Note B - Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Accounting Standards Update and Change in Accounting Principle [Text Block]

Note B - Recent Accounting Pronouncements

Recently issued accounting pronouncements

not

yet adopted

In

December 2019,

the Financial Accounting Standards Board (“FASB”) issued ASU

2019

-

12,

which enhances and simplifies various aspects of the income tax accounting guidance, including requirements such as a tax basis step-up in goodwill obtained in a transaction that is

not

a business combination, ownership changes in investments, and interim-period accounting for enacted changes in tax law. The standard will be effective for us in the fiscal year

2021,

although early adoption is permitted. We have

not

elected early adoption and we do

not

expect that the adoption of this accounting standard update (“ASU”) will have a significant impact on our condensed consolidated financial statements.

In

August 2018,

the FASB issued ASU

2018

-

14,

Compensation—Retirement Benefits—Defined Benefit Plans—General 

(Topic

715

-

20

): 

Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans 

 (“ASU

2018

-

14”

), which modified the disclosure requirements for defined benefit pension plans and other postretirement plans.  ASU

2018

-

14

is effective for fiscal years ending

December 15, 2020,

and early adoption is permitted.  As we did

not

elect to adopt ASU

2018

-

14

early, we are currently evaluating the impact of ASU

2018

-

14

on our condensed consolidated financial statements.

Recently adopted accounting pronouncements

Reference Rate Reform

In

March 2020,

the FASB issued ASU

2020

-

04,

“

Reference Rate Reform (Topic

848

) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting Summary

”.  This ASU provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. London Inter-bank Offered Rate (“LIBOR”) and other inter-bank offered rates are widely used benchmarks or reference rates in the United States and globally.  With global capital markets expected to move away from LIBOR and other inter-bank offered rates and toward more observable or transaction-based rates that are less susceptible to manipulation, the FASB launched a broad project in late

2018

to address potential accounting challenges expected to arise from the transition.  The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued.  This ASU is effective

March 12, 2020

through

December 31, 2022. 

We adopted this ASU on

March 12, 2020

and it did

not

have a  material impact on our condensed consolidated financial statements.

Income taxes

In

February 2018,

the FASB issued ASU 

2018

-

02,

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

. This ASU allows for reclassification of stranded tax effects on items resulting from the change in the corporate tax rate as a result of H.R.

1,

originally known as the Tax Cuts and Jobs Act of

2017

 

(the “Tax Reform Act”), 

from accumulated other comprehensive income to retained earnings. Tax effects unrelated to H.R.

1

are permitted to be released from accumulated other comprehensive income using either the specific identification approach or the portfolio approach, based on the nature of the underlying item. ASU

2018

-

02

is effective for interim and annual reporting periods beginning after

December 

15,

2018,

 with early adoption permitted. We adopted ASU

2018

-

02

in the

first

quarter of

2019.

See Note I,

Income Taxes,

 for a discussion of the impacts of this ASU.

Stock-based Compensation

In

June 2018,

the FASB issued ASU

2018

-

07,

Compensation-Stock Compensation (Topic

718

): Improvements to nonemployee share-based payment accounting,

which supersedes ASC

505

-

50,

Accounting for Distributions to Shareholders with Components of Stock and Cash,

and expands the scope of ASC

718

to include all share-based payment arrangements related to the acquisition of goods and services from both non-employees and employees. As a result, most of the guidance in ASC

718

associated with employee share-based payments, including most of its requirements related to classification and measurement, applies to non-employee share-based payment arrangements. This ASU is effective for annual periods beginning after

December 15, 2018,

and the interim periods within those fiscal years with early adoption permitted after the entity has adopted ASC

606.

We adopted this standard as of

January 1, 2019

and did

not

have a material impact on our condensed consolidated financial statements and related disclosures.

Leases

In

February 2016,

the FASB issued ASU

2016

-

02,

Leases (Topic

842

)

and subsequent amendment ASU

2018

-

11,

which requires all operating leases to be recorded on the balance sheet unless the practical expedient is elected for short-term operating leases. The lessee will record a liability for its lease obligations (initially measured at the present value of the future lease payments

not

yet paid over the lease term), and an asset for its right to use the underlying asset equal to the lease liability, adjusted for lease payments made at or before lease commencement). This ASU is effective for interim and annual periods beginning after

December 15, 2018,

with early adoption permitted. This change is required to be applied using a modified retrospective approach for leases that exist or are entered after the beginning of the earliest comparative period in the financial statements. Full retrospective application is prohibited. In

July 2018,

the FASB approved an optional transition method to initially account for the impact of the adoption with a cumulative-effect adjustment to the

January 

1,

2019,

rather than the

January 

1,

2017,

financial statements. This would eliminate the need to restate amounts presented prior to

January 

1,

2019.

We adopted the standard effective

January 1, 2019,

and we elected the optional transition method and the practical expedients permitted under the transition guidance within the standard. Accordingly, we accounted for our existing operating leases as operating leases under the new guidance, without reassessing (a) whether the contracts contain a lease under ASC Topic

842,

(b) whether classification of the operating leases would be different in accordance with ASC Topic

842,

or (c) whether the unamortized initial direct costs before transition adjustments (as of

December 31, 2019

) would have met the definition of initial direct costs in ASC Topic

842

at lease commencement.

The standard had a material impact on our condensed consolidated balance sheets, but did

not

have an impact on our Condensed Consolidated Statements of Comprehensive Income (Loss) or cash flows from operations. The cumulative effect of the changes on our retained earnings was

$22,000

associated with capital gain. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases. Our accounting for finance leases remained substantially unchanged. See Note D,

Leases

for further discussion.

Restricted Cash

In the

first

quarter of

2019,

 the Company adopted ASU

2016

-

18,

Statement of Cash flows (Topic

230

): Restricted Cash,

which enhances and clarifies the guidance on the classification and presentation of restricted cash in the statement of cash flows and requires additional disclosures about restricted cash balances.  The adoption of ASU

2016

-

18

did

not

have a material impact on our condensed consolidated financial statements and related disclosures.