Nutrisystem 2014 Annual Report Download - page 53

Recently Issued Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
No. 2014-09, “Revenue from Contracts with Customers,” (“ASU 2014-09”). ASU 2014-09 outlines a new, single
comprehensive model for entities to use in accounting for revenue arising from contracts with customers and
supersedes most current revenue recognition guidance, including industry-specific guidance. This new revenue
recognition model provides a five-step analysis in determining when and how revenue is recognized. The new
model will require an entity to recognize revenue when it transfers promised goods or services to customers in an
amount that reflects what it expects in exchange for the goods or services. It also requires more detailed
disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of
revenue and cash flows arising from contracts with customers. This guidance is effective for annual periods
beginning on or after December 15, 2016. The Company is currently assessing the impact that adopting this new
accounting guidance will have on the consolidated financial statements and footnote disclosures.
In July 2013, the FASB issued ASU No. 2013-11, “Income Taxes,” (“ASU 2013-11”) which provides that an
unrecognized tax benefit, or portion of an unrecognized tax benefit, would be presented in the financial
statements as a reduction of a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax
credit carryforward rather than a liability when the unrecognized tax benefit would reduce the net operating loss
or other carryforward under the tax law of the applicable jurisdiction and the Company intends to use the
deferred tax asset for this purpose. If an applicable deferred tax asset is not available or the tax law does not
require the company to use, and the company does not expect to use, the applicable deferred tax asset for such
purpose, then the unrecognized tax benefit would be presented as a liability in the financial statements and would
not be combined with an unrelated deferred tax asset. ASU 2013-11 is effective for annual reporting periods, and
interim periods within those years, beginning after December 15, 2013. ASU 2013-11 should be applied
prospectively to all unrecognized tax benefits that exist at the effective date; however, retrospective application is
permitted. Effective January 1, 2014, the Company adopted ASU 2013-11 and reduced its deferred tax asset for
the unrecognized tax benefit. The prior year consolidated balance sheet was reclassified to conform to the current
year presentation.
Use of Estimates
The preparation of financial statements in accordance with U.S. generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
at the date of the financial statements and the reported amounts of revenue and operating expenses during the
reporting period. Actual results could differ from these estimates.
3. CASH, CASH EQUIVALENTS AND SHORT TERM INVESTMENTS
At December 31, 2014, cash, cash equivalents and short term investments consisted of the following:
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
Cash .................................................. $12,471 $ 0 $ 0 $12,471
Money market account .................................... 149 0 0 149
Government and agency securities ........................... 9,912 31 (8) 9,935
Corporate debt securities .................................. 6,709 25 (42) 6,692
$29,241 $56 $(50) $29,247
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