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Software Development – New Edition of Interpretation on Software Development Costs and Cloud Computing Arrangements Published NEW!

FASB Agenda – FASB Discusses Agenda Prioritization NEW!

FASB Accounting Standards Updates - No. 2020-04 —Reference Rate Reform (Topic 848) —Facilitation of the Effects of Reference Rate Reform on Financial Reporting 

Debt vs. Equity – FASB Discusses Debt vs. Equity 

FASB Agenda – FASB Discusses Agenda Prioritization 

FASB Proposed Accounting Standards Update 2019-760 —Financial Services —Insurance (Topic 944): Effective Date 

FASB Proposed Accounting Standards Update 2019-770 —Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting 

Segment Reporting – FASB Discusses Segment Reporting and Other Matters 

FASB Discusses Improvements to Segment Reporting 

FASB Discusses Financial Performance Reporting 

FASB Discusses Agenda Prioritization 

Not-for-Profit Entities (Topic 958) - Updating the Definition of Collections - FASB ASU 2019-03 

Plan Accounting: Defined Benefit Pension Plans (Topic 960); Defined Contribution Pension Plans (Topic 962); Health and Welfare Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting

Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made 

Collaborative Arrangements (Topic 808) – Clarifying the Interaction between Topic 808 and Topic 606 – FASB ASU No. 2018-18 

Employee Benefit Plan Master Trust Reporting - ASU 2017-06 

Collaborative Arrangements (Topic 808): Targeted Improvements - FASB Proposed ASU 2018-240 

FASB Discusses Agenda Prioritization 

Collaborative Arrangements - FASB Discusses Targeted Improvements and Other Matters 

FASB Discusses Future Agenda Items 

FASB Discusses Conceptual Framework Project 

Conceptual Framework - FASB Discusses the Conceptual Framework Elements 

Not-for-Profit Entities (Topic 958) - Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made - FASB Proposed ASU 2017-270 

FASB Invitation to Comment 2016-290 - Agenda Consultation

Articles

Software Development – New Edition of Interpretation on Software Development Costs and Cloud Computing Arrangements Published

We have published a new edition of our Interpretation, Accounting for Software Development Costs and Cloud Computing Arrangements. This new edition includes the following revisions and updates:

  • Made verbiage changes to reflect conforming changes to other GAAP guidance following the issuance of ASU 2018-15; and
  • Clarified the accounting for content development costs in a cloud computing arrangement.

For more information, click here.

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

FASB Agenda – FASB Discusses Agenda Prioritization

As reported in its “Summary of Board Decisions” publication, the FASB met on July 29, 2020, and discussed the results of staff research and outreach on eight potential projects related to recent agenda requests and other implementation requests.
The FASB decided to add a targeted improvements project for Topic 842, Leases, to its technical agenda to address the following issues:

  • Sales-type leases with substantial variable lease payments
  • Remeasurement of lease payments based on a reference index or rate
  • Reduction of scope in a lease contract.

The FASB decided not to consider the issue on transition disclosures under Topic 842 as part of that project. The FASB decided to add a project to its technical agenda to address the effect of underwriter restrictions on fair value measurements and to add a project to its research agenda to evaluate the effects of other types of sale restrictions on fair value measurements.

For more information, click here.

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

FASB Accounting Standards Updates - No. 2020-04 —Reference Rate Reform (Topic 848) —Facilitation of the Effects of Reference Rate Reform on Financial Reporting

Summary - The FASB issued an Accounting Standards Update (ASU) that provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. This guidance is ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

LIBOR and other interbank offered rates are widely used benchmark or reference rates in the United States and globally. Trillions of dollars in loans, derivatives, and other financial contracts reference LIBOR, the benchmark interest rate banks use to make short-term loans to each other.

With global capital markets expected to move away from LIBOR and other interbank offered rates toward rates that are more observable or transaction based and less susceptible to manipulation, the FASB launched a broad project in late 2018 to address potential accounting challenges expected to arise from the transition.

The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued.

The ASU is intended to help stakeholders during the global market-wide reference rate transition period. Therefore, it will be in effect for a limited time through December 31, 2022.

For more information, click here.

