FASB Proposes Codification Improvements
The Proposed Accounting Standards Update, Codification Improvements, has been issued by the Financial Accounting Standards Board (“FASB”) to help improve certain aspects of U.S. GAAP. Covered in the proposal are the following: Comprehensive Income – Overall (Subtopic 220-10): The proposal clarifies that the disclosure of tax benefits concerning deductible temporary differences and carryforwards resulting from a semi-reorganization as defined under Subtopic 852-20, are not considered comprehensive income. Debt—Modifications and Extinguishments (Subtopic 470-50): The proposal clarifies that when the fair value option is selected on extinguished debt, the extinguished debt’s net carrying amount matches its fair value at the reacquisition date.. Read More.
Topics: Business Combinations (Topic 805), Debt Extinguishment, Defined Contribution Pension Plans, Fair Value Measurement (Topic 820), FASB, Financial Accounting Standards Board "FASB", Stock Compensation (Topic 718)
FASB Working to Fix Inconsistencies of U.S. GAAP
The Financial Accounting Standards Board (“FASB”) has released a proposed Accounting Standards Update to eliminate inconsistencies in parts of the U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). Impacting various areas in the FASB Accounting Standards Codification, the proposed changes will apply to all reporting entities within the scope of the related accounting guidance. Some of the amendments under Proposed Accounting Standards Update No. 2017-320 Codification Improvements, impact: Subtopic 718-740, Compensation—Stock Compensation—Income Taxes: The FASB proposes clarifying that an entity must disclose excess tax benefits (or tax deficiencies) in the reporting period when the tax deduction for compensation expense is taken on its. Read More.
Topics: Business Combinations (Topic 805), Fair Value Measurement (Topic 820), FASB, FASB Accounting Standards Codification, Financial Accounting Standards Board "FASB", Income Taxes, Proposed Accounting Standards Update, Stock Compensation (Topic 718), U.S. GAAP
FASB Seeks to Align Accounting Guidance Between Asset Acquisition and Business Combinations
There’s an effort underway by the Financial Accounting Standards Board (“FASB”) to look at closing the gap between the accounting standards for business combinations and the accounting standards for acquisition accounting. Because these two sets of accounting guidance are different, businesses are sometimes motivated to structure merger and acquisition (“M&A”) deals in ways that avoid complex accounting. Decreasing the differences between these standards could help make M&A activity more straightforward in the future. This effort is also a continuation of the FASB’s work to more clearly define what a business is for U.S. generally accepted accounting principles (“GAAP”). Some critics. Read More.
FASB Goodwill Impairment Standard Issued
Last week, the Financial Accounting Standards Board (“FASB”) published Accounting Standards Update (“ASU”) No. 2017-04, Intangibles – Goodwill and Other: Simplifying the Test for Goodwill Impairment. A result of the Simplification Initiative, the standard simplifies how a company tests goodwill for impairment by eliminating “Step 2”, which measures impairment loss by comparing the carrying amount of goodwill to its implied fair value. In its news release, the FASB said the ASU will allow companies to measure goodwill impairment as the excess of the reporting unit’s carrying value over its fair value. Stakeholders had complained that the current impairment test creates. Read More.
Topics: Accounting Standards Update "ASU", Business Combinations (Topic 805), Financial Accounting Standards Board "FASB", Goodwill Impairment Testing, Intangibles (Topic 350), Nonprofits, Securities and Exchange Commission "SEC", simplification initiative
FASB Clarifies Definition of a Business
Improving the guidance for defining whether a transaction includes the purchase or sale of a business or an asset, the Financial Accounting Standards Board (“FASB”) has issued Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. Per ASU No. 2017-01, in order to be considered a business, an asset or group of assets should include an input and a practical process that form outputs. FASB Chairman Russell Golden said the new standard addresses stakeholders’ concerns about the U.S. GAAP’s business definition being applied too broadly, and that several transactions disclosed as business acquisitions are. 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