FASB Standards Adopted during 2018 (continued) Standard Summary of guidance Effects on financial statements Definition of a business Issued January 2017 • Narrows the definition of a business and clarifies that, to be considered a business, substantially all of the fair value of the gross assets acquired (or disposed of) may not be concentrated in a single identifiable asset or a group of similar assets. • In addition, a business must now include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. • Adopted January 1, 2018. • The adoption of the guidance had no impact because it is applied prospectively. Subsequent to adoption, fewer transactions will be treated as acquisitions or dispositions of a business. Presentation of net periodic pension cost and net periodic postretirement benefit cost Issued March 2017 • Requires the service cost component of net periodic pension and postretirement benefit cost to be reported separately in the Consolidated statements of income from the other cost components. • Adopted January 1, 2018. • For further information, refer to Note 1. Premium amortization on purchased callable debt securities Issued March 2017 • Requires amortization of premiums to the earliest call date on certain debt securities. • Adopted January 1, 2018. • For further information, refer to Note 1. Hedge accounting Issued August 2017 • Aligns the accounting with the economics of the risk management activities. • Expands the ability for certain hedges of interest rate risk to qualify for hedge accounting. • Allows recognition of ineffectiveness in cash flow hedges and net investment hedges in OCI. • Permits an election at adoption to transfer certain investment securities classified as held-to-maturity to available- for-sale. • Simplifies hedge documentation requirements. • Adopted January 1, 2018. • For further information, refer to Note 1. Reclassification of certain tax effects from AOCI Issued February 2018 • Permits reclassification of the income tax effects of the TCJA on items within AOCI to retained earnings so that the tax effects of items within AOCI reflect the appropriate tax rate. • Adopted January 1, 2018. • For further information, refer to Note 1. JPMorgan Chase & Co./2018 Form 10-K 145