Effect of New Accounting Pronouncements

12 Months Ended

Oct. 31, 2019

Accounting Changes and Error Corrections [Abstract]

Effect of New Accounting Pronouncements

Note 14. Effect of New Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," which supersedes the lease requirements in "Leases (Topic 840)." This ASU was subsequently amended by ASU 2017-13, ASU 2018-01, ASU 2018-10, ASU 2018-11 (collectively, Topic 842). Topic 842 requires a lessee to recognize a right-of-use asset and a lease payment liability for most operating leases in the consolidated balance sheets. Topic 842 also makes minor changes to lessor accounting and aligns key aspects of the lessor accounting model with the new revenue recognition guidance. Topic 842 is effective for the Company on November 3, 2019.

The Company will adopt this new lease standard using the modified retrospective transition method without restatement of comparative periods, which is allowed under Topic 842. The Company will also elect the package of practical expedients to combine lease and non-lease components in the existing leases upon adoption. The Company’s lease portfolio primary consisted of facility leases and the impact of adoption is expected to be material to the consolidated balance sheets.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13) and subsequently issued amendments to the initial guidance: ASU 2018-19, ASU 2019-04 and ASU 2019-05 (collectively, Topic 326). Topic 326 requires measurement and recognition of expected credit losses for financial assets held. Topic 326 is effective for fiscal 2021, and earlier adoption is permitted beginning in the first quarter of fiscal 2020. The company is currently evaluating the impact of the pending adoption of Topic 326 on the consolidated financial statements.