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Codification Improvements

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FASB Accounting Standards Updates - No. 2020-03 —Codification Improvements to Financial Instruments NEW!

Codification Improvements to Topic 326, Financial Instruments—Credit Losses

FASB Accounting Standards Updates - No. 2019-07 —Codification Updates to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization, and Miscellaneous Updates 

Codification Improvements – FASB Discusses Codification Improvements for Share-Based Consideration Payable to Customers

Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments - FASB ASU 2019-04 

FASB Accounting Standards Updates - Accounting Standards Update No. 2019-01 —Leases (Topic 842) —Codification Improvements 

Codification Improvements to Topic 842, Leases 

Codification Improvements to Topic 995, U.S. Steamship Entities: Elimination of Topic 995 

Codification Improvements to Topic 326, Financial Instruments – Credit Losses – FASB ASU No. 2018-19 

Codification Improvements – Financial Instruments- FASB Proposed ASU 2018-300 

Codification Improvements - FASB ASU No. 2018-09

Codification Improvements to Topic 995, U.S. Steamship Entities: Elimination of Topic 995 - ASU 2017-15

FASB Codification - Proposed Improvements Discussed

Technical Corrections and Improvements

Revenue Recognition (Topic 605), Revenue from Contract with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observers Comments - FASB ASU 2017-13

Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting - FASB ASU 2016-11

Codification Improvements - FASB Proposed ASU 2017-320

FASB Accounting Standards Update No. 2016-19 - Technical Corrections and Improvements

FASB Accounting Standards Update No. 2015-10 - Technical Corrections and Improvements

Articles

FASB Accounting Standards Updates - No. 2020-03 —Codification Improvements to Financial Instruments

Summary - The FASB issued an Accounting Standards Update (ASU) that makes narrow-scope improvements to various aspects of the financial instruments guidance, including the current expected credit losses (CECL) standard issued in 2016.

The ASU is part of the FASB’s ongoing Codification improvement project aimed at clarifying specific areas of accounting guidance to help avoid unintended application. The items addressed in that project generally are not expected to have a significant effect on current accounting practice or create a significant administrative cost for most entities.

“The FASB decided to issue this financial instruments ASU separate from other Codification improvements to increase stakeholder awareness of the changes and to expedite the improvement process,” stated FASB Chairman Russell G. Golden. “It addresses areas brought to our attention by stakeholders, and it represents our ongoing commitment to support a successful transition to our standards.”

Among its improvements, the ASU clarifies that all nonpublic companies and organizations are required to provide certain fair value option disclosures.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Codification Improvements to Topic 326, Financial Instruments—Credit Losses

Summary - This ASU, among other narrow-scope improvements, clarifies guidance around how to report expected recoveries. “Expected recoveries” describes a situation in which an organization recognizes a full or partial writeoff of the amortized cost basis of a financial asset, but then later determines that the amount written off, or a portion of that amount, will in fact be recovered. This ASU permits organizations to record expected recoveries on PCD assets.

In addition to other narrow technical improvements, the ASU also reinforces existing guidance that prohibits organizations from recording negative allowances for available-for-sale debt securities.

For entities that have not yet adopted the amendments in ASU 2016-13 as of 11/26/19, the effective dates and transition requirements are the same as those in ASU 2016-13.

For entities that have adopted ASU 2016-13, these amendments are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted in any interim period after 11/26/19 as long as an entity has adopted ASU 2016-13.

For entities that have adopted ASU 2016-13, the amendments should be applied on a modified retrospective basis by means of a cumulative-effect adjustment to the opening retained earnings balance in the statement of financial position as of the date that an entity adopted ASU 2016-13.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

FASB Accounting Standards Updates - No. 2019-07 —Codification Updates to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization, and Miscellaneous Updates

Summary - The FASB has issued Accounting Standards Update (ASU) No. 2019-07, Codification Updates to SEC Sections. ASU 2019-07 amends certain SEC sections or paragraphs within the FASB Accounting Standards Codification™ (Codification). These amendments are being made to reflect the following previously issued SEC final rules:
• Disclosure Update and Simplification; and
• Investment Company Reporting Modernization (2 final rules).

