Recent Accounting Pronouncements

6 Months Ended

Mar. 31, 2020

Accounting Changes and Error Corrections [Abstract]

Recent Accounting Pronouncements

Note 3. Recent Accounting Pronouncements

Leases

The Company adopted ASU 2016-02 Leases (Topic 842) on September 25, 2019, the first day of fiscal year 2020. This update requires a lessee to recognize on the balance sheet the right-of-use assets and lease liabilities for leases with a lease term of more than twelve months. This update also requires additional disclosures about the amount, timing, and uncertainty of cash flows arising from leases. This standard is effective for interim and annual periods beginning after December 15, 2018.

We elected the optional transition method option to apply the standard as of the effective date and therefore, we will not apply the standard to the comparative periods presented in our consolidated financial statements. The adoption of this standard had a significant impact on the Company’s consolidated balance sheet as we recognized the right-of-use assets and lease liabilities for our operating leases. The adoption had an immaterial impact on the condensed consolidated statement of operations, cash flows and overall liquidity.

We elected to utilize the three practical expedients permitted within the standard, which eliminates the requirement to reassess the conclusions about historical lease identifications, lease classifications, and initial direct costs. We did not elect the hindsight practical expedient, which permits the use of hindsight when determining lease terms and impairments of right-of-use assets. Additionally, we elected to utilize the short-term lease exception policy, which allows us to not apply the recognition requirements of this standard to leases with a term of 12 months or less.

The effect of the changes made to the Company's condensed consolidated balance sheet as of September 25, 2019 for the adoption of ASU 2016-02 Leases (Topic 842) are as follows:

(Tabular dollar amounts in thousands)

Assets	September 24, 2019		Adoption of Leases (Topic 842)			September 25, 2019
Non-current assets:
Operating lease assets		-		51,165			51,165
Liabilities
Current Liabilities:
Operating lease liability		-		4,346			4,346
Non-current liabilities:
Accrued deferred rent		2,881		(2,881	)		-
Deferred lease incentives		5,698		(5,698	)		-
Operating lease liabilities, less current portion		-		55,398			55,398

The Company reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on the Company's consolidated financial statements.