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Summary of Significant Accounting Policies | 9 Months Ended
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Sep. 30, 2019
Accounting Policies [Abstract] |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared by us in accordance with U.S. generally accepted accounting principles, or U.S. GAAP, pursuant to the rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting. Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements and should be read in conjunction with our audited consolidated financial statements and related notes thereto for the year ended December 31, 2018. The accompanying unaudited consolidated financial statements reflect all adjustments that are, in our opinion, necessary for a fair presentation of results for the interim periods presented. We believe that these adjustments are of a normal recurring nature. Preparing financial statements requires us to make certain estimates and assumptions that affect the amounts that are reported in our consolidated financial statements and accompanying disclosures. Actual amounts could differ from those estimates. The results of operations for the nine and three months ended September 30, 2019 are not necessarily indicative of the results to be expected for any future period or the full fiscal year. These statements include the accounts of our wholly-owned and controlled subsidiaries. All intercompany balances and transactions between us and our wholly-owned and controlled subsidiaries have been eliminated in consolidation. For consolidated subsidiaries in which our ownership is less than 100% and for which we have control over the assets and liabilities and the management of the entity, the outside stockholders’ interests are shown as non-controlling interests. Recently Adopted Accounting Pronouncements
Standard/Description | Effective Date and Adoption Considerations | Effect on Financial Statements
ASU No. 2016-02, Leases. Entities are required to recognize both assets and liabilities arising from finance and operating leases, along with additional qualitative and quantitative disclosures. | We adopted ASU No. 2016-02 on January 1, 2019. | Further disclosures and details on our adoption of ASU 2016-02 are discussed below.
Accounting Pronouncements Not Yet Adopted
Standard/Description | Effective Date and Adoption Considerations | Effect on Financial Statements
ASU No. 2016-13, Financial Instruments - Measurement of Credit Losses on Financial Instruments. Applies to all financial instruments carried at amortized cost including held-to-maturity debt securities and trade receivables. Requires financial assets carried at amortized cost to be presented at the net amount expected to be collected and requires entities to record credit losses through an allowance for credit losses on available-for-sale debt securities. | Effective at the beginning of our first quarter of fiscal year 2020, with early adoption permitted. We do not expect to early-adopt. | We are currently evaluating this guidance to determine its impact on our consolidated financial statements, and based on our preliminary assessment, we do not expect the impact of adoption of this guidance to be material.
Adoption of ASU 2016-02, "Leases" On January 1, 2019, we adopted ASU 2016-02, Leases, or ASU 2016-02. This standard requires recognition of both assets and liabilities arising from finance and operating leases, along with additional qualitative and quantitative disclosures. ASU 2016-02 requires lessees to recognize a right-of-use asset representing a right to use the underlying asset over the lease term, and a corresponding lease liability on the balance sheet. Our operating leases primarily relate to our leased office space and data center facilities, and we do not have any leases classified as finance leases. We adopted ASU 2016-02 using the modified retrospective transition method and did not restate prior periods. Using the modified retrospective approach, we applied the provisions of ASU 2016-02 beginning in the period of adoption, and elected the package of practical expedients available to us. There was no impact to the opening balance of retained earnings as a result of a cumulative-effect adjustment on the adoption date. We elected the practical expedient to not reassess lease classifications, but alternatively to carry forward our historical classifications. In addition, we elected the practical expedient of not separating lease and non-lease components as our lease arrangements are not highly dependent on other underlying assets. Our implementation of the amended lease guidance was subject to the same internal controls over financial reporting that we apply to our consolidated financial statements. At lease inception, we review the service arrangement and components of a contract to identify if a lease or embedded lease arrangement exists. An indicator of a contract containing a lease is when we have the right to control and use an identified asset over a period of time in exchange for consideration. Operating lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term, using our estimated incremental borrowing rate. Upon adoption of ASU 2016-02, we made the policy election to not record existing or future leases with a term of 12 months or less on the balance sheet, and to recognize lease expense on a straight-line basis over the lease term. For these leases, the impact on adoption was nominal. We have also made policy elections related to capitalization thresholds and discount rates. We have elected to use a portfolio approach in consideration of our incremental borrowing rate to our population of lease agreements. Our incremental borrowing rate was determined based on our recent debt issuances that we believe are reflective of current borrowing rates. Certain lease agreements include options to extend, renew or terminate the lease agreement. As of September 30, 2019, the weighted-average remaining lease term was 6.9 years and the weighted average discount rate was 3.6%. Our lease agreements do not contain any residual value guarantees. Upon adoption of ASU 2016-02, we recorded $357 million in operating lease liabilities, of which $52 million is included in other current liabilities and $305 million is included in non-current operating lease liability within our accompanying consolidated balance sheet. We also recorded $308 million in operating lease right-of-use assets that are included as a component of property and equipment, net, in our balance sheet and are recorded in an amount equal to our lease liability, adjusted for any remaining unamortized lease incentives such as our deferred rent balances. As part of our adoption, we eliminated $49 million in deferred rent liabilities, of which $2 million had previously been included in other current liabilities and $47 million had been included in other non-current liabilities on our balance sheet. On the date of adoption, deferred rent liabilities were reclassified and presented as a reduction to the right-of-use asset, included in property and equipment, net, on our consolidated balance sheet. Our adoption did not have an impact on our consolidated income statement. We recognize rent expense monthly on a straight-line basis for each respective operating lease, as a reduction to the right-of-use asset. For the nine and three months ended September 30, 2019, we recognized $29 million and $9 million, respectively, of rent expense for office space as rent and occupancy expense and $16 million and $5 million, respectively, of rent expense for data center facilities as technology and communication expense within our consolidated income statement. We do not have any significant variable lease costs related to building and maintenance costs, real estate taxes, or other charges. Details of our lease asset and liability balances are as follows (in millions):
|  | As of September 30, 2019 |  | As of January 1, 2019
Right-of-use lease assets |  | $292 |  | $308
Current operating lease liability |  | 52 |  |  | 52 |
Non-current operating lease liability |  | 287 |  |  | 305 |
Total operating lease liability |  | $339 |  | $357
As of September 30, 2019, we estimate that our operating lease liability will be recognized in the following years (in millions):
Remainder of 2019 | $ | 14 |
2020 | 64 |
2021 | 63 |
2022 | 61 |
2023 | 44 |
Thereafter | 137 |
Lease liability amounts repayable | 383 |
Interest costs | 44 |
Total operating lease liability | $ | 339 |
Supplemental cash flow information and non-cash activity related to our operating leases are as follows:
| Nine Months Ended September 30, 2019 |  | Three Months Ended September 30, 2019
Cash paid for amounts included in the measurement of operating lease liability | $ | 46 |  |  | $ | 15 |
Right-of-use assets obtained in exchange for operating lease obligations | $ | 381 |  |  | $ | 2 |

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- Definition The entire disclosure for all significant accounting policies of the reporting entity. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
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