The SEC adopted the above final rules to improve, update, and simplify its regulations on financial reporting and disclosure. ASU 2019-07 updates the Codification to reflect these SEC changes. Other miscellaneous updates are included in ASU 2019-07 to update language in the Codification to the electronic Code of Federal Regulations.

For more information, click here.
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Codification Improvements – FASB Discusses Codification Improvements for Share-Based Consideration Payable to Customers

Summary - As reported in its “Summary of Board Decisions” publication, the FASB met on July 31, 2019. The FASB discussed comments received on its March 2019 proposed Accounting Standards Update, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Codification Improvements—Share-Based Consideration Payable to a Customer. The FASB’s discussion focused on the following topics:
• Redeliberation issues;
• Transition and effective date;
• Analysis of costs and benefits; and
• Next steps.

For more information, click here.
© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments - FASB ASU 2019-04

Summary - The FASB has issued Accounting Standards Update (ASU) No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, that clarifies and improves areas of guidance related to the recently issued standards on credit losses, hedging, and recognition and measurement.

“Since issuing the financial instruments standards, including credit losses and derivatives and hedging, the FASB staff has been working with stakeholders to obtain feedback and address questions on the guidance,” stated FASB Chairman Russell G. Golden. “Through these interactions, the FASB identified areas of the guidance that require clarification and correction. The amendments in the ASU address those areas.”

The topics included in this ASU are:

  • Topic 1: Codification Improvements Resulting from the June 11, 2018 and November 1, 2018 Credit Losses Transition Resource Group (TRG) Meetings;
  • Topic 2: Codification Improvements to ASU No. 2016-13;
  • Topic 3: Codification Improvements to ASU No. 2017-12 and Other Hedging Items;
  • Topic 4: Codification Improvements to ASU No. 2016-01; and
  • Topic 5: Codification Improvements Resulting from the November 1, 2018 Credit Losses TRG Meeting.

The ASU is part of the FASB’s ongoing agenda project focused on improving the FASB Accounting Standards Codification® and correcting its unintended application.

For more information, click here.
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FASB Accounting Standards Updates - Accounting Standards Update No. 2019-01 —Leases (Topic 842) —Codification Improvements

Summary - The FASB has issued an ASU that addresses two lessor implementation issues and clarifies that lessees and lessors are exempt from a certain interim disclosure requirement associated with adopting the new leases standard, Topic 842, Leases.

ASU 2019-01 aligns the guidance for fair value of the underlying asset by lessors that are not manufacturers or dealers in Topic 842 with that of existing guidance. As a result, the fair value of the underlying asset at lease commencement is its cost, reflecting any volume or trade discounts that may apply. However, if there has been a significant lapse of time between when the underlying asset is acquired and when the lease commences, the definition of fair value (in Topic 820, Fair Value Measurement) should be applied.

The ASU also requires lessors within the scope of Topic 942, Financial Services—Depository and Lending, to present all “principal payments received under leases” within investing activities.

Finally, the ASU exempts both lessees and lessors from having to provide certain interim disclosures in the fiscal year in which a company adopts the new leases standard.

For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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Codification Improvements to Topic 842, Leases

Summary - These amendments affect narrow aspects of the guidance issued in the amendments in ASU 2016-02 including those regarding residual value guarantees, rate implicit in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase option, variable lease payments that depend on an index or a rate, investment tax credits, lease term and purchase option, transition guidance for amounts previously recognized in business combinations, certain transition adjustments, transition guidance for leases previously classified as capital leases under Topic 840, transition guidance for modifications to leases previously classifed as direct financing or sales-type leases under Topic 840, transition guidance for sale and leaseback transactions, impairment of net investment in the lease, unguaranteed residual asset, effect of initial direct costs on rate implicit in the lease, and failed sale and leaseback transactions.

