Note 16 - Accounting Pronouncements

12 Months Ended

Mar. 01, 2020

Notes to Financial Statements

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

1 6 . ACCOUNTING PRONOUNCEMENTS

Recently Adopted

In

February 2016,

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

No.

2016

-

02,

Leases, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a lease (i.e., lessees and lessors). The new standard requires lessees to classify leases as either finance leases or operating leases and record a right-of-use asset and a lease liability for all leases with terms greater than

12

months regardless of their classification. An accounting policy election

may

be made to account for leases with a term of

12

months or less similar to existing guidance for operating leases today. ASU

No.

2016

-

02

supersedes the existing guidance on accounting for leases. In

July 2018,

the FASB issued ASU

No.

2018

-

11,

Leases (Topic

842

): Targeted Improvements, which allows for an optional transition method for the adoption of Topic

842.

The

two

permitted transition methods are now the modified retrospective approach, which applies the new lease requirements at the beginning of the earliest period presented, and the optional transition method, which applies the new lease requirements through a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. ASU

2016

-

02

is effective for the Company’s fiscal year ending

March 1, 2020

and the interim periods within that year. The Company adopted this standard in the

first

quarter of the

2020

fiscal year using the optional transition method. The optional transition method enables the Company to adopt the new standard as of the beginning of the period of adoption and does

not

require restatement of prior period financial information. As a result, prior period financial information has

not

been restated and continues to be reported under the accounting guidance that was effective during those periods. The Company also elected the practical expedients that allow the Company to carry forward the historical lease classification. At adoption, the Company elected the following practical expedients: (

1

) the “package of practical expedients”, pursuant to which the Company did

not

need to reassess its prior conclusions about lease identification, lease classification and initial direct costs, (

2

) creation of an accounting policy for short-term leases resulting in lease payments being recorded as an expense on a straight-line basis over the lease term, and (

3

) to account separately for lease and non-lease components for all leases. The Company has established an inventory of existing leases and implemented a new process of evaluating the classification of each lease. The financial impact of the adoption of the new standard in the

2020

fiscal year increased total assets and total liabilities by approximately

$551

as of adoption. The financial impact of the adoption primarily relates to the capitalization of right-of-use assets and recognition of lease liability related to operating leases. See Note

11,

Leases and Commitments, for additional information with respect to the impact of the adoption of the lease accounting guidance and the disclosures required by ASU

2016

-

02

and the related amendments.

In

January 2017,

the FASB issued ASU

No.

2017

-

04,

Intangibles – Goodwill and Other (Topic

350

): Simplifying the Test for Goodwill Impairment.  This ASU eliminates Step

2

from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should

not

exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable.  This ASU is effective for public business entities that are SEC filers for annual or any interim goodwill impairment tests in fiscal years beginning after

December 15, 2019. 

The Company adopted this ASU in the

fourth

quarter of its

2020

fiscal year.  As a result of that election, the adoption of ASU

2017

-

04

did

not

have an impact on the Company’s consolidated financial statements.  See Note

1,

Summary of Significant Accounting Practices, for additional information with respect to the adoption of the goodwill guidance and the disclosures required by ASU

2017

-

04.

In

February 2018,

the FASB issued ASU

No.

2018

-

02,

Income Statement - Reporting Comprehensive Income (Topic

220

): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This ASU allows for reclassification of stranded tax effects resulting from U.S. Tax Reform from accumulated other comprehensive loss to retained earnings, but it does

not

require this reclassification. This ASU is effective for the Company’s fiscal year ended

March 1, 2020

and the interim periods within that year. The Company adopted this ASU in the

first

quarter of its

2020

fiscal year and elected to reclassify the stranded tax effects resulting from U.S. Tax Reform. As a result of that election, the adoption of ASU

2018

-

02

did

not

have an impact on the Company’s consolidated financial statements and disclosures.

Recently Issued

In

June 2018,

the FASB issued ASU

No.

2016

-

13,

Financial Instruments – Credit Losses (Topic

326

): Measurement of Credit Losses on Financial Instruments.  This ASU improves financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The ASU requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates.  This ASU is effective for SEC filers for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2019 (

i.e.,

January 1, 2020,

for calendar year entities). For public companies that are

not

SEC filers, the ASU is effective for fiscal years beginning after

December 15, 2020,

and interim periods within those fiscal years. For all other organizations, the ASU on credit losses will take effect for fiscal years beginning after

December 15, 2020,

and for interim periods within fiscal years beginning after

December 15, 2021. 

The adoption of ASU

2016

-

13

will

not

have an impact on the Company’s consolidated financial statements and disclosures.

In

August 2018,

the FASB issued ASU

No.

2018

-

13,

Fair Value Measurement (Topic

820

): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. This ASU modifies the disclosure requirements for fair value measurements by removing the requirement to disclose the amount and reasons for transfers between Level

1

and Level

2

of the fair value hierarchy and the policy for timing of such transfers. This ASU expands the disclosure requirements for Level

3

fair value measurements, primarily focused on changes in unrealized gains and losses included in other comprehensive income (loss). This ASU is effective for the Company’s fiscal year ending

February 28, 2021

and for the interim periods within that year. Early adoption is permitted. ASU

2018

-

13

is generally required to be applied retrospectively to all periods presented upon their effective date with the exception of certain amendments, which should be applied prospectively to the most recent interim or annual period presented in the year of adoption. The Company is currently evaluating the potential impact of adopting this guidance on its consolidated financial statements and disclosures.

In

December 2019,

the FASB issued ASU

No.

2019

-

12,

Income Taxes (Topic

740

): Simplifying the Accounting for Income Taxes.  The changes simplify the accounting for a number of topics, some of which are narrow. Some of the proposed amendments eliminate specific exceptions to the general principles of income tax accounting while other changes clarify a handful of narrow issues within the broad topic of income tax accounting. The amendments in ASU

2019

-

12

are effective for public business entities for fiscal years beginning after

December 15, 2020,

and interim periods within those fiscal years. For all other entities, the requirements are effective for fiscal years beginning after

December 15, 2021

and interim periods within fiscal years beginning after

December 15, 2022.

Early adoption is permitted for: (

1

) public business entities for periods for which financial statements have

not

yet been issued, and (

2

) all other entities for periods for which financial statements have

not

yet been made available for issuance. The Company is currently evaluating the potential impact of adopting this guidance on its consolidated financial statements and disclosures.