Medtronic 2016 Annual Report Download - page 80

Table of Contents
Medtronic plc
Notes to Consolidated Financial Statements (Continued)
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adopted this accounting guidance in the third quarter of fiscal year 2016. Prior periods have not been retrospectively adjusted for
adoption of this statement.
In March 2016, the FASB issued accounting guidance which eliminates the requirement to apply the equity method of accounting
retrospectively when a reporting entity obtains significant influence over a previously held investment. Instead, the equity method
of accounting should be applied prospectively from the date significant influence is obtained. Investors should add the cost of
acquiring the additional interest in the investee (if any) to the current basis of their previously held interest. For available-for-sale
securities that become eligible for the equity method of accounting, any unrealized gain or loss recorded within accumulated other
comprehensive income (AOCI) should be recognized in earnings at the date the investment initially qualifies for the use of the
equity method. The Company prospectively adopted this accounting guidance in the fourth quarter of fiscal year 2016. Its adoption
did not have a material impact on the Company's consolidated financial statements.
Not Yet Adopted
In May 2014, the FASB issued amended revenue recognition guidance to clarify the principles for recognizing revenue from
contracts with customers. The guidance requires an entity to recognize revenue in an amount that reflects the consideration to
which an entity expects to be entitled in exchange for the transfer of goods or services. The guidance also requires expanded
disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.
Additionally, qualitative and quantitative disclosures are required about customer contracts, significant judgments and changes in
judgments, and assets recognized from the costs to obtain or fulfill a contract. This accounting guidance is effective for the Company
beginning in the first quarter of fiscal year 2019 using one of two prescribed retrospective methods. Early adoption is permitted.
The Company is evaluating the impact of the amended revenue recognition guidance on the Company's consolidated financial
statements.
In February 2016, the FASB issued guidance which requires lessees to recognize right-of-use assets and lease liabilities on the
balance sheet. The guidance is to be applied using a modified retrospective approach at the beginning of the earliest comparative
period in the financial statements and is effective for the Company beginning in the first quarter of fiscal year 2020. Early adoption
is permitted. The Company is evaluating the impact of the lease guidance on the Company's consolidated financial statements.
In March 2016, the FASB issued guidance to simplify the accounting for share based payment transactions by requiring all excess
tax benefits and deficiencies to be recognized in income tax expense or benefit in earnings. An entity can make an entity-wide
accounting policy election to either estimate the expected forfeiture awards or account for forfeitures as they occur. This accounting
guidance is effective for the Company beginning in the first quarter of fiscal year 2018. Early adoption is permitted for any entity
in any interim or annual period. The Company is currently assessing the impact of the guidance on the Company's consolidated
financial statements.
2. Acquisitions and Acquisition-Related Items
The Company had various acquisitions and other acquisition-related activity during fiscal years 2016, 2015, and 2014. Certain
acquisitions were accounted for as business combinations as noted below. In accordance with authoritative guidance on business
combination accounting, the assets and liabilities of the companies acquired were recorded as of the acquisition date, at their
respective fair values, and consolidated. With the exception of the Covidien acquisition, and unless otherwise disclosed, the pro
forma impact of these acquisitions was not significant, either individually or in the aggregate, to the results of the Company for
the fiscal years ended April 29, 2016, April 24, 2015, or April 25, 2014. The results of operations related to each company acquired
have been included in the Company’s consolidated statements of income since the date each company was acquired.
Acquisition of Covidien public limited company in Fiscal Year 2015
On January 26, 2015 (Acquisition Date), pursuant to the transaction agreement, dated as of June 15, 2014 (the Transaction
Agreement), the Company acquired Covidien plc (Covidien), and Covidien and Medtronic, Inc. became subsidiaries of Medtronic
(collectively, the Transactions). In connection with the consummation of the Transactions, Medtronic re-registered as a public
limited company organized under the laws of Ireland.
On January 26, 2015, (a) each Covidien ordinary share was converted into the right to receive $35.19 in cash and 0.956 of a newly
issued Medtronic plc share (the Arrangement Consideration) in exchange for each Covidien share held by such shareholders, and
(b) each share of Medtronic, Inc. common stock was converted into the right to receive one Medtronic plc ordinary share. Based
on the number of outstanding shares of Medtronic, Inc. and Covidien as of January 23, 2015 (the last business day prior to the