Recently Issued Accounting Pronouncements

3 Months Ended

Mar. 31, 2019

Accounting Changes and Error Corrections [Abstract]

Recently Issued Accounting Pronouncements

NOTE 16 – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments – Credit Losses (ASC Topic 326). This replaces the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. We will be required to use a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. Credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. The standard will be effective for the Company beginning January 1, 2020. Adoption of the standard will be applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the effective date to align our credit loss methodology with the new standard. We are currently evaluating the impact of this standard on our consolidated financial statements, including accounting policies, processes, and systems.

In February 2018, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2018–02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASC Topic 220), which was adopted by Innospec on January 1, 2019. The update allows entities to elect to reclassify certain stranded income tax effects of the Tax Cuts and Jobs Act on items within accumulated other comprehensive income to retained earnings. Innospec has decided not to make such election for the period.