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SIERRA BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
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2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
In August 2014, the FASB issued ASU 2014-14 which amended existing guidance related to the
classification of certain government-guaranteed mortgage loans, including those guaranteed by the FHA
and the VA, upon foreclosure. It requires that a mortgage loan be derecognized and a separate other
receivable be recognized upon foreclosure if the following conditions are met: 1) The loan has a government
guarantee that is not separable from the loan before foreclosure; 2) At the time of foreclosure, the creditor
has the intent to convey the real estate property to the guarantor and make a claim on the guarantee, and
the creditor has the ability to recover under that claim; and 3) At the time of foreclosure, any amount of the
claim that is determined on the basis of the fair value of the real estate is fixed. Upon foreclosure, the
separate other receivable should be measured based on the amount of the loan balance (principal and
interest) expected to be recovered from the guarantor. ASU 2014-14 is effective for annual periods and
interim periods within those annual periods, beginning after December 15, 2014. ASU 2014-14 did not
have any impact upon the Company’s financial statements or operations upon adoption, and is not expected
to have any impact in future periods.
On January 5, 2016, the FASB issued Accounting Standards Update 2016-01, Financial Instruments–
Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. Changes made to the
current measurement model primarily affect the accounting for equity securities with readily determinable
fair values, where changes in fair value will impact earnings instead of other comprehensive income. The
accounting for other financial instruments, such as loans, investments in debt securities, and financial
liabilities is largely unchanged. The Update also changes the presentation and disclosure requirements for
financial instruments including a requirement that public business entities use exit price when measuring
the fair value of financial instruments measured at amortized cost for disclosure purposes. This Update is
generally effective for public business entities in fiscal years beginning after December 15, 2017, including
interim periods within those fiscal years. We are currently evaluating the effects of ASU 2016-01 on our
financial statements and disclosures.
On February 25, 2016, the FASB issued Accounting Standards Update 2016-02, Leases (Topic 842). The
new standard is being issued to increase the transparency and comparability around lease obligations.
Previously unrecorded off-balance sheet obligations will now be brought more prominently to light by
presenting lease liabilities on the face of the balance sheet, accompanied by enhanced qualitative and
quantitative disclosures in the notes to the financial statements. This Update is generally effective for public
business entities in fiscal years beginning after December 15, 2018, including interim periods within those
fiscal years. The Company is currently evaluating the effects of ASU 2016-02 on its financial statements
and disclosures.