FASB Approves Technical Corrections to U.S. GAAP
A handful of routine corrections and clarifications to U.S. GAAP will soon be published as final amendments. Approved October 19 by the Financial Accounting Standards Board (“FASB”), two of changes were introduced in April as part of Proposed Accounting Standards Update (ASU) No. 2016-220, Technical Corrections and Improvements:
- Subtopic 820-10, Fair Value Measurement — Overall. The updated guidance clarifies the difference between a valuation approach and a valuation technique. An organization now must disclose when it changes to a valuation approach or valuation technique, and explain why the change occurred.
- ASU No. 2015-05, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. The FASB agreed that financial professionals must utilize the recognition guidance under Accounting Standards Codification 350-30-25-1, Assets — Intangibles — Goodwill and Other — General Intangibles Other Than Goodwill — Recognition, for cloud computing licenses.
One amendment approved but not outlined under Proposed ASU No. 2016-220 is a slight fix to the Financial Accounting Standards Board’s (“FASB”) first significant update to nonprofit accounting in over two decades. The FASB wants to remove the unintended phrase “that contain no purpose restriction” under the endowments section of ASU No. 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities. Despite the small update, the FASB will issue a proposal for public comment. The proposal is expected to be released in a few weeks and have a 15-day comment period. FASB Chairman Russell Golden does not expect much pushback on the proposed change.
Upon publication of the technical corrections, public companies will have to comply with the amendments after Thursday, December 15. Private companies must comply a year later. Early adoption of the technical corrections will be allowed.