XML 22 R10.htm IDEA: XBRL DOCUMENT v3.4.0.3
Recent Accounting Changes
 3 Months Ended
Mar. 31, 2016
New Accounting Pronouncements And Changes In Accounting Principles [Abstract]  
Recent Accounting Changes

Note 2 – Recent Accounting Changes

 

The Company's 2015 Form 10-K includes discussion of significant recent accounting changes that either have impacted or may impact our financial statements in the future. The following issuances of, and changes in, accounting pronouncements that apply to the Company have occurred since the Company filed its 2015 Form 10-K.

 

Recently Adopted Accounting Guidance

 

Amendments to the Consolidation Analysis (Accounting Standards Update (“ASU”) 2015-02). The Company adopted this new consolidation guidance effective January 1, 2016 with no material effect on its financial statements. Among other provisions, the guidance defines limited partnerships as VIEs unless substantive kick-out rights or participating rights exist. See Note 10 for additional disclosures about various real estate and security limited partnerships that are newly identified as variable interest entities for which the Company is not the primary beneficiary.

 

Improvements to Employee Share-Based Payment Accounting (ASU 2016-09). In March 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance that changes the accounting for certain aspects of share-based payments to employees. The new guidance requires excess tax benefits and tax deficiencies to be recorded in the income statement when the awards vest or are settled, requires cash flows related to the excess tax benefits to be classified as an operating activity in the statement of cash flows, permits repurchasing more of an employee's shares for tax withholding purposes without triggering liability accounting, clarifies that all cash payments made on an employee's behalf for withheld shares are to be presented as a financing activity in the statement of cash flows, and provides an accounting policy election to account for forfeitures as they occur. In addition, the new guidance changes the calculation of common stock equivalents for earnings per share purposes.  The new standard is required to be adopted as of January 1, 2017.

 

As permitted, the Company elected to early adopt the new guidance effective January 1, 2016.  Adopting this new guidance resulted in $23 million of tax benefits recorded in net income in the first quarter of 2016 in Corporate that previously would have been reported in additional paid-in capital.  The change in the calculation of common stock equivalents added approximately one million weighted average shares for the diluted earnings per share calculations.  The Company applied these provisions prospectively.

 

The Company applied the provisions of the new guidance related to the presentation of employee taxes paid for withheld shares retrospectively that resulted in reclassifying $73 million of tax withholding from operating to financing activities in its Consolidated Statement of Cash Flows for the three months ended March 31, 2015.  For the three months ended March 31, 2016, the Company reflected $67 million of tax withholding in financing activities.  The ability under the new guidance to repurchase more employee shares for tax withholding purposes had no impact on the Company's financial statements.  The Company elected to continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period.

 

Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) (ASU 2015-07). This amendment removed the requirement to categorize all investments for which fair value is measured using the practical expedient of net asset value (“NAV”) per share within the fair value hierarchy. The Company adopted this new guidance effective January 1, 2016. Upon adoption, the Company began to separately disclose certain Separate Account investments and provided comparable prior period disclosure. See Note 7 for this separate disclosure information.

       

Recently Issued Accounting Guidance Not Yet Adopted

 

Revenue from Contracts with Customers (ASU 2014-09). During 2016, the Financial Accounting Standards Board (“FASB”) has issued two new ASUs further clarifying the broader revenue guidance: 1) “Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net)” (ASU 2016-08) that clarifies the definition of principals and agents and 2)  “Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing” (ASU 2016-10) that clarifies guidance and adds examples to help companies properly identify performance obligations.  This ASU also illustrates when a license provides a customer with a right to use (point in time) versus a right to access (over time) benefit.

 

These clarifications, together with the broader revenue recognition guidance within ASU 2014-09, are required to be adopted beginning January 1, 2018.  The Company continues to monitor developing implementation guidance and evaluate these new requirements for its non-insurance customer contracts to determine its method and timing of implementation and any resulting estimated effects on its financial statements.