Recently Issued and Applicable Accounting Pronouncements (Issued and Not Yet Adopted)
In December 2023, the FASB issued ASU 2023-09, "Improvements to Income Tax Disclosures" ("ASU 2023-09") which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company has not early adopted the standard and is currently assessing the effect that ASU 2023-09 will have on its disclosures.
In November 2024, the FASB issued ASU 2024-03, "Disaggregation of Income Statement Expenses", ("ASU 2024-03") which requires enhanced disclosure about specific types of expenses included in the expense captions presented on the face of the consolidated income statement as well as disclosures about selling expenses. ASU 2024-03 is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027. Early adoption is permitted. The Company has not early adopted the standard and is currently assessing the effect that ASU 2024-03 will have on its disclosures.
Recently Issued and Applicable Accounting Pronouncements (Issued and Adopted)
The FASB issued ASU 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” which replaced the “incurred loss” methodology for recognizing credit losses with an “expected loss” methodology. This new methodology requires that a financial asset measured at amortized cost be presented at the net amount expected to be collected. This standard is intended to provide more timely decision-useful information about the expected credit losses on financial instruments. The adoption of this guidance on January 1, 2023 did not have a material impact on the Company’s consolidated financial statements or related disclosures. Revenue receivable is the primary financial asset that is within the scope of the new guidance. A loss-rate method is applied to the receivables to estimate credit losses. The Company recognized a tax effected $0.1 million non-cash cumulative effect adjustment to retained earnings on its opening consolidated balance sheet at January 1, 2023 to record an allowance for expected credit losses associated with the Company’s revenue receivable.
In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures", ("ASU 2023-07") which requires public entities, including public entities with a single reportable segment, to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets. ASU 2023-07 was effective for annual periods beginning after December 15, 2023, and is effective for interim periods beginning after December 15, 2024. The Company adopted this accounting standard beginning in this Annual Report on Form 10-K. See Segment Reporting section of this note for enhanced disclosures resulting from the adoption of ASU 2023-07.