Allison Transmission Holdings Inc New Standards Disclosure

Recently Adopted Accounting Pronouncements

In December 2023, the FASB issued authoritative accounting guidance to improve income tax disclosures by requiring disaggregated information about a reporting entity's effective tax rate reconciliation and information on income taxes paid. The guidance became effective for the Company for its fiscal year ended December 31, 2025 and was applied retrospectively. The adoption of this guidance did not have an impact on the Company's Consolidated Financial Statements but resulted in additional disclosures. See the Consolidated Statements of Cash Flows and "Note 16. Income Taxes" for the additional disclosures.

In July 2025, the FASB issued authoritative accounting guidance providing a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets arising from contracts with customers. The guidance became effective for the Company beginning January 1, 2026 and was applied prospectively. The adoption of this guidance did not have an impact on the Company's Consolidated Financial Statements.

Recently Issued Accounting Pronouncements

In November 2025, the FASB issued authoritative accounting guidance to amend certain aspects of the existing hedge accounting guidance to more closely align hedge accounting with the economics of an entity's risk management activities. The guidance will become effective for the Company beginning January 1, 2027 with early adoption permitted. Management is currently evaluating the potential impact of this guidance on the Company's Consolidated Financial Statements.

In November 2024, the FASB issued authoritative accounting guidance, which was subsequently amended, requiring additional disaggregation of certain expense and cost line items presented in the financial statements and in the notes to the financial statements. The guidance will become effective for the Company beginning with the fiscal year ending December 31, 2027 and the subsequent interim periods. Early adoption is permitted. Upon adoption, the guidance may be applied prospectively or retrospectively. Management is currently evaluating the impact of this guidance on the Company's Consolidated Financial Statements.

In September 2025, the FASB issued authoritative accounting guidance to modernize the accounting for costs related to internal-use software. The new guidance removes the software project development stages and provides new guidance on evaluating if the probable-to-complete recognition threshold has been met. The guidance will become effective for the Company beginning January 1, 2028 with early adoption permitted. Upon adoption, the guidance may be applied prospectively, retrospectively or using a modified transition approach. Management is currently evaluating the potential impact of this guidance on the Company's Consolidated Financial Statements.

All other recently issued accounting pronouncements were assessed as either not applicable to the Company or were not expected to have a material impact on the Company's Consolidated Financial Statements.