Summary
Salesforce, Inc. filed this Form 8-K on September 1, 2016, to report on the retrospective adoption of new accounting pronouncements during the first quarter of fiscal year 2017. These changes primarily affect the presentation of debt issuance costs and the accounting for employee share-based payments. Specifically, debt issuance costs are now presented as a direct deduction from the corresponding debt liability, rather than as an asset, in line with ASU 2015-03, with an exception for line-of-credit arrangements under ASU 2015-15. The company also adopted ASU 2016-09, which alters the accounting for employee stock compensation by requiring excess tax benefits and deficiencies to be recognized in the income statement when awards vest or settle, and removes the reclassification of related cash flows from operating to financing activities. Importantly, Salesforce states that these accounting changes had no material impact on its historical consolidated financial condition or statements of operations. This filing serves to update the consolidated financial statements previously presented in its Form 10-K for the fiscal year ended January 31, 2016.
Key Highlights
- 1Salesforce is retrospectively adopting new accounting pronouncements for presentation in its financial statements.
- 2Changes include the presentation of debt issuance costs, now deducted from liabilities per ASU 2015-03/2015-15.
- 3Accounting for employee share-based payments is updated under ASU 2016-09.
- 4The adoption of these standards impacts the Consolidated Balance Sheets and Statements of Cash Flow.
- 5Crucially, the company asserts that these accounting changes had no material effect on its historical consolidated financial condition.
- 6The filing updates the Form 10-K for the fiscal year ended January 31, 2016, with revised financial statements.
- 7The company explicitly states that these are not restatements but rather revisions due to accounting standard adoption.