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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.

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FASB Task Force Addresses Cloud Computing Accounting Issue

The Financial Accounting Standards Board’s (“FASB”) Emerging Issues Task Force (“EITF”) has resolved a longstanding accounting issue concerning the costs for setting up various types of cloud-managed business services. During its October 12 meeting, the EITF affirmed that customers of cloud computing arrangements must account for them similarly to a software license for a large business application with Subtopic 350-40, Intangibles—Goodwill and Other—Internal-Use Software. Last week’s decision could lead to an accounting change to U.S. GAAP. If so, the final amendment will allow companies to capitalize more costs related to installing cloud services such as employee training and creating interfaces. Read More.

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FASB Working to Update Definitions for Revenues and Expenses

Efforts have begun to update several financial statement definitions in the Financial Accounting Standards Board’s (“FASB”) Conceptual Framework, a guide used to help the board establish consistent accounting standards. In particular, the FASB is working to revise the definitions for revenues and expenses, as both terms use similar language in their descriptions under Statements of Financial Accounting Concepts No. 6, Elements of Financial Statements: a Replacement of FASB Concepts Statement No. 3 — Incorporating an Amendment of FASB Concepts Statement No. 2. The FASB will look into defining revenues as either inflows or other improvements to assets of a company,. Read More.

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Employee Benefit Plans Excluded from Disclosure Framework

As the Financial Accounting Standards Board (“FASB”) moves forward with finalizing its disclosure framework, the board has decided to exclude employee benefit plans from the guidance. Agreed upon at its October 4 meeting, the FASB said confirmed that employee benefit plans will not be evaluated similarly as other entities when the board decides whether they are required to disclose certain information. The decision was based on the FASB’s belief that an employee benefit plan’s financial statements and its users are significantly different from organizations to allow for possibly different reporting considerations. While most FASB members agreed with this sentiment, Christine. Read More.

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FASB to Clarify Guidance for Collaborative Arrangements

The Financial Accounting Standards Board (“FASB”) will seek ways to make its guidance under Topic 808, Collaborative Arrangements, easier to follow. At its October 4 meeting, the FASB unanimously agreed to simplify the guidance to reflect the board’s initial goal of clarifying when partners in a collaborative arrangement must record revenue due to the venture’s cost reductions. The FASB also plans to examine the guidance for transactions that do not generate revenue for the partners, as well as consider guidance for what is the unit of accounting under Topic 808. FASB members and staffers said that the board will not. Read More.

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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.

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