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Financial Services

Results from April 18th Revenue Recognition TRG Meeting

Earlier this week, the Revenue Recognition Transition Resource Group (“TRG”) held a meeting to discuss the issues regarding the implementation of Topic 606, Revenue from Contracts with Customers, and International Financial Reporting Standards 15, Revenue from Contracts with Customers. Staff members and the TRG agreed on the following matters: Memo No. 50, Scoping Considerations for Incentive-based Capital Allocations. Incentive-based capital allocations are within the scope of Topic 606. Memo No. 51, Contract Asset Treatment in Contract Modifications. A contract asset is sustained in the new modified contract and recognized under the new modified contract similar to receivables, resulting in prospective accounting.. Read More.

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Transition Resource Group Members for Credit Losses Standard Announced

On Tuesday, the Financial Accounting Standards Board (“FASB”) named the members of the Transition Resource Group (“TRG”) for its forthcoming credit losses standard. Comprised of financial statement preparers, auditors, users and financial services regulators, the TRG will address issues companies may face during the implementation process. Members are expected to share their feedback with the FASB, which will help determine how the Board should address such issues. It is anticipated that the FASB will release the credit losses standard this year. The complete list of the TRG members for the FASB’s credit losses standard is available on the Business Wire website. Details on the credit losses standard are. Read More.

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Credit Loss Standard Coming in June

According to Financial Accounting Standards Board (“FASB”) member Lawrence Smith, the standard setter is on track to publish Accounting Standards Update No. 2012-260, Financial Instruments — Credit Losses (Subtopic 825-15). Despite numerous delays, Smith said that the updated guidance for writing down bad loans and securities is scheduled to be issued by June 30th. The FASB also plans to meet again later this month to consider the standard’s costs and benefits, as well as revisit the previously agreed upon 2019 effective date for public entities.

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FASB Financial Instruments Standard Issued

After spending the past decade working to simplify the accounting for financial instruments, the Financial Accounting Standards Board (“FASB”) has issued its long-anticipated guidance, Accounting Standards Update (ASU) No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. FASB Chairman Russell Golden said the new standard will provide more useful information to financial statement users, and improves the accounting model to better address economic complexities. When the project initially started, the FASB attempted to overhaul the accounting for financial instruments. Things took a turn after the 2008 financial crisis, and the final standard. Read More.

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FASB Discusses Impairment of Financial Assets Project

During the Financial Accounting Standards Board’s (“FASB”) December 21st meeting, the board continued redeliberations on its proposed Accounting Standards Update, Financial Instruments—Credit Losses (Subtopic 825-15). In particular, the FASB discussed the following issues: Accounting for Purchased Financial Assets with Credit Deterioration (PCD Assets). The FASB determined that when the credit losses allowance is estimated without a method that discounts future anticipated cash flows, the allowance should be based on the average of the PCD asset. When the credit losses allowance is estimated with a method that discounts future anticipated cash flows, entities should use the discount rate that associates the. Read More.

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FASB Urged to Complete Asset Impairment Standard

Speaking at the American Institute of Certified Public Accountants’ (“AICPA”) Banking Conference on Wednesday, September 16th, Federal Reserve chief accountant Steve Merriett pressed the Financial Accounting Standards Board (“FASB”) to complete its oft-delayed asset impairment standard. Merriett said the standard needs to be finished soon so the implementation process can begin, but the FASB has noted that it may rush through the last stages to meet its deadline. The FASB is scheduled to issue the standard based on proposed Accounting Standards Update No. 2012-260, Financial Instruments—Credit Losses (Subtopic 825-15), by the end of the year. Expected in the standard is. Read More.