For entities that early adopted Topic 842, the amendments are effective upon issuanceof ASU 2018-10, and the transition  requirements are the same as those in Topic 842.

For entities that have not adopted Topic 842, the effective date and transition requirements will be the same as the effective date and transition requirements in Topic 842.

For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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Codification Improvements to Topic 995, U.S. Steamship Entities: Elimination of Topic 995

Summary - The amendments in ASU No. 2017-15 to supersede Topic 995, U.S. Steamship Entities, because its guidance is no longer relevant. FASB Statement No. 109, Accounting for Income Taxes, provided an option in the reporting of deferred taxes for steamship entities that had statutory reserve deposits that were made before December 15, 1992. The Department of Transportation program from which these statutory reserve deposits originate and the Internal Revenue Service (IRS) provide a 25-year time frame in which to use the reserves or forfeit the tax deferral. The FASB decided that all steamship entities with statutory reserve funds should be reporting all deferred taxes in accordance with Topic 740, Income Taxes. The guidance in Topic 995 on transitioning to the requirements of Topic 740 is no longer relevant because statutory funds deposited on or before December 15, 1992, have reached the 25-year limit.

Effective for fiscal years and first interim periods beginning after December 15, 2018. Early adoption is permitted for all entities, including adoption in an interim period.

An entity should apply the amendments on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Additionally, in the period of adoption, an entity should provide disclosures about a change in accounting principle. Entities also should disclose the amounts and types of temporary differences for which a deferred tax liability had not previously been recognized.

For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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Codification Improvements to Topic 326, Financial Instruments – Credit Losses – FASB ASU No. 2018-19

Summary - The FASB has issued Accounting Standards Update (ASU) No. 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, that amends the transition requirements and scope of the credit losses standard issued in 2016.

First, the ASU mitigates transition complexity by requiring entities other than public business entities, including not-for-profit organizations and certain employee benefit plans, to implement it for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. This aligns the implementation date for their annual financial statements with the implementation date for their interim financial statements.

Second, the ASU clarifies that receivables arising from operating leases are not within the scope of the credit losses standard, but rather, should be accounted for in accordance with the leases standard.

The effective date and transition requirements are the same as the effective dates and transition requirements in the credit losses standard, as amended by the new ASU, which is as follows:

For public business entities that meet the definition of a Securities and Exchange Commission (SEC) filer, for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For public business entities that do not meet the definition of an SEC filer, for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. For all other entities, including not-for-profit entities within the scope of Topic 958 and employee benefit plans within the scope of Topics 960 through 965 on plan accounting, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

For more information, click here.

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Codification Improvements – Financial Instruments- FASB Proposed ASU 2018-300

Summary - The FASB has issued a proposed Accounting Standards Update (ASU), Codification Improvements—Financial Instruments, that would clarify and improve areas of guidance related to the recently issued standards on financial instruments and hedging. Stakeholders are encouraged to review and provide comment on the proposal by December 19, 2018.

The proposed ASU is part of the FASB’s ongoing agenda project focused on improving the FASB Accounting Standards Codification® and correcting its unintended application.

For more information, click here.

© 2018 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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Codification Improvements - FASB ASU No. 2018-09

Summary - The FASB has released Accounting Standards Update (ASU) No. 2018-09, Codification Improvements. ASU 2018-09 affects a wide variety of Topics in the Codification including:

