Financial Reporting Manual Updated
On March 17th, the Securities and Exchange Commission’s Division of Corporation Finance issued an updated Financial Reporting Manual that addresses transition issues in regard to Accounting Standards Update No. 2014-09, Revenue From Contracts With Customers (Topic 606). The updates include implementation guidance for companies that adopt the Financial Accounting Standards Board’s revenue recognition standard using the full retrospective method or modified retrospective approach. Companies that adopt the full retrospective method, for instance, will not have to recalculate their investments in other entities, as stated by Rule 3-09 of Regulation S-X. The revised Financial Reporting Manual also reflects changes from the. Read More.
New Employee Share-Based Payment Accounting Guidance Issued
An Accounting Standards Update (“ASU”) has been issued by the Financial Accounting Standards Board (“FASB”) impacting organizations that distribute share-based payment awards. ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, simplifies certain components of the accounting for share-based payments such as income tax consequences, the classification of awards as either equity or liabilities, and the classification regarding cash flow statements. For public companies, the amendments in ASU No. 2016-09 are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Private companies must apply the amendments to annual periods. Read More.
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.