FASB Discusses Topic 606 Pre-Agenda Research
At its meeting earlier this month, the Financial Accounting Standards Board (“FASB”) reviewed pre-agenda research for updates to Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606). In particular, the discussion focused on certain disclosure requirements for remaining performance obligations. The FASB agreed to add a practical expedient to the requirement for disclosing remaining performance obligations for certain types of variable consideration. Also agreed upon were improvements to the qualitative disclosure requirement for remaining performance obligations in paragraph 606-10-50-15. The following types of variable consideration would not be required in an entity’s disclosure of its remaining. Read More.
FASB Updates Guidance for Assessing Put and Call Options
Impacting companies that invest in or issue debt instruments (or hybrid financial instruments with a debt host) with embedded call (put) options, the Financial Accounting Standards Board (“FASB”) has issued Accounting Standards Update No. 2016-06, Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments. The Update clarifies the steps companies are required to take when assessing whether or not the economic characteristics and risks of call (put) options are clearly and closely related to the economic characteristics and risks of their debt hosts. When a call (put) option is contingently exercisable, a company does not have. Read More.
FASB Updates Guidance for Principal versus Agent Revenue Accounting
Improving the implementation guidance regarding principal versus agent revenue considerations, the Financial Accounting Standards Board (“FASB”) has issued Accounting Standards Update (ASU) No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). The amendments in ASU No. 2016-08 clarify the following: A company must determine the nature of each specified good or service promised to a customer (e.g., a good/service itself or right to a good/service). Then a company decides whether it is acting in the capacity as a principal or agent for each individual good or service promised to a customer.. Read More.
FASB Amends Prepaid Cards Guidance
Updating its guidance for prepaid cards, the Financial Accounting Standards Board (“FASB”) has published Accounting Standards Update (ASU) No. 2016-04, Liabilities — Extinguishments of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products, a Consensus of the FASB’s Emerging Issues Task Force. ASU No. 2016-04 was issued in part because of the lack of U.S. GAAP guidance concerning the derecognition of the liabilities from prepaid, store-value cards. The FASB’s goal is to reduce accounting inconsistencies for such liabilities. The amendments in ASU No. 2016-04 consider liabilities from prepaid card sales as financial liabilities. In addition, a card’s remaining. Read More.
Equity Method of Accounting Updated
Impacting companies with an investment that now qualifies for the equity method of accounting due to increased ownership interest or influence, the Financial Accounting Standards Board (“FASB”) has issued Accounting Standards Update (ASU) No. 2016-07, Investments – Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting. Current GAAP requires that when an investment was previously below the threshold for equity method but then qualifies, the investor was required to retroactively value the investment as if it had been under the equity method from the initial purchase. As part of the simplification initiative, ASU. Read More.
Private Company Accounting Alternatives Removed
Impacting the use of private company accounting alternatives, the Financial Accounting Standards Board has issued Accounting Standards Update (ASU) No. 2016-03 . The ASU eliminates the effective dates for the following alternatives: ASU No. 2014-02, Intangibles—Goodwill and Other (Topic 350). ASU No. 2014-03, Derivatives and Hedging (Topic 815). ASU No. 2014-07, Consolidation (Topic 810): Applying Variable Interest Entities Guidance to Common Control Leasing Arrangements. ASU No. 2014-18, Business Combinations (Topic 805): Accounting for Identifiable Intangible Assets in a Business Combination. ASU No. 2016-03 also waives the preferability assessment for the first time a private entity applies a private company accounting alternative. The amendments in ASU No. 2016-03 are effective immediately.
Topics: accounting alternatives, Accounting Standards Update "ASU", Business Combinations (Topic 805), Consolidation (Topic 810), Derivatives and Hedging (Topic 815), Intangibles (Topic 350), preferability assessment, Private companies