  • Amendments to Subtopic 220-10, Income Statement— Reporting Comprehensive Income—Overall. The guidance in paragraph 220-10-45-10B(b) states that taxes not payable in cash are required to be reported as a direct adjustment to paid-in capital. This requirement conflicts with other guidance in Topic 740, Income Taxes, Subtopic 805-740, Business Combinations—Income Taxes, and Subtopic 852-740, Reorganizations—Income Taxes, which generally states that income taxes and adjustments to those accounts upon a business combination or a bankruptcy that is eligible for fresh-start reporting must be recognized in income. ASU No. 2018-09 clarifies the guidance in paragraph 220-10-45-10B by removing the generic phrase taxes not payable in cash and adding guidance that is specific to certain quasi-reorganizations.
  • Amendments to Subtopic 470-50, Debt—Modifications and Extinguishments. The guidance in paragraph 470-50-40-2 requires that the difference between the reacquisition price of debt and the net carrying amount of extinguished debt be recognized in income in the period of extinguishment. The guidance in that paragraph was not amended by FASB Statement No. 155, Accounting for Certain Hybrid Financial Instruments, or FASB Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities; therefore, it does not specifically address extinguishments of debt when the fair value option is elected. ASU No. 2018-09 clarifies that:
  1. When the fair value option has been elected on debt that is extinguished, the net carrying amount of the extinguished debt equals its fair value at the reacquisition date, and
  2. Related gains or losses in other comprehensive income must be included in net income upon extinguishment of the debt.
  • Amendments to Subtopic 480-10, Distinguishing Liabilities from Equity—Overall. The guidance in paragraph 480-10-25-15 prohibits the combination of freestanding financial instruments within the scope of Subtopic 480-10 with noncontrolling interest, unless the combination is required by Topic 815, Derivatives and Hedging. The example in paragraphs 480-10-55-55 and 480-10-55-59 conflicts with that guidance by stating that freestanding option contracts with the terms in Derivative 2 should be accounted for on a combined basis with the noncontrolling interest. The source of the example in paragraph 480-10-55-59 is from EITF Issue No. 00-4, “Majority Owner’s Accounting for a Transaction in the Shares of a Consolidated Subsidiary and a Derivative Indexed to the Noncontrolling Interest in That Subsidiary.” Issue 00-4 was nullified by FASB Statement No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, but a conforming amendment to the example in paragraph 480-10-55-59 was not made to align it with the guidance in Statement 150. The amendment in this Update conforms the guidance in paragraphs 480-10-55-55 and 480-10-55-59 to the guidance in Statement 150.
  • Amendments to Subtopic 718-740, Compensation—Stock Compensation—Income Taxes. The guidance in paragraph 718-740-35-2, as amended, is unclear on whether an entity should recognize excess tax benefits (or tax deficiencies) for compensation expense that is taken on the entity’s tax return. The amendment to paragraph 718-740-35-2 in ASU No. 2018-09 clarifies that an entity should recognize excess tax benefits (that is, the difference in tax benefits between the deduction for tax purposes and the compensation cost recognized for financial statement reporting) in the period when the tax deduction for compensation expense is taken on the entity’s tax return. This includes deductions that are taken on the entity’s return in a different period from when the event that gives rise to the tax deduction occurs and the uncertainty about whether (1) the entity will receive a tax deduction and (2) the amount of the tax deduction is resolved.