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

Debt vs. Equity – FASB Discusses Debt vs. Equity

Summary - As reported in its “Summary of Board Decisions” publication, the FASB met on February 5, 2020, and continued redeliberating the amendments in proposed ASU, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The FASB reached a number of decisions, including:

  • Clarify the scope of the guidance in Subtopic 470-20 for convertible debt instruments and in Subtopic 505-10, Equity—Overall, for convertible preferred stock.
  • Clarify the difference between a convertible debt and a debt instrument that could be converted to a variable number of shares with an aggregate fair value equal to a fixed monetary amount (such as share-settled debt).
  • Require that an entity apply the if-converted method of calculating diluted EPS to all convertible instruments and that interest expense not be added back to the numerator for convertible debt instruments if the principal is required to be settled in cash.
  • Exclude certain share-based payment arrangements (instruments that are liability-classified in accordance with guidance in paragraph 718-10-25-15) from the scope of the EPS amendments on instruments that may be settled in cash or shares.
  • Clarify that the reassessment guidance in paragraph 815-40-35-8 applies to both freestanding instruments and embedded features (similar to the scope as written in paragraph 815-40-15-5).
  • Add a cross-reference in Section 815-40-35 to the guidance in Subtopic 815-15, Derivatives and Hedging—Embedded Derivatives, on the accounting for embedded features upon a change in assessment of the derivatives scope exception.

For more information, click here.

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

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FASB Agenda – FASB Discusses Agenda Prioritization

Summary - As reported in its “Summary of Board Decisions” publication, the FASB met on September 18, 2019, and discussed the results of FASB staff research on four potential projects related to six recent agenda requests.

The FASB added a project to the EITF agenda to address the issuers’ accounting for modifications of equity classified warrants, that is, equity classified freestanding call options that are outside the scope of Topic 718, Compensation—Stock Compensation, or Topic 815, Derivatives and Hedging. The FASB limited the scope of the project to equity classified freestanding call options that remain equity classified after the modifications.

The FASB also added a project to its technical agenda on the accounting by a joint venture for contributions of nonmonetary assets by the ventures.

The FASB decided not to add the following potential projects to its agenda:

  • Acquired financial assets in a business combination that do not meet the definition of purchased financial assets with credit deterioration; and
  • Recognition and measurement of interest income.

For more information, click here.

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

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FASB Proposed Accounting Standards Update 2019-760 —Financial Services —Insurance (Topic 944): Effective Date

Summary - The FASB issued a proposed Accounting Standards Update (ASU) that would grant all insurance companies that issue long-duration contracts, such as life insurance and annuities, additional time to apply a standard that addresses this area of financial reporting. Stakeholders are encouraged to review and provide comment on the proposed ASU by September 20, 2019.

On August 15, 2018, the FASB issued ASU No. 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. The ASU made targeted amendments to improve, simplify, and enhance the financial reporting requirements for long-duration contracts issued by insurance companies.

Since that time, the FASB received an agenda request to delay its effective date by one year. In response, FASB members and staff conducted outreach with numerous insurance companies that issue and/or reinsure long-duration contracts to better understand their implementation challenges and progress.

Furthermore, last week, the FASB issued a proposed ASU that describes a new FASB philosophy for determining how effective dates for major standards are staggered between larger public companies and all other entities. Under this philosophy, a major standard would first be effective for larger public companies; effective dates for all other public and private companies and organizations would be staggered at least two years later. Generally, it is expected that early application would continue to be permitted for all entities.

The proposed ASU would amend the effective dates for the long-duration insurance standard.

For more information, click here.

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

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FASB Proposed Accounting Standards Update 2019-770 —Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting

Summary - The FASB has issued for public comment a proposed ASU that would provide temporary optional guidance to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting. Comments on the proposed ASU are due by October 7, 2019.

Trillions of dollars in loans, derivatives, and other financial contracts reference LIBOR, the benchmark interest rate banks use to make short-term loans to each other. With global capital markets expected to move away from LIBOR and other interbank offered rates toward rates that are more observable or transaction based and less susceptible to manipulation, the FASB launched a broad project in late 2018 to address potential accounting challenges expected to arise from the transition.

If adopted as proposed, the ASU would provide optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships affected by reference rate reform. The guidance would apply only to contracts or hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform.

The guidance is intended to help stakeholders during the global market-wide reference rate transition period and would therefore be in effect for a limited time. Accordingly, the guidance would be effective upon issuance of final guidance and would not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022.

For more information, click here.

