Annual Report 2022

No t e s t o Co n s o l i d a t e d F i n a n c i a l S t a t eme n t s J u n e 3 0 , 2 0 2 2 a n d 2 0 2 1 In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which modifies disclosure requirements on fair value measurements. The university adopted the new guidance in fiscal 2021, resulting in no material impact to the consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires timelier recording of credit losses on financial instruments by effectively replacing the current incurred loss methodology with one that reflects expected losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendments affect loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022. The university does not expect the new guidance to have a material impact on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their statements of financial position. The objective of this ASU is to increase transparency and comparability between organizations that enter into lease agreements. The university adopted Topic 842 as of July 1, 2020 (the effective date) and elected the package of practical expedients under the new standard, which permits entities to not reassess lease classification, lease identification, or initial direct costs for existing or expired leases prior to the effective date. The university also elected the practical expedient to account for non-lease components and the lease components to which they relate as a single lease component for all leases. The university elected the short-term lease exemption to not recognize leases with an initial term of 12 months or less on the Consolidated Statement of Financial Position, as well as the practical expedient to not assess whether existing or expired land easements that were not previously accounted for as leases under prior guidance are or contain a lease under Topic 842. The adoption of Topic 842 resulted in the recognition of operating lease right-of-use assets and operating lease liabilities of $96.6 million and $96.1 million, respectively, as of July 1, 2020, primarily related to real estate leases. Right-of-use assets and lease liabilities related to finance leases totaled $6.7 million and $6.8 million, respectively, resulting in total right-of-use assets and lease liabilities of $103.3 million and $102.9 million, respectively, as of July 1, 2020. No cumulative effect adjustment to beginning net assets was required. Refer to Note 19 for additional information on the university’s leases pursuant to Topic 842. 23