Recently Adopted Accounting Standards
Effective January 2025, we adopted an Accounting Standards Update ("ASU") to improve disclosures required for income taxes, specifically related to existing rate reconciliation and income taxes paid information and the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation and requiring income taxes paid to be disaggregated by jurisdiction. The prospective adoption of this standards update did not impact our consolidated financial statements; however, it resulted in changes to our consolidated financial statement disclosures primarily related to our effective tax rate reconciliation. Refer to Note to the Consolidated Financial Statements No. 7, Income Taxes.
Recently Issued Accounting Standards
On November 4, 2024, the Financial Accounting Standards Board ("FASB") issued a final ASU to require disaggregated disclosure of income statement expenses. This new standard requires certain expense categories, including selling expenses, to be disaggregated in the notes to the consolidated financial statements. The standards update is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. We are currently assessing the impact of this standards update on our disclosures in the notes to the consolidated financial statements.
On September 18, 2025, the FASB issued a final ASU to modernize the accounting for internal-use software. This update replaces the previous stage-based capitalization model with a principles-based approach, allowing capitalization of software development costs once management has authorized and committed funding and it is probable the project will be completed and perform its intended function. The ASU also consolidates guidance for website development under the internal-use software framework and expands applicability to cloud-based and agile development methods. The standards update is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. We are currently assessing the impact of this standards update on our accounting policies and disclosures.
About New Standards Disclosures
New accounting standards disclosures describe recently adopted pronouncements and those not yet effective, along with management's assessment of their expected impact. This section provides an early warning system for upcoming changes to how a company reports its financial results, often years before the new rules take effect.
Key signals: when management describes a not-yet-adopted standard's impact as "material" or "still being evaluated," it signals potential significant changes to reported metrics upon adoption. Watch for standards that affect a company's core operations — for example, revenue recognition changes for software companies or lease accounting changes for retailers with large store footprints. The transition method chosen (full retrospective versus modified retrospective) affects comparability with prior periods. Companies that delay adoption to the latest permitted date may be struggling with implementation complexity. Compare the disclosed impact assessments against peers in the same industry to gauge whether management's expectations are reasonable.