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

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Segment Reporting – FASB Discusses Segment Reporting and Other Matters

Summary - As reported in its “Summary of Board Decisions” publication, the FASB met on July 23, 2019. The FASB held educational sessions on the following topics:
• Segment reporting;
• Primary financial statements/financial performance reporting;
• Financial instruments with characteristics of equity/distinguishing liabilities from equity;
• IBOR reform/reference rate reform;
• Goodwill and impairment/identifiable intangible assets and subsequent accounting for goodwill;
• Disclosure initiative/disclosure framework;
• Implementation of the revenue (Topic 606, IFRS 15) and leases (Topic 842, IFRS 16) standards; and
• The FASB’s project on effective date consideration for private companies, not-for-profit organizations, and small public companies.

No decisions were made.

For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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FASB Discusses Improvements to Segment Reporting

Summary - As reported in its “Summary of Board Decisions” publication, the FASB met on May 29, 2019, and discussed improvements to segment reporting. As part of developing the topics for a study on segment disclosures, the FASB discussed options to both require that segment information be reported in a financial statement format and require additional general disclosures in Topic 280, Segment Reporting.

The FASB discussed the merits of the financial statement format alternative. Because the complexities related to that alternative would likely overwhelm the other issues included in the study, the FASB decided to exclude that alternative from the study. However, the FASB directed the staff to undertake research into how the segment reconciliation requirements could be improved.

The FASB also directed the staff to study the effect of including additional general segment disclosure requirements.

The FASB gave permission for the staff to proceed with the study.

For more information, click here.

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

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FASB Discusses Financial Performance Reporting

Summary - As reported in its “Summary of Board Decisions” publication, the FASB met on April 24, 2019, and discussed an internal view approach to disaggregating income statement expense information. The FASB staff identified and explained the main issues and alternatives for FASB consideration on that approach and the draft preparer outreach materials. The goal of the internal view approach is to disaggregate income statement expense information based on how management internally views consolidated expenses.

The FASB directed its staff to proceed with outreach, affirmed the staff’s outreach strategy, and recommended several types of entities for outreach efforts. Additionally, the FASB highlighted areas for the staff to focus on during outreach with preparers and users.

The FASB directed its staff to conduct outreach with preparers on the operability of the internal view approach as well as other follow-on issues and to conduct outreach with users in order to understand the usefulness of potential outcomes from the internal view approach. 

For more information, click here.

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

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FASB Discusses Agenda Prioritization

Summary - As reported in its “Summary of Board Decisions” publication, the FASB met on May 8, 2019 and discussed the results of staff research on six potential projects related to eight recent agenda requests and a technical inquiry.The Board decided to add the following projects to the EITF agenda:
  • Financial Instruments—Clarifying the Interactions between Topic 321, Investments—Equity Securities, and Topic 323, Investments—Equity Method and Joint Ventures.
  • Revenue Recognition—Contract Modifications of Licenses of Intellectual Property.
The FASB also decided to expand the scope of its project, Improving the Accounting for Asset Acquisitions and Business Combinations, to include the accounting for in-process research and development and contingent consideration obligations recognized upon the initial consolidation of a variable interest entity that is not a business.The FASB decided not to add the following potential projects to its agenda:
  • Collective Defined Contribution Plans and the Definition of a Defined Contribution Plan
  • Share Repurchase Disclosures—Price and Earnings Per Share Effects; or
  • Accounting for Emissions Trading and Other Environmental Market Transactions.
The FASB also decided to remove the project, Measurement Alternative and Observable Transactions Identified after the Reporting Date, from its research agenda. 

For more information, click here.

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


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Not-for-Profit Entities (Topic 958) - Updating the Definition of Collections - FASB ASU 2019-03

Summary - The FASB has issued Accounting Standards Update (ASU) No. 2019-03, Not-for-Profit Entities (Topic 958): Updating the Definition of Collections.

These amendments modify the definition of the term collections and require that a collection-holding entity disclose its policy for the use of proceeds from when collection items are deaccessioned (i.e., removed from a collection). If a collection-holding entity has a policy that allows proceeds from deaccessioned collection items to be used for direct care, it should disclose its definition of direct care.

The amendments apply to all entities, including business entities, that maintain collections. However, accounting for collections is primarily an issue for certain not-for-profit (NFP) entities because collections often are held by museums; botanical gardens; libraries; aquariums; arboretums; historic sites; planetariums; zoos; art galleries; nature, science, and technology centers; and similar educational, research, and public service organizations that have those divisions.

