January 2016, amended guidance was issued that requires equity investments to
be measured at fair value with changes in fair value recognized in net income and enhanced disclosures about
those investments. This guidance also simplifies the impairment assessments of equity investments without
readily determinable fair value. The investments that are accounted for under the equity method of accounting or
result in consolidation of the investee are excluded from the scope of this amended guidance. The amended
guidance will become effective for us commencing in the first quarter of 2019 and will be adopted through a
cumulative-effect adjustment. Early adoption is not permitted except for certain provisions. We are currently
evaluating the impact of this amended guidance on our consolidated financial statements.
Business Combinations: In September 2015, amended guidance was issued for an acquirer’s accounting for
measurement-period adjustments. The amended guidance eliminates the requirement that an acquirer in a
business combination account for measurement-period adjustments retrospectively and instead requires that
measurement-period adjustments be recognized during the period in which it determines the adjustment. In
addition, the amended guidance requires that the acquirer record, in the same period’s financial statements, the
effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the
change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date.
The amended guidance is effective for us prospectively commencing in the first quarter of 2017. Early adoption
is permitted. We do not expect the adoption of this amended guidance to have a material effect on our
consolidated financial statements.
Inventory: In July 2015, amended guidance was issued for the subsequent measurement of inventory. The
amended guidance requires entities to measure inventory at the lower of cost or 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. The requirement would replace the current lower of cost or
market evaluation. Accounting guidance is unchanged for inventory measured using last-in, first-out (“LIFO”) or
the retail method. The amended guidance will become effective for us commencing in the first quarter of 2018.
Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our
consolidated financial statements.
Fair Value Measurement: In May 2015, amended guidance was issued that limits disclosures and removes
the requirement to categorize investments within the fair value hierarchy if the fair value of the investment is
measured using the net asset value per share practical expedient. The amended guidance will become effective
for us commencing in the first quarter of 2017. Early adoption is permitted. This amended guidance is primarily
expected to affect our annual disclosures related to our pension benefits. We do not expect the adoption of this
amended guidance to have a material effect on our consolidated financial statements.
Fees Paid in a Cloud Computing Arrangement: In April 2015, amended guidance was issued for a
customer’s accounting for fees paid in a cloud computing arrangement. The amended guidance requires
customers to determine whether or not an arrangement contains a software license element. If the arrangement
contains a software element, the related fees paid should be accounted for as an acquisition of a software license.
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