3M 2015 Annual Report Download - page 63
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margin.ThenewASUreplacesmarketwithNRV,definedasestimatedsellingpricesintheordinarycourseofbusiness,less
reasonablypredictablecostsofcompletion,disposalandtransportation.Thiseliminatestheneedtodetermineandconsider
replacementcostorNRVlessanapproximatelynormalprofitmarginwhenmeasuringinventory.For3M,thisstandardiseffective
prospectivelybeginningJanuary1,2017,withearlyadoptionpermitted.TheCompanyiscurrentlyassessingthisASU’simpactson
3M’sconsolidatedresultsofoperationsandfinancialcondition.
InSeptember2015,theFASBissuedASUNo.2015-16,SimplifyingtheAccountingforMeasurement-PeriodAdjustments,that
eliminatestherequirementforanacquirerinabusinesscombinationtoaccountformeasurement-periodadjustmentsretrospectively.
Underexistingstandards,anacquirerinabusinesscombinationreportsprovisionalamountswithrespecttoacquiredassetsand
liabilitieswhentheirmeasurementsareincompleteasoftheendofthereportingperiod.PriortotheimpactofthisASU,anacquirer
isrequiredtoadjustprovisionalamounts(andtherelatedimpactonearnings)byrestatingpriorperiodfinancialstatementsduringthe
measurementperiodwhichcannotexceedoneyearfromthedateofacquisition.Thenewguidancerequiresthatthecumulative
impactofameasurement-periodadjustment(includingtheimpactonpriorperiods)berecognizedinthereportingperiodinwhich
theadjustmentisidentified—eliminatingtherequirementtorestatepriorperiodfinancialstatements.Thenewstandardrequires
disclosureofthenatureandamountofmeasurement-periodadjustmentsaswellasinformationwithrespecttotheportionofthe
adjustmentsrecordedincurrent-periodearningsthatwouldhavebeenrecordedinpreviousreportingperiodsiftheadjustmentsto
provisionalamountshadbeenrecognizedasoftheacquisitiondate.TheASUisappliedprospectivelytomeasurement-period
adjustmentsthatoccuraftertheeffectivedate.For3M,thisstandardisrequiredprospectivelybeginningJanuary1,2016,withearly
adoptionpermitted.TheCompanyadoptedthisstandardwithrespecttomeasurement-periodadjustmentsbeginninginthefourth
quarterof2015.Additionaldisclosure,asapplicable,isincludedinNote2,AcquisitionsandDivestitures.
InNovember2015,theFASBissuedASUNo.2015-17,BalanceSheetClassificationofDeferredTaxes,whichrequiresentitiesto
presentdeferredtaxassets(DTAs)anddeferredtaxliabilities(DTLs),alongwithanyrelatedvaluationallowance,asnoncurrentina
balancesheet.ThisASUeliminatescurrentguidancerequiringdeferredtaxesforeachjurisdictiontobepresentedasanetcurrent
assetorliabilityandanetnoncurrentassetorliability.Asaresult,eachjurisdictionwouldhaveonenetnoncurrentDTAorDTL
balance.TheASUdoesnotchangetheexistingrequirementthatonlypermitsoffsettingDTAsandDTLswithinaparticular
jurisdiction.For3M,thisstandardiseffectiveJanuary1,2017,withearlyadoptionpermitted.Inlightoftheprocesssimplification
providedbythisASU,theCompanyadoptedthisstandardinthefourthquarterof2015withretrospectiveapplicationtoprior
periods.Asaresult,theDecember31,2014balancesofDTAsandDTLspreviouslyreportedwereimpactedasfollows:
December31,2014
(Millions) PreviouslyReported Impact AsAdopted
Prepaidexpensesandother(withinothercurrentassets) $ 595 $ 169 $ 764
Othercurrenttaxassets(withinothercurrentassets) 444 (444) —
Deferredtaxassets(withinotherassets) 889 241 1,130
Deferredtaxliabilities(withinothercurrentliabilities) 34 (34) —
InconjunctionwiththeadoptionofthisASU,3Mreclassified$169millionofremainingothercurrenttaxassetstoprepaidexpenses
andothertoconformtothe2015presentation.
InJanuary2016,theFASBissuedASUNo.2016-01,RecognitionandMeasurementofFinancialAssetsandFinancialLiabilities,
whichrevisestheaccountingrelatedto(1)theclassificationandmeasurementofinvestmentsinequitysecuritiesand(2)the
presentationofcertainfairvaluechangesforfinancialliabilitiesmeasuredatfairvalue.TheASUalsoamendscertaindisclosure
requirementsassociatedwiththefairvalueoffinancialinstruments.Thenewguidancerequiresthefairvaluemeasurementof
investmentsinequitysecuritiesandotherownershipinterestsinanentity,includinginvestmentsinpartnerships,unincorporatedjoint
venturesandlimitedliabilitycompanies(collectively,equitysecurities)thatdonotresultinconsolidationandarenotaccountedfor
undertheequitymethod.Entitieswillneedtomeasuretheseinvestmentsandrecognizechangesinfairvalueinnetincome.Entities
willnolongerbeabletorecognizeunrealizedholdinggainsandlossesonequitysecuritiestheyclassifyundercurrentguidanceas
availableforsaleinothercomprehensiveincome(OCI).Theyalsowillnolongerbeabletousethecostmethodofaccountingfor
equitysecuritiesthatdonothavereadilydeterminablefairvalues.Instead,forthesetypesofequityinvestmentsthatdonototherwise
qualifyforthenetassetvaluepracticalexpedient,entitieswillbepermittedtoelectapracticabilityexceptionand
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