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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.

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FASB Agrees on Guidance for Troubled Debt Restructurings

The Financial Accounting Standards Board (“FASB”) plans to clarify its guidance for troubled debt restructurings under Accounting Standards Update No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. During its September 6 meeting, the FASB agreed that lenders should assess the impact of the restructuring when the individual troubled loan is known. In certain situations, banks are free to make estimates based on historic data, which the FASB refers to as a “portfolio-level” approach. FASB member Christine Botosan remarked that the decision allows banks to estimate troubled debt restructurings earlier, wherein the estimation. Read More.

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Bank Regulators Add Guidance for FASB Credit Loss Standard

Several bank regulators have updated their interpretive guidance regarding the Financial Accounting Standards Board’s (“FASB”) credit loss standard. The revised guidance from Federal Deposit Insurance Corporation, Federal Reserve, the National Credit Union Administration, and the Office of the Comptroller of the Currency will be added to the December 2016-published frequently asked questions document that explains why the FASB issued Accounting Standards Update No. No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The new guidance addresses how to handle subjective information when banks estimate their loss reserves when applying ASU No. 2016-13. In. Read More.

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FASB Issues Update on Certain Financial Instruments with Liabilities and Equity Characteristics

Following recommendations from the Private Company Council, the Financial Accounting Standards Board (“FASB”) has issued Accounting Standards Update No. 2017-11, Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. Part I simplifies accounting for select financial instruments with down round features, a rule in an equity-linked financial instrument or embedded feature that offers a downward adjustment. Read More.

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Stock Award Modifications Guidance Updated

Guidance has been issued regarding whether the terms and conditions of share-based payments require modification accounting. Last week, Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting. The new ASU requires that a modification accounting be applied unless the following conditions are met: The modified award’s fair value is equal to the original award’s fair value The modified award’s vesting conditions is equal to the original award’s vesting conditions The modified award is categorized in the same way as the original award (as either an equity instrument or a liability. Read More.

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FASB Amends Guidance for Reporting Pension Costs

Later this year, some companies will be required to change the way they present expenses related to retirement benefits. The Financial Accounting Standards Board (“FASB”) has issued Accounting Standards Update (“ASU”) No. 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which is intended to improve the presentation of pension costs. The amended guidance requires companies to report expenses for employees’ pensions under the same line as other compensation costs. The other pension-related expenses mentioned in FASB ASC 715-30-35-04, Compensation—Retirement Benefits — Defined Benefit Plans — Pension — Subsequent Measurement . Read More.

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