|TRIVAGO N.V. filed this Form 20-F on 03/06/2018|
From time to time, we may be involved in various claims and legal proceedings relating to claims arising out of our operations, as discussed further in Note 16 - Commitments and contingencies. Periodically, and at year end, we review the status of all significant outstanding matters to assess the potential financial exposure. When (i) it is probable that an asset has been impaired or a liability has been incurred and (ii) the amount of the loss can be reasonably estimated, we record the estimated loss in our consolidated statements of operations. We provide disclosure in the notes to the consolidated financial statements for loss contingencies that do not meet both of these conditions if there is a reasonable possibility that a loss may have been incurred that would be material to the financial statements. Significant judgment is required to determine the probability that a liability has been incurred and whether such liability is reasonably estimable. We base accruals made on the best information available at the time, which can be highly subjective. The final outcome of these matters could vary significantly from the amounts included in the accompanying consolidated financial statements. See Note 16 - Commitments and contingencies.
Adoption of new accounting pronouncements
In March 2016, the FASB issued new guidance related to accounting for share-based payments. The updated guidance changes how companies account for certain aspects of share-based payments awards to employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The guidance is effective for annual and interim reporting periods beginning after December 15, 2016. The adoption of this new guidance on January 1, 2017 did not have a material impact to our consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04, which simplifies the test for goodwill impairment where step 2 of the formal goodwill test is eliminated. We have adopted this new guidance for goodwill impairment assessments performed from October 1, 2017 . The adoption of this new guidance did not have a material impact to our consolidated financial statements.
Recent accounting policies not yet adopted
In May 2014, the FASB issued Accounting Standards Update ("ASU") 2014-09 amending revenue recognition guidance and requiring more detailed disclosures to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU 2015-14 deferring the effective date of the revenue standard so it would be effective for annual and interim reporting periods beginning after December 15, 2017. In addition, the FASB has also issued several amendments to the standard, which clarify certain aspects of the guidance.
The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (modified retrospective). We will adopt this new guidance in the first quarter of 2018 and apply the modified retrospective method. We have determined the new guidance will not change the timing or amount of revenue to be recognized. We do expect impacts from the new revenue guidance on the presentation of our financial statements, as deferred revenue is going to be presented as contract liability in the future. We have completed our overall assessment and we have identified and implemented changes to our accounting policies and practices, business processes, and controls to support the new revenue recognition standard. We are continuing our assessment of potential changes to our disclosures under the new guidance.
In January 2016, the FASB issued ASU 2016-01 that provides new guidance related to accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. The new standard is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. We will adopt this new guidance on January 1, 2018. A material impact on the financial statements is currently not expected.
In February 2016 and January 2018, the FASB issued ASU 2016-02 and ASU 2018-01 that provide new guidance related to accounting and reporting guidelines for leasing arrangements. The new guidance requires entities that lease assets to recognize assets and liabilities on the balance sheet related to the rights and