Statement of Cash Flows:
In August and November of 2016, the FASB
issued updated accounting standards which address the classification and presentation of certain cash receipts, cash payments and restricted cash in the statement of cash flows. We adopted these standards retrospectively on July 1, 2018. Our
consolidated balance sheets include cash held for customers and a liability for the same amount. Cash held for customers and the related customer account liabilities arise from certain payment transactions we process on behalf of customers where we
collect and hold customer funds for a short transient period before disbursing the cash and settling the liability. Cash we hold on behalf of customers is segregated from our other corporate cash accounts, is not available for use by us and is
considered restricted cash. Prior to the adoption of this standard the change in cash held for customers and the corresponding liability were presented on a net basis in our consolidated statement of cash flows. As a result of adoption, the
operating section of our consolidated statement of cash flows now reflects the impact on our total cash position, including the impact of changes in customer account liabilities.
During the six months ended December 31, 2017, the retrospective adoption of this standard resulted in an increase in operating cash
flows of approximately $4.6 million.
Defined Benefit Plan Expenses:
In March 2017, the FASB issued an
accounting standard update that changes the income statement presentation of defined benefit plan expense by requiring separation between operating expense (the service cost component) and
non-operating
expense (all other components of net periodic defined benefit cost). Under the revised standard, the service cost component is classified consistently with other compensation costs, while all other components are reported in other expense, net. We
adopted this standard retrospectively on July 1, 2018 and reclassified approximately $0.2 million and $0.4 million from income from operations to other expense, net for the three and six months ended December 31, 2017,
respectively, in our consolidated statement of comprehensive loss.
Accounting Pronouncements to be Adopted
Leases:
In February 2016, the FASB issued an accounting standard update which requires balance sheet recognition of a
lease liability and a corresponding
right-of-use
asset for all leases with terms longer than twelve months. The pattern of recognition of lease related revenue and
expenses will be dependent on its classification. The updated standard requires additional financial statement disclosures. We will adopt this standard on July 1, 2019 and anticipate that the standard will have a material impact to our
consolidated balance sheet due to the recognition of right of use assets and lease liabilities and additional disclosures. We expect to adopt the standard using a modified retrospective method as of the date of adoption (July 1, 2019).
Financial Instruments - Credit Losses:
In June 2016, the FASB issued an accounting standard update that introduces a new
forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments including trade receivables. The estimate of expected credit losses will require entities to incorporate historical information,
current information and reasonable and supportable forecasts. This standard also expands the disclosure requirements to enable users of financial statements to understand the entitys assumptions, models and methods for estimating expected
credit losses. This standard is effective for us on July 1, 2020, with early application permitted. We are currently evaluating the anticipated impact of this standard on our financial statements as well as timing of adoption.
Goodwill Impairment:
In January 2017, the FASB issued an accounting standard update to simplify the test for goodwill
impairment which removes step 2 from the goodwill impairment test. Under the revised standard, an entity will perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and
recognize an impairment charge for the amount by which the carrying amount exceeds the reporting units fair value. The loss should not exceed the total amount of goodwill allocated to the reporting unit. The standard is effective for us on
July 1, 2020 on a prospective basis, with early adoption permitted. We do not currently expect the adoption of this standard to have a material impact on our financial statements.
Derivatives and Hedging:
In August 2017, the FASB issued an accounting standard update that more closely aligns the results of
cash flow and fair value hedge accounting with risk management activities through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results in the financial statements. The
guidance expands hedge accounting for both nonfinancial and financial risk components and refines the measurement of hedge results to better reflect an entitys hedging strategies. In October 2018, the FASB issued an accounting standard update
to expand the list of United States benchmark interest rates permitted in the application of hedge accounting. The revised standard allows the use of the Overnight Index Swap rate based on the Secured Overnight Financing Rate as a U.S. benchmark
interest rate for hedge accounting purposes. These standard updates are required to be adopted concurrently and are effective for us on July 1, 2019. We are currently evaluating the anticipated impact of these standards on our financial
statements.
Share-Based Compensation - Nonemployee Share-Based Payment Accounting:
In June 2018, the FASB issued an
accounting standard update to simplify the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees. Under the revised standard, measurement of nonemployee awards will be fixed at
the grant date by estimating the fair value of the equity instruments to be issued. Additionally, during the vesting period, nonemployee awards that contain a performance condition that affects the quantity or other terms of the award will be
measured based on the probable outcome. Upon adoption, entities must recognize a cumulative-effect adjustment to retained earnings as of the beginning of the annual period of adoption for equity-classified nonemployee awards for which a measurement
date has not been established and liability-classified nonemployee awards that have not been settled. This standard is effective for us on July 1, 2019. We do not currently expect the adoption of this standard to have a material impact on our
financial statements.
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