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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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FASB Makes Progress on Stock Compensation Standard

After reviewing feedback on its proposed changes to stock compensation accounting, the Financial Accounting Standards Board (“FASB”) agreed that companies must apply the modification accounting under Topic 718 if an alteration to an award impacts the fair value (or assessed value or intrinsic value, if a different measurement technique is used), vesting conditions, or the award classification. The FASB said Wednesday that the proposed Accounting Standards Update (“ASU”), Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting, should exclude guidance that allows an entity to decide whether a modification to an award’s fair value is insignificant. In addition, the unit of. Read More.

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Nonfinancial Assets Guidance to Coincide with FASB Revenue Standard

The Financial Accounting Standards Board’s (“FASB”) latest Accounting Standards Update (“ASU”) clarifies guidance to help determine when gains and losses on nonfinancial assets should be recognized. Issued as ASU No. 2017-05, Other Income—Gains and Losses From the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets, the amendments clarify the term “in substance nonfinancial asset” to inform financial reporting professionals which transactions are part of the nonfinancial asset derecognition guidance. The FASB had failed to define the term in ASU No. 2014-09, Revenue From Contracts With Customers (Topic. Read More.

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Private Companies Receive Exemptions from Hedge Accounting Document Requirements

The Financial Accounting Standards Board’s (“FASB”) proposed changes to hedge accounting guidance will offer private companies a break from documentation requirements. At its February 15 meeting, the FASB agreed to exempt private companies from providing all documents that disclose any risk management activities. Instead, they will have to prepare a “statement of intent to hedge” featuring the hedging instrument, hedged item/transaction, the potential risk of the hedged item/transaction, and the method used to review effectiveness. In addition, private companies will forego performing an effectiveness test to affirm a hedge accounting method until the issuance of their financial statements. Most of. Read More.

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FASB Discusses Proposed Callable Debt Securities Standard

After reviewing feedback from its proposed Accounting Standards Update, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities, the Financial Accounting Standards Board (“FASB”) has made tentative decisions on the following: Requests to Require a True “Yield-to-Worst” Amortization Method. Premiums on purchased callable debt securities will be amortized to the earliest call date. Requests to Clarify Consequential Amendments to Paragraph 946-320-35-20. The amendment to industry guidance was corrected to affirm that the FASB did not intend to change practice for investment companies holding debt securities. Requests to Clarify “Callable” and the Interaction with Paragraph 310-20-35-26.. Read More.

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Nonprofits Still Unsure of Grants Guidance for Revenue Standard

Facing implementation of the Financial Accounting Standards Board’s (“FASB”) revenue recognition standard in 2019, nonprofits are uncertain whether government grants and related contracts with government entities or foundations are to be classified as exchange transactions or contributions. The issue was the center of discussion at the September 8 meeting between the FASB and its Not-for-Profit Advisory Council, along with how the conditions and restrictions on such contributions should be distinguished. The meeting was part of the accounting board’s effort to streamline implementation of Accounting Standards Update No. 2014-09, Revenue From Contracts With Customers (Topic 606). While the landmark standard outlines. Read More.

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