  • Amendments to Subtopic 805-740, Business Combinations— Income Taxes. The amendments to paragraph 805-740-25-13 removes a list of three methods for allocating the consolidated tax provision to an acquired entity after acquisition that is inconsistent with guidance in Topic 740. The three methods for tax allocation described in paragraph 805-740-25-13 do not follow the broad principles of being systematic, rational, and consistent with Topic 740. The amendment removes the allocation methods in paragraph 805-740-25-13 and conforms the guidance in Subtopic 805-740 to the guidance in Topic 740.
  • Amendments to Subtopic 815-10, Derivatives and Hedging— Overall. The amendment to paragraphs 815-10-45-4 and 815-10-45-5 in ASU No. 2018-09 clarifies the circumstances in which derivatives may be offset. Under certain specific conditions, derivatives may be offset if three of the four criteria in paragraph 210-20-45-1 are met. One of the criteria—the intent to set off—is not required to offset derivative assets and liabilities for certain amounts arising from derivative instruments recognized at fair value and executed with the same counterparty under a master netting agreement.
  • Amendments to Subtopic 820-10, Fair Value Measurement— Overall. The amendments to paragraph 820-10-35-16D in ASU No. 2018-09 clarify the Board’s decisions about the measurement of the fair value of a liability or instrument classified in a reporting entity’s shareholder’s equity from the perspective of a market participant that holds an identical item as an asset at the measurement date. A technical inquiry questioned how transfer restrictions embedded in an asset should affect the fair value of the corresponding liability or equity instrument from the perspective of the issuer. The amendments correct the wording of paragraph 820-10-35-16D to clarify how an entity should account for those restrictions. The amendments are not intended to substantively change the application of GAAP. However, it is possible that the amendments may result in a change to existing practice for some entities. The amendments to paragraphs 820-10-35-18D through 35-18F and 820-10-35- 18H through 35-18L revise the current guidance to allow portfolios of financial instruments and nonfinancial instruments accounted for as derivatives in accordance with Topic 815 to use the portfolio exception to valuation. The amendments improve guidance by adding wording that explicitly states that a group of financial assets, financial liabilities, nonfinancial items accounted for as derivatives in accordance with Topic 815, or a combination of these items that otherwise meet the criteria to do so are permitted to apply the portfolio exception for measuring fair value of the group. This allows entities to measure fair value on a net basis for those portfolios in which financial assets and financial liabilities and nonfinancial instruments are managed and valued together.
  • Amendments to Subtopic 940-405, Financial Services—Brokers and Dealers—Liabilities. Paragraph 940-405-55-1 contains incomplete guidance about offsetting on the balance sheet. The current guidance focuses only on explicit settlement dates as a determining criterion for offsetting when, in fact, an entity should consider all the requirements in Section 210-20-45, Balance Sheet—Offsetting—Other Presentation Matters, to determine whether a right of offset exists. There is similar guidance in paragraph 942-210-45-3. Paragraphs 940-405-55-1 and 942-210-45- 3 originated from two different AICPA Audit and Accounting Guides and paraphrase the guidance in Subtopic 210-20, albeit each slightly differently. The Board decided to amend both paragraphs so that the industry Topic guidance refers to the complete guidance for offsetting.
  • Amendments to Subtopic 962-325, Plan Accounting—Defined Contribution Pension Plans—Investments—Other. The amendment to Subtopic 962-325 removes the stable value common collective trust fund from the illustrative example in paragraph 962-325-55-17 to avoid the interpretation that such an investment would never have a readily determinable fair value and, therefore, would always use the net asset value per share practical expedient. Rather, a plan should evaluate whether a readily determinable fair value exists to determine whether those investments may qualify for the practical expedient to measure at net asset value in accordance with Topic 820.