The amendments are effective for annual financial statements issued for fiscal years beginning after December 15, 2019, and for interim periods within fiscal years beginning after December 15, 2020. Early application of the amendments is permitted. The amendments should be applied on a prospective basis.

For more information, click here.

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

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Plan Accounting: Defined Benefit Pension Plans (Topic 960); Defined Contribution Pension Plans (Topic 962); Health and Welfare Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting

Summary - Among other things, the amendments require a plan’s interest in that master trust and any change in that interest to be presented in separate line items in the statement of net assets available for benefits and in the statement of changes in net assets available for benefits, respectively.

The amendments also remove the requirement to disclose the percentage interest in the master trust for plans with divided interests and require that all plans disclose the dollar amount of their interest in each of those general types of investments.

The amendments require all plans to disclose: (a) their master trust’s other asset and liability balances; and (b) the dollar amount of the plan’s interest in each of those balances.

Lastly, the amendments eliminate redundant investment disclosures (e.g., those required by Topics 815 and 820) relating to 401(h) account assets.

Effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. The amendments should be applied retrospectively to each period for which financial statements are presented.    

For more information, click here.

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

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Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made

Summary - These amendments clarify and improve the scope and accounting guidance around contributions of cash and other assets received and made by not-for-profit organizations (NFPs) and business enterprises.

The ASU clarifies and improves current guidance about whether a transfer of assets, or the reduction, settlement, or cancellation of liabilities, is a contribution or an exchange transaction. It provides criteria for determining whether the resource provider is receiving commensurate value in return for the resources transferred which, depending on the outcome, determines whether the organization follows contribution guidance or exchange transaction guidance in the revenue recognition and other applicable standards.

It also provides a more robust framework for determining whether a contribution is conditional or unconditional, and for distinguishing a donor-imposed condition from a donor-imposed restriction. This is important because such classification affects the timing of contribution revenue and expense recognition.

The new ASU does not apply to transfers of assets from governments to businesses. 

For a public business entity or a not-for-profit entity that has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market for transactions in which the entity serves as a resource recipient to annual periods beginning after June 15, 2018, including interim periods within those annual periods. For all other entities, the requirements are effective for transactions in which the entity serves as a resource recipient to annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019.

An entity that is either a public business entity or a not-for-profit entity (NFP) that has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market should apply ASU No. 2018-08 for transactions in which the entity serves as a resource provider to annual periods beginning after December 15, 2018, including interim periods within those annual periods. All other entities should apply ASU No. 2018-08 for transactions in which the entity serves as the resource provider to annual periods beginning after December 15, 2019, and interim periods within those annual periods beginning after December 15, 2020. Early adoption is permitted.

For more information, click here.

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

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Collaborative Arrangements (Topic 808) – Clarifying the Interaction between Topic 808 and Topic 606 – FASB ASU No. 2018-18

Summary - The FASB has issued Accounting Standards Update (ASU) No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction Between Topic 808 and Topic 606, that clarifies the interaction between the guidance for certain collaborative arrangements and the Revenue Recognition financial accounting and reporting standard.

A collaborative arrangement is a contractual arrangement under which two or more parties actively participate in a joint operating activity and are exposed to significant risks and rewards that depend on the activity’s commercial success. The ASU provides guidance on how to assess whether certain transactions between collaborative arrangement participants should be accounted for within the revenue recognition standard.

The ASU also provides more comparability in the presentation of revenue for certain transactions between collaborative arrangement participants. It accomplishes this by allowing organizations to only present units of account in collaborative arrangements that are within the scope of the revenue recognition standard together with revenue accounted for under the revenue recognition standard.  The parts of the collaborative arrangement that are not in the scope of the revenue recognition standard should be presented separately from revenue accounted for under the revenue recognition standard.

For public companies, the amendments in ASU No. 2018-18 are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. For all other organizations, the amendments are effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. Early adoption is permitted.

For more information, click here.

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

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Employee Benefit Plan Master Trust Reporting - ASU 2017-06

Summary - Effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. The amendments should be applied retrospectively to each period for which financial statements are presented.  

