New Cash Flow Statement Classification Guidance Issued
The Financial Accounting Standards Board has issued new guidance to address how specific cash receipts and payments are classified in cash flow statements. The amendments in Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, cover the following cash flow issues: Debt prepayment or debt extinguishment costs Settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant concerning the effective interest rate of the borrowing Contingent consideration payments made following a business combination Proceeds from the settlement of insurance claims Proceeds from the settlement. Read More.
Topics: Business Combination, Debt Extinguishment Costs, Debt Prepayment, Equity method accounting, FASB, Insurance Claims, Securitization Transactions, Statement of Cash Flows (Topic 230), Zero-Coupon Debt Instruments
FASB Nixes Equity Method Project
The Financial Accounting Standards Board (“FASB”) has canceled the second phase of its project to improve the equity method of accounting. After reviewing feedback on its proposed Accounting Standards Update, Investments—Equity Method and Joint Ventures (Topic 323): Simplifying the Equity Method of Accounting, the FASB concluded that the project does not have enough support to move forward. As a result, the project has been removed from the Board’s agenda.
PCC Media Meeting Recap for April 12th
On Tuesday, April 12th, the Private Company Council (“PCC”) met to discuss its ongoing projects for PCC Issue 15-02: Applying VIE Guidance to Entities Under Common Control, and partnerships. The meeting also covered several Financial Accounting Standards Board (“FASB”) projects, including disclosures by business entities about government assistance and improving the equity method of accounting. The PCC Media Meeting Recap for April 12th can be downloaded from the FASB Web site.
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.