Transition and Effective Date.

The transition and effective date guidance is based on the facts and circumstances of each amendment. Some of the amendments in ASU No. 2018-09 do not require transition guidance and will be effective upon issuance of ASU No. 2018-09. However, many of the amendments do have transition guidance with effective dates for annual periods beginning after December 15, 2018, for public business entities.

In addition, there are some conforming amendments in ASU No. 2018-09 that have been made to recently issued guidance that is not yet effective that may require application of the transition and effective date guidance in the original ASU. For example, there are conforming amendments to Topic 820 and Subtopic 944-310, Financial Services—Insurance—Receivables, that are related to the amendments in Accounting Standards Update No. 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which require application of the transition and effective date guidance in that ASU.

For more information, click here.
 
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Codification Improvements to Topic 995, U.S. Steamship Entities: Elimination of Topic 995 - ASU 2017-15

Summary - Effective for fiscal years and first interim periods beginning after December 15, 2018. Early adoption is permitted for all entities, including adoption in an interim period.

An entity should apply the amendments on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Additionally, in the period of adoption, an entity should provide disclosures about a change in accounting principle. Entities also should disclose the amounts and types of temporary differences for which a deferred tax liability had not previously been recognized.
The amendments in ASU No. 2017-15 to supersede Topic 995, U.S. Steamship Entities, because its guidance is no longer relevant. FASB Statement No. 109, Accounting for Income Taxes, provided an option in the reporting of deferred taxes for steamship entities that had statutory reserve deposits that were made before December 15, 1992. The Department of Transportation program from which these statutory reserve deposits originate and the Internal Revenue Service (IRS) provide a 25-year time frame in which to use the reserves or forfeit the tax deferral. The FASB decided that all steamship entities with statutory reserve funds should be reporting all deferred taxes in accordance with Topic 740, Income Taxes. The guidance in Topic 995 on transitioning to the requirements of Topic 740 is no longer relevant because statutory funds deposited on or before December 15, 1992, have reached the 25-year limit.
Earliest Effective Annual period (years beginning or ending after) December 15, 2018.
For more information, click here.
 
© 2018 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

FASB Codification - Proposed Improvements Discussed

Summary - As reported in its "Summary of Board Decisions" publication, the FASB met on April 11, 2018, and redeliberated amendments in the proposed ASU, Codification Improvements. The FASB affirmed its decision to supersede guidance related to Circular 202 and affirmed that the amendments will be effective upon issuance of a final Accounting Standards Update. 

For more information, click here.
 
© 2018 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Technical Corrections and Improvements

Summary - The amendments in this topic generally fall into one of the types of categories listed below:
  1. Amendments related to differences between original guidance (e.g., FASB Statements, EITF Issues, etc.) and the Codification.
  2. Guidance clarification and reference corrections that provide clarification through updating wording, correcting references, or a combination of both.
  3. Simplification amendments that streamline or simplify the Codification through minor structural changes to headings or minor editing of text to improve the usefulness and understandability of the Codification.
  4. Minor improvements to the guidance that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities.
Effective - The amendments that require transition guidance, and that are effective under paragraph 350-40-65-2 are effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2016. For all other entities, the amendments are effective for annual periods beginning after December 15, 2017, and interim periods in annual periods beginning after December 15, 2018. The amendments that are effective under paragraph 820-10-65-11 are effective for fiscal years, and interim periods within those fiscal years, for all entities beginning after December 15, 2016. Early adoption for all amendments under ASU 2016-19 is permitted.
For more information, click here.
 
© 2018 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Revenue Recognition (Topic 605), Revenue from Contract with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observers Comments - FASB ASU 2017-13

Summary - The amendments in ASU No. 2017-13 amends the early adoption date option for certain companies related to the adoption of ASU No. 2014-09 and ASU No. 2016-02. Both of the below entities may still adopt using the public company adoption guidance in the related ASUs, as amended.
 
The SEC staff stated the SEC would not object to a public business entity that otherwise would not meet the definition of a public business entity except for a requirement to include or the inclusion of its financial statements or financial information in another entity's filing with the SEC adopting ASC Topic 606 for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019.
 
The SEC staff stated the SEC would not object to a public business entity that otherwise would not meet the definition of a public business entity except for a requirement to include or the inclusion of its financial statements or financial information in another entity's filing with the SEC adopting ASC Topic 842 for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020.
Effective - Effective with ASU 2014-09 and ASU 2016-02, both as amended.
For more information, click here.
 
© 2018 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting - FASB ASU 2016-11

Summary - The amendments rescinds SEC paragraphs pursuant to two SEC Staff Announcements at the March 3, 2016 Emerging Issues Task Force (EITF) meeting.  Specifically, registrants should not rely on the following SEC Staff Observer comments upon adoption of Topic 606:
  1. Revenue and Expense Recognition for Freight Services in Process, which is codified in paragraph 605-20-S99-2
  2. Accounting for Shipping and Handling Fees and Costs, which is codified in paragraph 605-45-S99-1
  3. Accounting for Consideration Given by a Vendor to a Customer (including Reseller of the Vendor's Products), which is codified in paragraph 605-50-S99-1
  4. Accounting for Gas-Balancing Arrangements (i.e., use of the "entitlements method"), which is codified in paragraph 932-10-S99-5.For more information, click here.
Effective - Effective upon adoption of ASU 2014-09.
For more information, click here.
 
