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FASB Moves Forward with Simplifying Debt Classification Guidance

At its September 13 meeting, the Financial Accounting Standards Board (“FASB”) wrapped up talks on the Proposed Accounting Standards Update, Debt (Topic 470): Simplifying the Classification of Debt in a Classified Balance Sheet (Current versus Noncurrent). As part of the discussion, the FASB reached the decisions on the following topics: Classification Principle: Debt and other instruments that are part of the final Accounting Standards Update must be categorized as noncurrent liabilities in a classified balance sheet if: The liability is contractually due to be settled over one year (or operating cycle, if longer) after the balance sheet date; or The. Read More.

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FASB Proposes Changes to Balance Sheet Debt Classification and Inventory Disclosures

In a January 10 news release , the Financial Accounting Standards Board (“FASB”) announced the issuance of two proposed Accounting Standards Updates impacting the balance sheet classification of debt and the inventory disclosure requirements under the Disclosure Framework project. Classification of Debt on a Balance Sheet: The FASB proposes simplifying the current debt classification guidance with an all-encompassing, consistent principle that addresses a borrower’s contractual rights and responsibilities. The proposed changes could create a shift in how some debt arrangements among noncurrent liabilities and current liabilities are classified. Comments on the proposal are due Friday, May 5. Disclosure Framework—Inventory: The FASB wants companies to. Read More.

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Debt Classification Accounting Guidance Proposal Coming

On Wednesday, the Financial Accounting Standards Board (“FASB”) unanimously voted to issue a proposal that would help companies distinguish between debts that are due much sooner and debts that do not require payments for at least a year. The FASB agreed to move its debt classification guidance proposal forward despite criticism from its Private Company Council and the AICPA’s Private Companies Practice Section Technical Issues Committee. Members of both organizations said the proposed changes will increase a company’s number of debts classified as “current”, thus putting their creditworthiness at risk. In addition, some private companies have previously argued that the amendments. Read More.

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