NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)
For operations outside the United States that prepare financial statements in currencies other than the U.S. dollar, results of operations and
cash flows are translated at average exchange rates during the period and assets and liabilities are translated at spot exchange rates at the end of the period. Foreign currency translation adjustments are included as a separate component of
accumulated other comprehensive income (loss) in total equity. The effects of changes in exchange rates between the designated functional currency and the currency in which a transaction is denominated are recorded as foreign currency transaction
gains (losses) in the Consolidated Statements of Income and Comprehensive Income and were immaterial for the three months ended March 31, 2019 and 2018.
Recent Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-02,
Leases (Topic 842). This ASU amends the existing guidance by requiring the recognition of all leases, including operating leases, on the balance sheet as right of use asset and lease liability and disclosing key information about the lease
arrangements. The Company adopted this ASU on January 1, 2019 using the modified retrospective approach with no cumulative effect on retained earnings. See Note 3Leases for more information.
In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted
Improvements to Accounting for Hedging Activities, which amends and simplifies existing guidance to better align an entitys risk management activities and financial reporting for hedging relationships through changes to both the designation
and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The Company adopted this ASU as of January 1, 2019 with an immaterial impact on the Companys Consolidated Financial Statements. See Note
7Derivatives and Hedging Activities for more information.
In August 2018, the SEC issued a final rule amending certain of its
disclosure requirements. This rule eliminates or simplifies redundant or outdated disclosure requirements. The rule also requires companies to present changes in shareholders equity on a quarterly basis for both current and prior year periods.
In August 2018, the FASB issued Accounting Standards Update (ASU) 2018-15,
Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40), Customers Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement
That Is a Service Contract. This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain
internal-use software (and hosting arrangements that include an internal-use software license). This ASU is effective for the annual periods beginning after
December 15, 2019 and interim periods within those annual periods, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its Consolidated Financial Statements.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments Credit Losses (Topic
326): Measurement of Credit Losses on Financial Instruments. This ASU presents new methodology for calculating credit losses on financial instruments (e.g. trade receivables) based on expected credit losses and expands the types of information
companies must use when calculating expected losses. This ASU is effective for annual periods beginning after December 15, 2019 and interim periods within those annual periods, with early adoption permitted. The Company is currently evaluating
the impact of this ASU on its Consolidated Financial Statements.
2. REVENUE RECOGNITION
In May 2014, the FASB issued ASU 2014-09, Revenue From Contracts With Customers (Topic 606) (ASC
606). ASC 606 supersedes the revenue recognition requirements in Accounting Standard Codification (ASC) 605, Revenue Recognition (ASC 605). The new standard provides a five-step analysis of transactions to determine
when and how revenue is recognized, based upon the core principle that revenue is recognized to depict the transfer of 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. The new standard also requires additional disclosures regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.
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