Sprint - Nextel 2015 Annual Report Download - page 103

Table of Contents
Index to Consolidated Financial Statements
SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
New Accounting Pronouncements
In May 2014, the FASB issued new authoritative literature, RevenuefromContractswithCustomers.The issuance is part of a joint effort by the FASB
and the International Accounting Standards Board (IASB) to enhance financial reporting by creating common revenue recognition guidance for U.S. GAAP and
International Financial Reporting Standards and, thereby, improving the consistency of requirements, comparability of practices and usefulness of disclosures. The
new standard will supersede much of the existing authoritative literature for revenue recognition. In July 2015, the FASB deferred the effective date of this
standard. As a result, the standard and related amendments will be effective for the Company for its fiscal year beginning April 1, 2018, including interim periods
within that fiscal year. Early application is permitted, but not before the original effective date of April 1, 2017. The FASB has subsequently issued additional
guidance on several areas including the implementation of principal versus agent considerations and recognition of breakage for certain prepaid stored-value
products requiring breakage of these liabilities to be accounted for consistent with the breakage guidance under this revenue standard. They also clarified how an
entity should evaluate when a promised good or service is distinct within the context of a contract and allowed entities to disregard goods or services that are
immaterial in the context of a contract. Entities are allowed to transition to the new standard by either retrospective application or recognizing the cumulative
effect. The Company is currently evaluating the guidance, including which transition approach will be applied. We expect this guidance to have a material impact
on our consolidated financial statements.
In August 2014, the FASB issued authoritative guidance regarding DisclosureofUncertaintiesaboutanEntity’sAbilitytoContinueasaGoing
Concern, which requires management to assess an entity’s ability to continue as a going concern and to provide related footnote disclosures in certain
circumstances. The updated guidance requires management to perform interim and annual assessments on whether there are conditions or events, considered in the
aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued
and to provide related disclosures, if required. The standard would have been effective for the Company’s fiscal year beginning April 1, 2016, including interim
reporting periods within that fiscal year, although early adoption was permitted. The Company has elected to early adopt this guidance effective January 1, 2016.
The early adoption of this guidance did not have a material effect on our consolidated financial statements.
In January 2015, the FASB issued authoritative guidance on ExtraordinaryandUnusualItems, eliminating the concept of extraordinary items. The
issuance is part of the FASB’s initiative to reduce complexity in accounting standards. Under the current guidance, an entity is required to separately classify,
present and disclose events and transactions that meet the criteria for extraordinary classification. Under the new guidance, reporting entities will no longer be
required to consider whether an underlying event or transaction is extraordinary, however, presentation and disclosure guidance for items that are unusual in nature
or occur infrequently was retained and expanded to include items that are both unusual in nature and infrequently occurring. The amendments will be effective for
the Company’s fiscal year beginning April 1, 2016, although early adoption is permitted if applied from the beginning of a fiscal year. The Company does not
expect the adoption of this guidance to have a material effect on our consolidated financial statements.
In February 2015, the FASB issued authoritative guidance regarding Consolidation, which provides guidance to management when evaluating whether
they should consolidate certain legal entities. The updated guidance modifies evaluation criteria of limited partnerships and similar legal entities, eliminates the
presumption that a general partner should consolidate a limited partnership, and affects the consolidation analysis of reporting entities that are involved with
variable interest entities, particularly those that have fee arrangements and related party relationships. All legal entities will be subject to reevaluation under the
revised consolidation model. The standard will be effective for the Company’s fiscal year beginning April 1, 2016, including interim periods within that fiscal year,
although early adoption is permitted. The Company is currently evaluating the newly issued guidance and does not expect this guidance to have a material effect on
our consolidated financial statements.
In July 2015, the FASB issued authoritative guidance regarding Inventory, which simplifies the subsequent measurement of certain inventories by
replacing today’s lower of cost or market test with a lower of cost and net realizable value test. Net realizable value is the estimated selling prices in the ordinary
course of business, less reasonably predictable costs of completion, disposal, and transportation. The standard will be effective for the Company’s fiscal year
beginning April 1, 2017, including interim periods within that fiscal year. The Company does not expect the adoption of this guidance to have a material effect on
our consolidated financial statements.
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