Page 51 - SWGas Annual Report 2015

Retrospective application of the update is required. The amendments in this update are effective for financial
statements issued for fiscal years beginning after December 15, 2015, and interim periods within fiscal years
beginning after December 15, 2015. Early adoption of the amendments in this update is permitted for financial
statements that have not been previously issued. The Company adopted this update as of December 31, 2015, as
permitted. See Note 7 – Long-Term Debt for additional information.

In May 2015, the FASB issued the update “Disclosures for Investments in Certain Entities that Calculate Net Asset
Value per Share (or its Equivalent).” This guidance simplifies disclosure requirements relating to investments for
which fair value is measured using the net asset value per share, or its equivalent. The update removes the
requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the
net asset value per share practical expedient. Investments that calculate net asset value per share (or its
equivalent), but for which the practical expedient is not applied, will continue to be included in the fair value
hierarchy. The update removes the requirement to make certain disclosures for all investments that are eligible to
be measured at fair value using the net asset value per share practical expedient. A reporting entity should
continue to disclose information on investments for which fair value is measured at net asset value as a practical
expedient to help users understand the nature and risks of the investments and whether the investments, if sold,
are probable of being sold at amounts different from net asset value. The amendments in this update are effective
for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods thereafter.
Early application is permitted and the Company adopted this update as of December 31, 2015. See Note 10 – Pension
and Other Postretirement Benefits for additional information.

In November 2015, the FASB issued the update “Income Taxes (Topic 740)” in order to simplify the presentation of
deferred income taxes. The update requires that deferred tax liabilities and assets be classified as noncurrent in a
classified statement of financial position. The previous guidance required an entity to separate deferred income tax
liabilities and assets into current and noncurrent amounts in a classified statement of financial position. This update
is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim
periods within those annual periods. Early application is permitted and the Company adopted this update as of
December 31, 2015. See Note 12 – Income Taxes for additional information.

In January 2016, the FASB issued the update “Financial Instruments – Overall (Subtopic 825-10): Recognition and
Measurement of Financial Assets and Financial Liabilities” in order to improve the recognition and measurement of
financial instruments. The update makes targeted improvements to existing U.S. GAAP by: 1) requiring equity
investments to be measured at fair value with changes in fair value recognized in net income; 2) requiring the use
of the exit price notion when measuring the fair value of financial instruments for disclosure purposes; 3) requiring
separate presentation of financial assets and financial liabilities by measurement category and form of financial
asset on the balance sheet or the accompanying notes to the financial statements; 4) eliminating the requirement
to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be
disclosed for financial instruments measured at amortized cost on the balance sheet; and 5) requiring a reporting
organization to present separately in other comprehensive income the portion of the total change in the fair value
of a liability resulting from a change in the instrument-specific credit risk when the organization has elected to
measure the liability at fair value in accordance with the fair value option for financial instruments. The update is
effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. All
entities can early adopt the provision to record fair value changes for financial liabilities under the fair value option
resulting from instrument-specific credit risk in other comprehensive income. The Company is evaluating what
impact, if any, this update might have on its consolidated financial statements and disclosures.

Southwest Gas Corporation