Accounting Policies (Policy)

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Basis of Accounting and Consolidation

Basis of Accounting and Consolidation

The unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and with rules and regulations of the Securities and Exchange Commission and consolidate the financial statements of the Parent and all of its controlled subsidiaries. In the opinion of management, the financial statements reflect all adjustments, consisting of normal recurring accruals, which are necessary for the fair statement of the financial condition and results of operations for the periods presented. All significant intercompany transactions, balances, revenues and expenses are eliminated upon consolidation. The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

Accounting Pronouncements Recently Adopted and Pending Accounting Pronouncements

Accounting Pronouncements Recently Adopted

Leases. In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-02, “Leases” (Topic 842). Topic 842 requires that lessees recognize lease assets and lease liabilities on the balance sheet for all leases with a lease term greater than 12 months. The company adopted the leases standard on January 1, 2019 using the modified retrospective approach.

The company recorded a right-of-use asset of approximately $200.9 million and lease liability of approximately $251.5 million, primarily related to real estate operating leases on January 1, 2019 with no cumulative-effect adjustment to opening retained earnings. The impact of the adoption of the standard on the Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2019 was not material. The company continues to recognize lease expenses on a straight-line basis over the lease term. The initial recognition of the right-of-use asset and lease liability represented a non-cash activity related to the statement of cash flows.

As of May 24, 2019, the company recorded an additional right-of-use asset of $144.3 million and lease liability of approximately $144.0 million in connection with the OppenheimerFunds acquisition. These amounts are included in Other assets and Accounts payable and accrued expenses in the table of identified assets acquired and liabilities assumed in Note 2, “Business Combinations.” The initial recognition of the right-of-use asset and lease liability represented a non-cash activity related to the statement of cash flows.

The package of three practical expedients applicable to the company have been elected which resulted in the company not having to reassess whether expired or existing contracts upon adoption contained a lease as well as retaining the historical classifications of the company’s leases and initial direct costs. The company also elected the hindsight practical expedient in evaluating lessee options.

The company elected both at transition and on an ongoing basis, to combine lease and non-lease components in calculating the lease liability and right-of-use asset for all operating leases.

Pending Accounting Pronouncements

Financial Instruments. In June 2016, FASB issued Accounting Standards Update 2016-13, “Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments” (ASU 2016-13). ASU 2016-13 amends guidance reporting credit losses for financial assets measured at amortized cost and available for sale securities. The new guidance adds an impairment model that is based on expected losses rather than incurred losses. ASU 2016-13 is effective for fiscal years and interim periods within those years beginning after December 15, 2019 and requires a modified retrospective approach to adoption. The company has determined that there will be no material impact upon adoption of this amendment.