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New Accounting Standard | 3 Months Ended
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Mar. 31, 2019
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] |
New Accounting Standards | NEW ACCOUNTING STANDARDS Leases. Effective January 1, 2019, FCX adopted the Financial Accounting Standards Board’s (FASB) Accounting Standards Update (ASU) that requires lessees to recognize most leases on the balance sheet. FCX elected the practical expedients allowing it to (i) apply the provisions of the updated lease guidance at the effective date, without adjusting the comparative periods presented and (ii) not reassess lease contracts, lease classification and initial direct costs of leases existing at adoption. FCX also elected an accounting policy to not recognize a lease asset and liability for leases with a term of 12 months or less and a purchase option that is not expected to be exercised. FCX leases various types of properties, including offices and equipment under non-cancelable leases. Nearly all of FCX’s leases were considered operating leases under the new ASU. Adoption of this ASU resulted in the recognition of $243 million in lease right-of-use assets and lease liabilities as of January 1, 2019. The components of FCX’s leases presented in the consolidated balance sheet as of March 31, 2019, follow (in millions):
Lease right-of-use assets (included in property, plant, equipment and mine development costs, net) | $ | 245 |
Short-term lease liabilities (included in accounts payable and accrued liabilities) | $ | 33 |
Long-term lease liabilities (included in other liabilities) | 223 |
Total lease liabilities | $ | 256 |
Operating lease costs in first-quarter 2019, primarily included in production and delivery expense in the consolidated statement of income, are as follows (in millions):
Operating leases | $ | 12 |
Variable and short-term leases | 21 |
Total lease costs | $ | 33 |
Lease costs totaled $80 million for the year 2018 and sublease income was immaterial. During first-quarter 2019, FCX paid $10 million for lease liabilities recorded in the consolidated balance sheet (included in operating cash flows in the consolidated statements of cash flows). As of March 31, 2019, the weighted-average discount rate used to determine the lease liabilities was 5.7 percent and the weighted-average remaining lease term was 9.3 years. The future minimum payments for leases presented in the consolidated balance sheets at March 31, 2019, follows (in millions):
Remaining nine months of 2019 | $ | 36 |
2020 | 45 |
2021 | 39 |
2022 | 33 |
2023 | 30 |
Thereafter | 155 |
Total payments | 338 |
Less amount representing interest | (82 | )
Present value of net minimum lease payments | 256 |
Less current portion | (33 | )
Long-term portion | $ | 223 |
Financial Instruments. In June 2016, FASB issued an ASU that requires entities to estimate all expected credit losses for most financial assets held at the reporting date based on an expected loss model, which requires consideration of historical experience, current conditions, and reasonable and supportable forecasts. This ASU also requires enhanced disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. For public companies, this ASU is effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. FCX does not expect this guidance to have a material impact on its consolidated financial statements.

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- Definition The entire disclosure of changes in accounting principles, including adoption of new accounting pronouncements, that describes the new methods, amount and effects on financial statement line items. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -URI http://asc.fasb.org/topic&trid=2122394 + Details
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