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Nonprofits Concerned with Contribution Classifications for Revenue Standard

Several nonprofits are confused over whether to classify a contribution as having a restriction or a condition with respect to the Financial Accounting Standards Board’s (“FASB”) revenue recognition standard. The issue is significant to nonprofits because it impacts the timing of recording the revenue from the contribution, but FASB Assistant Director Jeffrey Mechanick recently cautioned that it will ultimately be in the hands of an organization’s financial report preparers to decide. At last week’s meeting between the FASB and its Not-for-Profit Advisory Committee, Mechanick said due to the amount of judgment in practice, the board is attempting to offer improved. Read More.

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FASB Passes on Fair Value Definition Project

A project to amend the “readily determinable fair value” definition will not be taken up by the Financial Accounting Standards Board (“FASB”). In a 6-1 vote at its March 1 meeting, the FASB declined adding the project to the board’s standard-setting agenda. FASB Vice Chairman James Kroeker said efforts to clarify the definition are unnecessary, but Chairman Russell Golden encouraged staff members to follow up with critics who raised concerns about the definition.

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SEC’s Bricker Urges Implementation of Revenue Recognition Standard

Nearly 10 percent of public companies have not started to implement Accounting Standards Update No. 2014-09, Revenue From Contracts With Customers (Topic 606). While the percentage is insignificant, Securities and Exchange Commission (“SEC”) Chief Accountant Wesley Bricker is telling unprepared companies they have no option but to begin the implementation process. At a panel discussion during the SEC Speaks conference on February 25, Bricker said that companies cannot overlook the importance of the Financial Accounting Standards Board’s revenue recognition standard and must prepare accordingly. He encouraged companies to communicate their implementation plans with audit committees, executive teams and others, and. Read More.

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Revenue Recognition Draft Guidance Issued for Utilities and Time-Share Companies

The American Institute of Certified Public Accountants’ Financial Reporting Executive Committee has issued the following working drafts to address implementation of Accounting Standards Update No. 2016-09, Revenue From Contracts With Customers, by the Financial Accounting Standards Board (“FASB”): Working Draft: Proposed Implementation Issues for Revenue Recognition: Power & Utility Entities (#13-1): Accounting for Tariff Sales to Regulated Customers. Intended to help power and utility companies with applying ASU No. 2016-09 to revenues caused by regulated utility tariffs, this working draft explains that agreements between utilities and customers for services provided under a regulated tariff must be disclosed as a customer. Read More.

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New FASB Standard Impacts Master Trust Investments

Updates have been issued regarding the Financial Accounting Standards Board’s (“FASB”) master trust investments guidance. The amendments in Accounting Standards Update No. 2017-06, Plan Accounting: Defined Benefit Pension Plans (Topic 960); Defined Contribution Pension Plans (Topic 962); Health and Welfare Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting, primarily deal with an employee benefit plan reporting its interest in a master trust. The amendments address diversity in practice regarding the presentation of master trust investments in the statement of net assets available for benefits. For every master trust wherein an employee benefit plan holds an interest, the interest. Read More.

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FASB Clarifies Donor-Imposed Conditions

During a discussion last Wednesday concerning its project on revenue recognition of grants and contracts by nonprofits, the Financial Accounting Standards Board (“FASB”) agreed to refine guidance under Subtopic 958-605, Not-for-Profit Entities—Revenue Recognition. Specifically, the FASB clarified the definition of a “donor-imposed condition” by including the following: A right of return, involving either a return of assets transferred or a release of a promisor from its responsibility to transfer assets. A barrier that must be overcome before the recipient receives transferred or promised assets. Indicators and illustrative examples would help describe a barrier.

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