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Summary of Significant Accounting Standards and Policies | 9 Months Ended
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Sep. 30, 2019
Summary of Significant Accounting Standards and Policies |
Summary of Significant Accounting Standards and Policies | 2. Summary of Significant Accounting Standards and Policies ​ For detailed information about the Company’s significant accounting standards, please refer to Note 2 of the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Except for the items listed below, there have been no other material changes to the Company’s significant accounting policies for the three and nine months ended September 30, 2019. ​ Recently Adopted Accounting Standards ​ ASU No. 2016-02, Leases (Topic 842) ​ In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (Topic 842), which supersedes Topic 840, Leases. The Company adopted this updated standard as of January 1, 2019, using the modified retrospective approach and the effective date as its date of initial application. The Company elected the package of three practical expedients permitted under the transition guidance, which among other things allowed the Company to carry forward the historical lease classification of existing leases and to not reassess expired contracts for leases. The practical expedient for hindsight to determine lease term was not elected by the Company. The standard resulted in the initial recognition of $170 million of total operating lease liabilities and $161 million of net operating lease assets on the Condensed Consolidated Balance Sheet on January 1, 2019. The standard did not materially impact the Condensed Consolidated Statement of Income or Condensed Consolidated Statement of Cash Flows. The disclosures required by the recently adopted accounting standard are included in Note 8 of the Notes to the Condensed Consolidated Financial Statements. ​ ASU No. 2017-12 and ASU 2018-16, Derivatives and Hedging (Topic 815) ​ In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This Update modifies accounting guidance for hedge accounting by making more hedge strategies eligible for hedge accounting, amending presentation and disclosure requirements, and changing how companies assess ineffectiveness. The intent is to simplify the application of hedge accounting and increase transparency of information about an entity’s risk management activities. The amended guidance is effective for annual periods beginning after December 15, 2018, with early adoption permitted. The Company completed its assessment of these updates adopted on January 1, 2019, including potential changes to existing hedging arrangements, and determined the adoption of the guidance did not have a material impact on the Company’s Condensed Consolidated Financial Statements. ​ In October 2018, the FASB issued ASU 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as Benchmark Interest Rate for Hedge Accounting Purposes. This Update permits use of the OIS rate based on the SOFR as a U.S. benchmark interest rate for hedge accounting purposes. The guidance should be adopted on a prospective basis. This Update is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Update did not have a material impact on the Company’s Condensed Consolidated Financial Statements. ​ New Accounting Standards ​ In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This Update simplifies the subsequent measurement of goodwill as the Update eliminates Step 2 from the goodwill impairment test. Instead, under the Update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should then recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, with the loss recognized not to exceed the total amount of goodwill allocated to that reporting unit. This Update is effective for annual periods beginning after December 15, 2019, with early adoption permitted. ​ Significant Accounting Policies ​ Indefinite-lived intangible assets and Goodwill: The Company has indefinite-lived intangible assets of $178 million at September 30, 2019 and December 31, 2018. Goodwill ($795 million and $791 million at September 30, 2019 and December 31, 2018, respectively) represents the excess of the cost of an acquired entity over the fair value assigned to identifiable assets acquired and liabilities assumed. The following table summarizes the Company’s indefinite-lived intangible assets for the periods presented: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
(in millions) | ​ | Balance at September 30, 2019 |  | Balance at December 31, 2018 | ​
Trademarks/tradenames (indefinite-lived) | ​ | $ | 178 |  | $ | 178 | ​
​ ​ The original carrying value of goodwill and accumulated impairment charges by reportable business segment at September 30, 2019 was as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | North | ​ | South | ​ | Asia | ​ | ​ | ​ | ​ | ​ | ​ | ​
(in millions) |  | America |  | America |  | Pacific |  | EMEA |  | Total |
Goodwill before impairment charges | ​ | $ | 601 | ​ | $ | 55 | ​ | $ | 225 | ​ | $ | 65 | ​ | $ | 946 | ​
Accumulated impairment charges | ​ | ​ | (1) | ​ | ​ | (33) | ​ | ​ | (121) | ​ | ​ | — | ​ | ​ | (155) | ​
Balance at January 1, 2019 | ​ | ​ | 600 | ​ | ​ | 22 | ​ | ​ | 104 | ​ | ​ | 65 | ​ | ​ | 791 | ​
Acquisitions | ​ | ​ | 7 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 7 | ​
Currency translation | ​ | ​ | — | ​ | ​ | (2) | ​ | ​ | 2 | ​ | ​ | (3) | ​ | ​ | (3) | ​
Balance at September 30, 2019 | ​ | $ | 607 | ​ | $ | 20 | ​ | $ | 106 | ​ | $ | 62 | ​ | $ | 795 | ​
​ The Company assesses indefinite-lived intangible assets and goodwill for impairment annually (or more frequently if impairment indicators arise). The Company performs this annual impairment assessment as of July 1 each year. In testing indefinite-lived intangible assets for impairment, the Company first assesses qualitative factors to determine whether it is more-likely-than-not that the fair value of an indefinite-lived intangible asset is impaired. After assessing the qualitative factors, if the Company determines that it is more-likely-than-not that the fair value of an indefinite-lived intangible asset is greater than its carrying amount, then it would not be required to compute the fair value of the indefinite-lived intangible asset. In the event the qualitative assessment leads the Company to conclude otherwise, then it would be required to determine the fair value of the indefinite-lived intangible assets and perform a quantitative impairment test in accordance with Accounting Standards Codification (“ASC”) subtopic 350-30. In performing the qualitative analysis, the Company considers various factors including net sales derived from these intangibles and certain market and industry conditions. Based on the results of its assessment, the Company concluded that as of July 1, 2019, there were no impairments in its indefinite-lived intangible assets. ​ In testing goodwill for impairment, the Company first assesses qualitative factors in determining whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. After assessing the qualitative factors, if the Company determines that it is more-likely-than-not that the fair value of a reporting unit is greater than its carrying amount then the Company does not perform the two-step impairment test. If the Company concludes otherwise, then it performs the first step of the two-step impairment test as described in ASC Topic 350. In the first step (“Step One”), the fair value of the reporting unit is compared to its carrying value. If the fair value of the reporting unit exceeds the carrying value of its net assets, goodwill is not considered impaired and no further testing is required. If the carrying value of the net assets exceeds the fair value of the reporting unit, a second step (“Step Two”) of the impairment assessment is performed in order to determine the implied fair value of a reporting unit's goodwill. Determining the implied fair value of goodwill requires a valuation of the reporting unit's tangible and intangible assets and liabilities in a manner similar to the allocation of purchase price in a business combination. If the carrying value of the reporting unit's goodwill exceeds the implied fair value of its goodwill, goodwill is deemed impaired and is written down to the extent of the difference. Based on the results of the annual assessment, the Company concluded that as of July 1, 2019, there were no impairments in its reporting units. ​

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