Among other things, the amendments require a plan's interest in that master trust and any change in that interest to be presented in separate line items in the statement of net assets available for benefits and in the statement of changes in net assets available for benefits, respectively.
The amendments also remove the requirement to disclose the percentage interest in the master trust for plans with divided interests and require that all plans disclose the dollar amount of their interest in each of those general types of investments.
The amendments require all plans to disclose: (a) their master trust's other asset and liability balances; and (b) the dollar amount of the plan's interest in each of those balances.
Lastly, the amendments eliminate redundant investment disclosures (e.g., those required by Topics 815 and 820) relating to 401(h) account assets.
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.

Collaborative Arrangements (Topic 808): Targeted Improvements - FASB Proposed ASU 2018-240

Summary The FASB has released a proposed Accounting Standard Update (ASU), Collaborative Arrangement (Topic 808): Targeted Improvements.

The amendments in this proposed ASU would affect all entities that have collaborative arrangements. If adopted as proposed, this proposal would make targeted improvements to generally accepted accounting principles (GAAP) for collaborative arrangements as follows:
  • Add unit-of-account guidance in Topic 808 to align with the guidance in Topic 606, Revenue from Contracts with Customers, (i.e., a distinct good or service) limited to when an entity is assessing the scope of Topic 606;
  • Clarify that certain transactions between collaborative participants should be accounted for as revenue under Topic 606 when the collaborative participant is a customer in the context of the unit of account. In these situations, all of the guidance in Topic 606 should be applied, including recognition, measurement, presentation, and disclosure requirements; and
  • Clarify that in a transaction that is not directly related to sales to third parties, presenting the transaction as revenue would be precluded if the collaborative participant counterparty is not a customer.
For more information, click here.
 
© 2018 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

FASB Discusses Agenda Prioritization

Summary As reported in its "Summary of Board Decisions" publication, the FASB met on March 28, 2018, and discussed the results of its staff's research on the following five potential projects:
  • Determining a Highly Inflationary Economy;
  • Interest Rate Lock Commitments;
  • Misalignment of Collections Definition;
  • Cost Capitalization for Episodic Television Series; and
  • Recognition under Topic 805 for an Assumed Liability in a Revenue Contract.
For more information, click here.
 
© 2018 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Collaborative Arrangements - FASB Discusses Targeted Improvements and Other Matters

Summary - As reported in its "Summary of Board Decisions" publication, the FASB met on February 7, 2018, and discussed the project scope for potential improvements to Topic 808, Collaborative Arrangements, based on the feedback received during workshops held with stakeholders in December 2017. The FASB decided to retain the current scope of the project. The current scope includes certain transactions between participants of a collaborative arrangement; it excludes transactions directly related to sales to third parties. The current scope clarifies when certain transactions are within the scope of the revenue guidance; it does not include the development of a model for the financial reporting for non-revenue transactions.

On the remaining issues for deliberations, the FASB decided the following:

  • Entities would be required to apply the amendments resulting from the proposed ASU using a retrospective approach. The amendments would be required to be applied retrospectively as of an entity’s adoption date of Topic 606, Revenue from Contracts with Customers, subject to modification using the practical expedients in paragraph 606-10-65-1(h).
  • Additional recurring disclosures should not be required as a result of the targeted improvements, given the existing disclosures in Topics 606 and 808.

The FASB concluded that it received sufficient information and analysis to make an informed decision on the expected costs of the targeted improvements. Subject to what it learns from comment letters, the FASB believes that the expected benefits of the targeted improvements justify the expected costs. The FASB authorized its staff to draft a proposed Update for vote by written ballot that will be issued for public comment for a 45-day comment period.

For more information, click here.

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

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FASB Discusses Future Agenda Items

Summary - As reported in its "Summary of Board Decisions" publication, the FASB met on September 20, 2017, and discussed: (1) the results of staff research and analysis on the projects included in the FASB Invitation to Comment, Agenda Consultation, and (2) the status of its research agenda. The FASB reached a number of decisions, including the following:

