Valero 2015 Annual Report Download - page 77

Table of Contents
VALERO ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In July 2015, the provisions of ASC Topic 330, “Inventory” were amended to simplify the measurement of inventory. The guidance
does not apply to inventory where the cost of such inventory is measured using the LIFO or the retail inventory methods. The guidance
applies to inventory where the cost of such inventory is measured using the first-in, first-out or average cost methods, and it requires the
inventory to be measured at the lower of cost and net realizable value rather than the lower of cost or market. Net realizable value is
defined as the estimated selling prices in the ordinary course of business, less reasonably predicable costs of completion, disposal, and
transportation. These provisions are to be applied prospectively and are effective for annual reporting periods beginning after
December 15, 2016, and interim periods within those annual periods, with early adoption permitted. The adoption of this guidance
effective January 1, 2017 will not affect our financial position or results of operations.
In September 2015, the provisions of ASC Topic 805, “Business Combinations,” were amended to simplify the accounting and
reporting of adjustments made to provisional amounts recognized in a business combination. The amendment requires that an acquirer
(i) 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 and (ii) present separately on the statement of income or disclose in the notes the portion of the amount recorded in
current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional
amounts had been recognized as of the acquisition date. These provisions are effective for annual reporting periods beginning after
December 15, 2015, and interim periods within those annual periods, and should be applied prospectively to adjustments made to
provisional amounts that occur after the effective date. Earlier application is permitted for financial statements that have not yet been
issued. The adoption of this guidance effective January 1, 2016 will not affect our financial position or results of operations; however, it
may result in changes to the manner in which adjustments to provisional amounts recognized in a future business combination, if any,
are presented in our financial statements.
In November 2015, the provisions of ASC Topic 740, “Income Taxes,” were amended to simplify the presentation of deferred income
taxes. The amendments require that deferred tax liabilities and assets be classified as noncurrent in a classified balance sheet. The
amendments are effective for financial statements for annual periods beginning after December 15, 2016, and interim periods within
those annual periods, with early adoption permitted as of the beginning of any interim or annual period. The amendments may be
applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. Entities applying the
guidance retrospectively should disclose in the first interim and first annual period of adoption the nature of and reason for the change
in accounting principle and quantitative information about the effects of the accounting change on prior periods. Effective January 1,
2016, the adoption of this guidance on a retrospective basis will not materially affect our financial position and will not impact our
results of operations. Upon adoption, our current deferred income tax assets of $74 million and current deferred income tax liabilities of
$366 million as of December 31, 2015 will be reclassified to noncurrent deferred income tax liabilities. Adoption of this guidance
simplifies the future presentation of our deferred income tax assets and liabilities.
In January 2016, the provisions of ASC Subtopic 825-10, “Financial Instruments–Overall,” were amended to enhance the reporting
model for financial instruments regarding certain aspects of recognition, measurement, presentation, and disclosure. The amendment
(i) requires equity investments (except those accounted for under the equity method or that are consolidated) to be measured at fair
value with changes
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