3M 2015 Annual Report Download - page 63

TableofContents
margin.ThenewASUreplacesmarketwithNRV,definedasestimatedsellingpricesintheordinarycourseofbusiness,less
reasonablypredictablecostsofcompletion,disposalandtransportation.Thiseliminatestheneedtodetermineandconsider
replacementcostorNRVlessanapproximatelynormalprofitmarginwhenmeasuringinventory.For3M,thisstandardiseffective
prospectivelybeginningJanuary1,2017,withearlyadoptionpermitted.TheCompanyiscurrentlyassessingthisASU’simpactson
3M’sconsolidatedresultsofoperationsandfinancialcondition.

InSeptember2015,theFASBissuedASUNo.2015-16,SimplifyingtheAccountingforMeasurement-PeriodAdjustments,that
eliminatestherequirementforanacquirerinabusinesscombinationtoaccountformeasurement-periodadjustmentsretrospectively.
Underexistingstandards,anacquirerinabusinesscombinationreportsprovisionalamountswithrespecttoacquiredassetsand
liabilitieswhentheirmeasurementsareincompleteasoftheendofthereportingperiod.PriortotheimpactofthisASU,anacquirer
isrequiredtoadjustprovisionalamounts(andtherelatedimpactonearnings)byrestatingpriorperiodfinancialstatementsduringthe
measurementperiodwhichcannotexceedoneyearfromthedateofacquisition.Thenewguidancerequiresthatthecumulative
impactofameasurement-periodadjustment(includingtheimpactonpriorperiods)berecognizedinthereportingperiodinwhich
theadjustmentisidentified—eliminatingtherequirementtorestatepriorperiodfinancialstatements.Thenewstandardrequires
disclosureofthenatureandamountofmeasurement-periodadjustmentsaswellasinformationwithrespecttotheportionofthe
adjustmentsrecordedincurrent-periodearningsthatwouldhavebeenrecordedinpreviousreportingperiodsiftheadjustmentsto
provisionalamountshadbeenrecognizedasoftheacquisitiondate.TheASUisappliedprospectivelytomeasurement-period
adjustmentsthatoccuraftertheeffectivedate.For3M,thisstandardisrequiredprospectivelybeginningJanuary1,2016,withearly
adoptionpermitted.TheCompanyadoptedthisstandardwithrespecttomeasurement-periodadjustmentsbeginninginthefourth
quarterof2015.Additionaldisclosure,asapplicable,isincludedinNote2,AcquisitionsandDivestitures.
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InNovember2015,theFASBissuedASUNo.2015-17,BalanceSheetClassificationofDeferredTaxes,whichrequiresentitiesto
presentdeferredtaxassets(DTAs)anddeferredtaxliabilities(DTLs),alongwithanyrelatedvaluationallowance,asnoncurrentina
balancesheet.ThisASUeliminatescurrentguidancerequiringdeferredtaxesforeachjurisdictiontobepresentedasanetcurrent
assetorliabilityandanetnoncurrentassetorliability.Asaresult,eachjurisdictionwouldhaveonenetnoncurrentDTAorDTL
balance.TheASUdoesnotchangetheexistingrequirementthatonlypermitsoffsettingDTAsandDTLswithinaparticular
jurisdiction.For3M,thisstandardiseffectiveJanuary1,2017,withearlyadoptionpermitted.Inlightoftheprocesssimplification
providedbythisASU,theCompanyadoptedthisstandardinthefourthquarterof2015withretrospectiveapplicationtoprior
periods.Asaresult,theDecember31,2014balancesofDTAsandDTLspreviouslyreportedwereimpactedasfollows:
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December31,2014 
(Millions)  PreviouslyReported  Impact  AsAdopted 
Prepaidexpensesandother(withinothercurrentassets)  $ 595  $ 169  $ 764 
Othercurrenttaxassets(withinothercurrentassets)   444   (444)  — 
Deferredtaxassets(withinotherassets)   889   241   1,130 
Deferredtaxliabilities(withinothercurrentliabilities)   34   (34)  — 
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InconjunctionwiththeadoptionofthisASU,3Mreclassified$169millionofremainingothercurrenttaxassetstoprepaidexpenses
andothertoconformtothe2015presentation.
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InJanuary2016,theFASBissuedASUNo.2016-01,RecognitionandMeasurementofFinancialAssetsandFinancialLiabilities,
whichrevisestheaccountingrelatedto(1)theclassificationandmeasurementofinvestmentsinequitysecuritiesand(2)the
presentationofcertainfairvaluechangesforfinancialliabilitiesmeasuredatfairvalue.TheASUalsoamendscertaindisclosure
requirementsassociatedwiththefairvalueoffinancialinstruments.Thenewguidancerequiresthefairvaluemeasurementof
investmentsinequitysecuritiesandotherownershipinterestsinanentity,includinginvestmentsinpartnerships,unincorporatedjoint
venturesandlimitedliabilitycompanies(collectively,equitysecurities)thatdonotresultinconsolidationandarenotaccountedfor
undertheequitymethod.Entitieswillneedtomeasuretheseinvestmentsandrecognizechangesinfairvalueinnetincome.Entities
willnolongerbeabletorecognizeunrealizedholdinggainsandlossesonequitysecuritiestheyclassifyundercurrentguidanceas
availableforsaleinothercomprehensiveincome(OCI).Theyalsowillnolongerbeabletousethecostmethodofaccountingfor
equitysecuritiesthatdonothavereadilydeterminablefairvalues.Instead,forthesetypesofequityinvestmentsthatdonototherwise
qualifyforthenetassetvaluepracticalexpedient,entitieswillbepermittedtoelectapracticabilityexceptionand
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