Revenue Standard Could Have Major Impact on Software Industry
With the Financial Accounting Standards Board’s (“FASB”) new revenue recognition rules becoming effective in three months, the Accounting Standards Update (“ASU”) could have a major effect on the bottom lines of companies in the software industry. Under ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), software companies will have to recognize more revenue when the sale occurs. However, companies in the software industry have long-term arrangements with customers, meaning revenue is usually recognized over the life of the contract. One software company already feeling the impact is Microsoft, which was an early adopter of the standard. Under the. Read More.
FASB Proposes Reorganizing Consolidation Guidance
To address concerns over the organization of the guidance under Topic 810, Consolidation, the Financial Accounting Standards Board (“FASB”) recently issued Proposed Accounting Standards Update, Consolidation (Topic 812): Reorganization. The proposal reorganizes certain components within the FASB’s consolidation guidance and includes for illustrative purposes the amendments under the Proposed Accounting Standards Update, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. The FASB would reorganize the consolidation guidance under Topic 810 into a new Topic featuring the following two Subtopics for variable interest entities and voting interest entities: Subtopic 812-20, Consolidation—Variable Interest Entities Subtopic 812-30, Consolidation—Voting. Read More.
Interpretive Guidance Updated for Revenue Recognition
New interpretive guidance is available regarding revenue recognition. On August 18, the Securities and Exchange Commission (“SEC”) issued Release No. 33-10402, Commission Guidance Regarding Revenue Recognition for Bill-and-Hold Arrangements, which advises public companies to abandon the guidance for bill-and-hold transactions under Accounting and Auditing Enforcement Release (“AAER”) No. 108, In the Matter of Stewart Parness, once they start applying Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue From Contracts With Customers. Until then, companies should continue using guidance under AAER No. 108. Another interpretive release issued was Release No. 33-10403, Updates to Commission Guidance Regarding Accounting for. Read More.
Topics: Accounting and Auditing Enforcement Release, Accounting Standards Codification, FASB, Financial Accounting Standards Board "FASB", Revenue Recognition, SEC, Securities and Exchange Commission "SEC", Staff Accounting Bulletin "SAB"
FASB Proposes Amendments to Financial Instruments and Leases
Last week, the Financial Accounting Standards Board (“FASB”) issued a proposed Accounting Standards Update (“ASU”), Technical Corrections and Improvements to Recently Issued Standards: I. Accounting Standards Update No. 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities and II. Accounting Standards Update No. 2016-02, Leases (Topic 842). The proposed changes address the following areas: Equity Securities without a Readily Determinable Fair Value—Discontinuation. The proposed amendment allows a company measuring an equity security using the measurement alternative to change to a fair value method in agreement with Topic 820, Fair Value Measurement. Equity Securities without a. Read More.
Topics: Equity Securities, Fair Value Measurement (Topic 820), FASB, Financial Accounting Standards Board "FASB", Financial Instruments—Overall (Subtopic 825-10), Forward Contracts, lease accounting, Proposed Accounting Standards Update, Purchased Options, Readily Determinable Fair Value
Lease Accounting Proposal to Help Companies with Land Easements
Utility and oil and gas companies could receive new guidance from the Financial Accounting Standards Board (“FASB”) to help account for land easements. In Proposed Accounting Standards Update (“ASU”) No. 2017-290, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842, the FASB gives companies with land easements what it calls a transition break. The transition break allows companies to forgo reviewing dated contract files to determine whether the transactions must be identified as leases and should be accounted for under ASU No. 2016-02, Leases (Topic 842). When the lease standard goes into effect, new easements must be reviewed. Read More.
SEC’s Corp Fin Updates Compliance and Disclosure Interpretations
Staff members of the Securities and Exchange Commission’s (“SEC”) Division of Corporation Finance (“Corp Fin”) recently updated two Compliance and Disclosure Interpretations (“C&DIs”): Fixing America’s Surface Transportation (FAST) Act (Updated Question 1) ; and Securities Act Forms (New Questions 101.04 and 101.05) . Featuring the staff’s interpretations concerning SEC forms, rules and regulations, both updates relate to financial information requirements for emerging growth companies.