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NEW ACCOUNTING PRONOUNCEMENTS | 9 Months Ended
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Sep. 30, 2019
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] |
NEW ACCOUNTING PRONOUNCEMENTS | NEW ACCOUNTING PRONOUNCEMENTS On August 29, 2018, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software. This new standard requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40, Accounting for Internal-Use Software, to determine which implementation costs to (i) capitalize as assets and amortize over the term of the hosting arrangement or (ii) expense as incurred. This new standard is effective for public business entities in fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years. Early adoption is permitted, including during an interim period. Entities have the option to apply this standard prospectively to all implementation costs incurred after the date of adoption or retrospectively. The Company is evaluating this new standard, but does not expect it to have a significant impact on its financial statement presentation or results. On August 28, 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement. This standard is effective for public business entities in fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years. Early adoption is permitted, including during an interim period. This new standard requires changes to the disclosure requirements for fair value measurements for certain Level 3 items, and specifies that some of the changes must be applied prospectively, while others should be applied retrospectively. The Company is evaluating this new standard, but does not expect it to have a significant impact on its financial statement disclosures. See Note 8 for further information on the Company's fair value measurements. On February 25, 2016, the FASB issued the New Lease Standard. The New Lease Standard requires lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases (with the exception of short-term leases, as defined in the New Lease Standard) at the lease commencement date and recognize expenses on the income statement in a similar manner to the legacy guidance in ASC 840, Leases ("ASC 840"). The lease liability is measured as the present value of the unpaid lease payments and the right-of-use asset will be derived from the calculation of the lease liability. Lease payments include fixed and in-substance fixed payments, variable payments based on an index or rate, reasonably certain purchase options, termination penalties, fees paid by the lessee to the owners of a special-purpose entity for restructuring the transaction, and probable amounts the lessee will owe under a residual value guarantee. Lease payments do not include (i) variable lease payments other than those that depend on an index or rate, (ii) any guarantee by the lessee of the lessor’s debt, or (iii) any amount allocated to non-lease components, if such election is made upon adoption, per the provisions of the New Lease Standard. The Company adopted the provisions of the New Lease Standard effective January 1, 2019, using the modified retrospective adoption method, utilizing the simplified transition option available in the New Lease Standard, which allows entities to continue to apply the legacy guidance in ASC 840, including its disclosure requirements, in the comparative periods presented in the year of adoption. The Company elected the package of practical expedients available under the transition provisions of the New Lease Standard, including (i) not reassessing whether expired or existing contracts contain leases, (ii) not reassessing lease classification, and (iii) not revaluing initial direct costs for existing leases. In addition, the New Lease Standard eliminated the previous build-to-suit lease accounting guidance and resulted in derecognition of build-to-suit assets and liabilities that remained on the balance sheet after the end of the construction period, including the related deferred taxes. However, given the Company's guarantee associated with the bonds issued to fund the Dallas Love Field Modernization Program (the "LFMP"), the remaining debt service amount as of the adoption date was considered a minimum rental payment under the New Lease Standard, and therefore was recorded as a lease liability on the unaudited Condensed Consolidated Balance Sheet that will be reduced through future debt service payments made in 2019 and beyond. See Note 7 for disclosures related to the New Lease Standard, and Note 10 for further information on the Company’s build-to-suit projects. The following table provides the unaudited Condensed Consolidated Balance Sheet impact of applying the New Lease Standard effective as of January 1, 2019. The impact to the Company's results of operations and cash flows was not significant:
| Balance as of January 1, 2019
(in millions) | Balances removed under prior accounting |  | Balances added under New Lease Standard |  | Net impact of New Lease Standard
Prepaid expenses and other current assets | $ | 1 |  |  | $ | — |  |  | $ | (1 | )
Flight equipment | — |  |  | (110 | ) |  | (110 | )
Assets constructed for others | 1,669 |  |  | — |  |  | (1,669 | )
Less allowance for depreciation and amortization | (166 | ) |  | (2 | ) |  | 164 |
Operating lease right-of-use assets | — |  |  | 1,466 |  |  | 1,466 |
Other assets | 121 |  |  | — |  |  | (121 | )
Total assets | $ | 1,625 |  |  | $ | 1,354 |  |  | $ | (271 | )
Accounts payable | $ | 8 |  |  | $ | — |  |  | $ | (8 | )
Accrued liabilities | 37 |  |  | — |  |  | (37 | )
Current operating lease liabilities | — |  |  | 355 |  |  | 355 |
Current maturities of long-term debt | — |  |  | (14 | ) |  | (14 | )
Long-term debt less current maturities | — |  |  | (96 | ) |  | (96 | )
Deferred income taxes | (17 | ) |  | — |  |  | 17 |
Construction obligation | 1,602 |  |  | — |  |  | (1,602 | )
Noncurrent operating lease liabilities | — |  |  | 1,119 |  |  | 1,119 |
Other noncurrent liabilities | 60 |  |  | — |  |  | (60 | )
Retained earnings | (65 | ) |  | (10 | ) |  | 55 |
Total liabilities and stockholders' equity | $ | 1,625 |  |  | $ | 1,354 |  |  | $ | (271 | )

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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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