Basis of Presentation and New Accounting Pronouncements (Policies)

9 Months Ended

Sep. 30, 2015

Basis Of Presentation And New Accounting Pronouncements [Abstract]

Debt Issuance Costs

Debt Issuance Costs

In April 2015, the Financial Accounting Standards Board (FASB) issued ASU 2015-03, “Interest – Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs.”   To simplify the presentation of debt issuance costs and improve consistency with International Financial Reporting Standards, ASU 2015-03 requires that debt issuance costs be presented in the balance sheet as a deduction from the carrying amount of a Company’s corresponding debt liability, similar to the current presentation of a debt discount or premium.   Amortization of debt issuance costs will be reported as interest expense.  In August, ASU 2015-15, “Interest – Imputation of Interest: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements” was issued to incorporate a Securities and Exchange Commission (SEC) Staff Announcement regarding ASU 2015-03.  The SEC staff noted that because ASU 2015-03 does not address the presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements, it would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement.  

ASU 2015-03 and 2015-15 are effective for fiscal and interim periods beginning after December 15, 2015.  Early adoption of the amendments in these updates is permitted.  Entities are required to comply with the applicable disclosures for a change in an accounting principle, including a description of prior period information that has been retrospectively adjusted.  We believe adoption of ASU 2015-03 and 2015-15 will have an immaterial impact on the presentation of debt on the Company’s consolidated condensed balance sheet.  

Revenue from Contracts with Customers

Note 2 – Basis of Presentation and New Accounting Pronouncements – Continued

Revenue from Contracts with Customers

In May, 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers.”  ASU 2014-09 was developed to enable financial statement users to better understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.  The update’s core principal is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.  Companies are to use a five-step contract review model to ensure revenue gets recognized, measured and disclosed in accordance with this principle.  

ASU 2014-09 was to be effective for fiscal years and interim periods beginning after December 15, 2016.  On July 9, 2015, the FASB decided to defer by one year the effective date for both public and nonpublic entities.  As a result, ASU 2014-09 is now effective for fiscal years and interim periods beginning after December 15, 2017.   The amendments in this update will be applied retrospectively either to each prior reporting period presented or to disclose the cumulative effect recognized at the date of initial application.  Gentherm has developed a plan to complete the five-step contract review process for all existing contracts with customers.  We are still in the process of determining the impact the implementation of ASU 2014-09 will have on the Company’s financial statements.