  • Intangibles. The FASB decided to remove the holistic project on Intangibles from its research agenda and maintain a component on its research agenda focused on developing qualitative disclosures about intangibles as part of the overall disclosure framework project. The FASB also decided to combine the following two projects on its research agenda: (a) Accounting for Identifiable Intangible Assets in a Business Combination for Public Business Entities (PBEs) and Not-for-Profit Entities (NFPs) and (b) Subsequent Accounting for Goodwill for PBEs and NFPs.
  • Pensions and Other Postretirement Benefit Plans. The FASB decided to remove from its research agenda a project on pensions and other postretirement benefit plans.
  • Distinguishing Liabilities from Equity (Including Convertible Debt). The FASB decided to add to its agenda a project on distinguishing liabilities from equity. The objective of the project is to improve understandability and reduce complexity (without loss of information for users). The project will focus on indexation and settlement (in the context of the derivative scope exception), convertible debt, disclosures, and earnings-per-share.
  • Financial Performance Reporting. The FASB decided to add a project to its agenda to focus on the disaggregation of performance information. The project would consider disaggregation either through presentation in the income statement or through disclosure in the notes. The project would base the disaggregation on requiring functional lines to be disaggregated into natural components. The FASB also retained a component of the project on its research agenda associated with improving the structure of the performance statement and developing an operating performance measure.
  • Segment Reporting. The FASB decided to add a project to its agenda on segment reporting. The objective of the project is to improve the segment aggregation criteria and to improve the disclosure requirements. 
For more information, click here.
 
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

FASB Discusses Conceptual Framework Project

Summary As reported in its "Summary of Board Decisions" publication, the FASB met on October 11, 2017, and discussed working definitions of revenues and expenses, which are currently defined in FASB Concepts Statement No. 6, Elements of Financial Statements, and the relationship of those definitions with the definitions of gains and losses. The FASB provided the following tentative leanings and reactions to the working definitions:

  • Retain the phrase or other activities in the working definitions of revenues and expenses to ensure the terms are sufficiently inclusive.
  • Excluding the phrase carrying out from the working definitions was an improvement.
  • Not remove the phrase that constitute the entity's ongoing major or central operations in the working definitions at this time.
The FASB directed its staff to develop working definitions of gains and losses in order to further analyze whether the phrase that constitute the entity's major or central operations can be excluded from the working definitions of revenues and expenses. 

For more information, click here.
 
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Conceptual Framework - FASB Discusses the Conceptual Framework Elements

Summary - As reported in its "Summary of Board Decisions" publication, the FASB met on August 30, 2017, and discussed working definitions of an asset and a liability. The FASB decided to eliminate the terms probable, future economic benefits, sacrifices of economic benefits, and past transactions or events from the FASB's revised definitions. The FASB directed its staff to further analyze whether the term control is necessary in the definition of an asset.
For more information, click here.
 
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Not-for-Profit Entities (Topic 958) - Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made - FASB Proposed ASU 2017-270

Summary - The FASB has issued a proposed Accounting Standard Update (ASU) to clarify and improve the scope and the accounting guidance for contributions received and made, primarily by not-for-profits. Stakeholders are asked to review and provide comment on the proposed ASU by November 1, 2017.

The proposed ASU helps organizations decide if transactions should be accounted for as a contribution or an exchange. Organizations would accomplish this by using clarifying guidance to evaluate whether a resource provider is receiving value in return for the resources transferred.

The proposed ASU also helps organizations evaluate such arrangements by using an improved framework to determine whether a contribution is conditional or unconditional, and better distinguish a donor-imposed condition from a donor-imposed restriction

Accounting for contributions is an issue primarily for not-for-profit organizations because contributions are a significant source of revenue. However, the amendments in this proposed ASU would apply to all organizations that receive or make contributions of cash and other assets, including business enterprises.

The proposed amendments would not apply to transfers of assets from the government to businesses. The guidance would apply to both a recipient of contributions received and a resource provider of contributions made.

The proposed standard follows the same effective dates as ASC Topic 606, Revenue from Contracts with Customers: 

  • A public company or a not-for-profit organization that has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market would apply the new standard to annual reporting periods beginning after December 15, 2017, including interim periods within that annual period.
  • Other organizations would apply the standard to annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019.

Early adoption would be permitted irrespective of the early adoption of the amendments in ASC Topic 606.

For more information, click here.

© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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FASB Invitation to Comment 2016-290 - Agenda Consultation 

Summary -  The FASB has issued for public comment an Invitation to Comment-Agenda Consultation. The purpose of this document is to solicit feedback about the financial reporting issues that the FASB considers adding to its agenda. The FASB requests feedback about the following:

  • Are the financial reporting issues described in this ITC areas for which there is potential for significant improvement?
  • What is the priority of addressing each issue?
  • What approach should the FASB take to address each issue?
  • Are there other major areas of financial reporting not described in this ITC that the FASB should consider adding to its agenda?
Comments are due by October 17, 2016.

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