2019 BBNC Annual Report - Page 55

In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10). ASU 2016-01 require equity investments (except those accounted for under the equity method of accounting or those that result in consol- idation of the investee) to be measured at fair value with changes in fair value recognized in net income. In addition, ASU 2016-01 simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. The update is effective for years beginning after December 15, 2018. The Corporation has early adopted in FY2018 the elimination of the requirement to disclose the fair value of financial instruments measured at amortized cost. The Corporation adopted the remainder of the new standard on April 1, 2018. Adoption of the ASU did not have a significant impact on the consolidated financial statements. The FASB issued ASU No. 2016-02, Leases (Topic 842), in February 2016. The primary change in GAAP addressed by ASU 2016-02 is the requirement for a lessee to recognize on the balance sheet a liability to make lease payments (lease liability) and a right of use asset representing its right to use the underlying asset for the lease term. For finance leases, a lessee is required to (i) recognize a right of use asset and a lease liability, initially measured at the present value of the lease payments; (ii) recognize interest on the lease liability separately from amortization of the right of use asset; and (iii) classify repayments of the principal portion of the lease liability within financing activities and payments of interest on the lease liability and variable lease payments within operating activities on the statement of cash flows. For operating leases, a lessee is required to (i) recognize a right of use asset and a lease liability, initially measured at the present value of the lease payments; (ii) recognize a single lease cost, calculated so that the lease is allocated over the lease term on a generally straight line basis; and (iii) classify all cash payments within operating activities in the statement of cash flows. For leases with a term of twelve months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight line basis over the lease term. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. ASU 2016-02 also requires qualitative and quantitative disclosures to enable users of the financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The new standard is effective for annual reporting periods beginning after December 15, 2019. The Corporation is currently planning on implementing the provisions of ASU 2016-02 as of April 1, 2020. While the Corporation continues to assess the effect of adoption, it currently believes that the most significant changes related to the recognition of right to use assets and lease liabilities on the consolidated balance sheets will be for equipment and warehouse operating leases. (2) ALASKA NATIVE CLAIMS SETTLEMENT ACT The Corporation is a regional corporation organized pursuant to the Alaska Native Claims Settlement Act of 1971 (ANCSA). ANCSA provided for a monetary entitlement to be disbursed through the Alaska Native Fund to the regional and village corporations created under ANCSA and to certain regional corporation shareholders. The Corporation received $32,694,953 as its total proportionate share of the monetary entitlement. The Corporation is also entitled under ANCSA to select and receive approximately three million acres of land, primarily subsurface estate. Stockholders’ equity includes net cash receipts from the U.S. government and the state of Alaska under ANCSA. Land and subsurface rights conveyed under ANCSA are not recorded because it is not reasonably possible to determine the value of the assets conveyed at this time. Of the Corporation’s entitlement of 3,079,553 acres, the Corporation has received interim conveyance to 410,174 acres of subsurface estate and has received patent to 2,598,274 acres. The Corporation has also received interim conveyance and patent to 115,349 acres of surface and subsurface estate. M anagement ' s D iscussion and A nalysis 53