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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.

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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.

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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.

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Public Companies Urged to Use Revenue Standard Panel’s Meeting Minutes

As the Financial Accounting Standards Board’s (“FASB”) revenue recognition standard prepares to take effect in 2018, Securities and Exchange Commission (“SEC”) Chief Accountant James Schnurr is pushing public companies to follow the guidance in the Transition Resource Group’s (“TRG”) meeting minutes when implementing Accounting Standards Update (ASU) No. 2014-09, Revenue From Contracts With Customers. At last week’s SEC Speaks conference, Schnurr said while the TRG’s conclusions are not authoritative, companies should still use them in practice. Additionally, any alternative approach a company takes must be communicated to the SEC. FASB Vice Chairman and TRG Co-Chairman Jim Kroeker praised Schnurr’s comments,. Read More.

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Decisions Reached on Accounting for Partial Sales of Nonfinancial Assets

The Financial Accounting Standards Board (“FASB”) recently reviewed the project on clarifying the scope of Subtopic 610-20, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets, which is part of Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606). During its February 17th meeting, the FASB decided not to offer explicit guidance regarding the sales of undivided interests in Subtopic 610-20. The FASB also decided to maintain consistency with Topic 606 and require the assessment of control to be reviewed from the counterparty’s perspective. For transition purposes, the FASB decided that Subtopic 610-20 will go into. Read More.

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Proposed Changes to Cash Flow Presentation Issued

The proposed Accounting Standards Update, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, was recently issued by the Financial Accounting Standards Board. Seeking to reduce the current diversity in practice in the presentation and classification of certain cash receipts and cash payments under Topic 230 and other Topics, the proposal addresses the following cash flow issues: Debt Prepayment or Debt Extinguishment Costs Settlement of Zero-Coupon Bonds Contingent Consideration Payments Made after a Business Combination Proceeds from the Settlement of Insurance Claims Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned Life Insurance. Read More.

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