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Service Concession Arrangements (Topic 853): Determining the Customer of the Operation Services - FASB ASU 2017-10

FASB Accounting Standards Update No. 2017-10 - Service Concession Arrangements (Topic 853): Determining the Customer of the Operation Services

FASB Accounting Standards Update No. 2017-10 - Service Concession Arrangements (Topic 853): Determining the Customer of the Operation Services

FASB Proposed Accounting Standards Update EITF-16C - Service Concession Arrangements (Topic 853) - Determining the Customer of the Operation Services

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Service Concession Arrangements (Topic 853): Determining the Customer of the Operation Services - FASB ASU 2017-10

Summary - The amendments clarify that the grantor in a service concession arrangement is the customer of the operation services in all cases for those arrangements.
 
Example: A public-sector entity grantor (government) enters into an arrangement with an operating entity under which the operating entity will provide operation services (which include operation and general maintenance of the infrastructure) for a toll road that will be used by third-party users (drivers). ASU 2017-10 clarifies that the grantor (government), rather than the third-party drivers, is the customer of the operation services in all cases for service concession arrangements within the scope of Topic 853.

Effective - Effective for a public business entity, 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 and an employee benefit plan that files or furnishes financial statements with or to the Securities and Exchange Commission, the amendments are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.
 
For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019.
 
Earlier adoption is permitted for all entities, including within an interim period, subject to specific transition requirements depending on whether an entity adopted Topic 606 before or after the issuance of the Update.
For more information, click here.
 
© 2018 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

FASB Accounting Standards Update No. 2017-10 - Service Concession Arrangements (Topic 853): Determining the Customer of the Operation Services

Summary - The FASB has issued Accounting Standards Update (ASU) 2017-10, Service Concession Arrangements (Topic 853): Determining the Customer of the Operation Services. ASU 2017-10 applies to the accounting by operating entities for service concession arrangements within the scope of Topic 853.
 
ASU 2017-10 clarifies that the grantor in a service concession arrangement is the customer of the operation services in all cases for those arrangements.
 
Example: A public-sector entity grantor (government) enters into an arrangement with an operating entity under which the operating entity will provide operation services (which include operation and general maintenance of the infrastructure) for a toll road that will be used by third-party users (drivers). ASU 2017-10 clarifies that the grantor (government), rather than the third-party drivers, is the customer of the operation services in all cases for service concession arrangements within the scope of Topic 853.
 
Effective date: For an entity that has not adopted Topic 606, Revenue from Contracts with Customers, before the issuance of ASU 2017-10, the effective date is the same as the effective date for Topic 606 (whether that is early or at the required date for Topic 606 adoption).
 
For an entity that has adopted Topic 606 before the issuance of ASU 2017-10, the effective date is as follows:
  • For a public business entity, 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 and an employee benefit plan that files or furnishes financial statements with or to the Securities and Exchange Commission, the amendments are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.
  • For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019.
Earlier adoption is permitted for all entities, including within an interim period, subject to specific transition requirements depending on whether an entity adopted Topic 606 before or after the issuance of the Update.
For more information, click here.
 
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

FASB Accounting Standards Update No. 2017-10 - Service Concession Arrangements (Topic 853): Determining the Customer of the Operation Services

Summary - The amendments clarify that the grantor in a service concession arrangement is the customer of the operation services in all cases for those arrangements.
 
Example: A public-sector entity grantor (government) enters into an arrangement with an operating entity under which the operating entity will provide operation services (which include operation and general maintenance of the infrastructure) for a toll road that will be used by third-party users (drivers). ASU 2017-10 clarifies that the grantor (government), rather than the third-party drivers, is the customer of the operation services in all cases for service concession arrangements within the scope of Topic 853.
 
Effective for a public business entity, 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 and an employee benefit plan that files or furnishes financial statements with or to the Securities and Exchange Commission, the amendments are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.
 
For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019.
 
Earlier adoption is permitted for all entities, including within an interim period, subject to specific transition requirements depending on whether an entity adopted Topic 606 before or after the issuance of the Update.
For more information, click here.
 
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

FASB Proposed Accounting Standards Update EITF-16C - Service Concession Arrangements (Topic 853) - Determining the Customer of the Operation Services

Summary - The FASB has issued proposed Accounting Standards Update, Distinguishing Liabilities from Equity (Topic 480): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. Comments are due by February 6, 2017.

The amendments in Part I of the proposal would change the accounting for certain equity-linked financial instruments (or embedded features) with down round features. The proposed amendments would require that when determining whether certain financial instruments should be classified as liabilities or equity instruments, an entity would not consider the down round feature when assessing whether the instrument is indexed to its own stock. However, an entity would recognize the effect of the feature when triggered (i.e., when the exercise price of the related equity-linked financial instrument is adjusted downward because of the down round feature) as follows:

  • For a financial instrument classified as equity, an entity would recognize the value of the effect of the down round feature in equity as a dividend.
  • For a financial instrument classified as a liability, an entity would recognize the value of the effect of the down round feature through a charge to net income.
  • For financial instruments with down round features that have been triggered during the reporting period, an entity would disclose that the feature has been triggered, the value of the effect of the down round feature being triggered, and the financial statement line item in which that effect is recorded.

The amendments in Part II of the proposal are a recharacterization of the indefinite deferral of certain provisions of Subtopic 480-10 that are currently presented as pending content in the Codification, to a scope exception. These amendments will not have an accounting effect.

For more information, click here.

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

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