© 2018 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Codification Improvements - FASB Proposed ASU 2017-320

Summary - The FASB has issued proposed Accounting Standards Update (ASU), Codification Improvements, to improve US GAAP. Comments are due on the proposed ASU by December 4, 2017.

The items covered in this proposed ASU include, among other things:

  • Comprehensive Income - Overall (Subtopic 220-10) - Clarifies that the guidance in paragraph 220-10-45-10B, that the recognition of tax benefits related to deductible temporary differences and carryforwards arising from a quasi-reorganization as defined in Subtopic 852-20, are not an item of comprehensive income.
  • Debt-Modifications and Extinguishments (Subtopic 470-50) - The guidance in paragraph 470-50-40-2 requires that the difference between the reacquisition price of debt and the net carrying amount of extinguished debt be recognized in income in the period of extinguishment. This amendment clarifies that: (1) when the fair value option has been elected on extinguished debt, the net carrying amount of the extinguished debt equals its fair value at the reacquisition date; and (2) related gains or losses in other comprehensive income must be included in net income upon extinguishment of the debt.
  • Compensation-Stock Compensation-Income Taxes (Subtopic 718-740) - Clarifies that an entity should recognize excess tax benefits (or tax deficiencies) in the period when the tax deduction for compensation expense is taken on the entity's tax return. This includes deductions that are taken on the entity's return in a different period from when the event that gives rise to the tax deduction occurs and the uncertainty about whether: (a) the entity will receive a tax deduction, and (b) the amount of the tax deduction is resolved.
  • Business Combinations-Income Taxes (Subtopic 805-740) - Removes a list of three methods for allocating the consolidated tax provision to an acquired entity after acquisition that is inconsistent with guidance in Topic 740. These three methods can be found in paragraph 805-740-25-13.
  • Fair Value Measurement-Overall (Subtopic 820-10) - Revises the current guidance to allow portfolios of financial instruments and nonfinancial instruments accounted for as derivatives in accordance with Topic 815, Derivatives and Hedging, to use the portfolio exception to valuation.
  • Plan Accounting-Defined Contribution Pension Plans-Investments-Other (Subtopic 962-325) - Removes the stable value common collective trust fund from the illustrative example in paragraph 962-325-55-17 to avoid the interpretation that such an investment should always be measured using the net asset value per share practical expedient. Rather, a plan would need to evaluate whether a readily determinable fair value exists.

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FASB Accounting Standards Update No. 2016-19 - Technical Corrections and Improvements

Summary -The amendments generally fall into one of the types of categories listed below.
  1. Amendments related to differences between original guidance (e.g., FASB Statements, EITF Issues, etc.) and the Codification. 
  2. Guidance clarification and reference corrections that provide clarification through updating wording, correcting references, or a combination of both.
  3. Simplification amendments that streamline or simplify the Codification through minor structural changes to headings or minor editing of text to improve the usefulness and understandability of the Codification.
  4. Minor improvements to the guidance that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities.
Effective Date - The amendments that require transition guidance, and that are effective under paragraph 350-40-65-2 are effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2016. For all other entities, the amendments are effective for annual periods beginning after December 15, 2017, and interim periods in annual periods beginning after December 15, 2018. The amendments that are effective under paragraph 820-10-65-11 are effective for fiscal years, and interim periods within those fiscal years, for all entities beginning after December 15, 2016. Early adoption for all amendments under ASU 2016-19 is permitted.
For more information, click here.
 
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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FASB Accounting Standards Update No. 2015-10 - Technical Corrections and Improvements

Summary - The amendments in ASU 2015-10 represent changes to clarify the Codification, correct unintended application of guidance, or make minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. In addition, some of the amendments are intended to make the Codification easier to understand and easier to apply by eliminating inconsistencies, providing needed clarifications, and improving the presentation of guidance in the Codification.
Effective Date - The amendments that require transition guidance are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. All other amendments will be effective upon issuance.
For more information, click here.
 
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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