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Clarified Guidance on Intellectual Property Licenses Approved

On January 6th, the Financial Accounting Standards Board (“FASB”) approved clarifications to its upcoming revenue recognition standard. Specifically, the clarifications address questions concerning how to account for intellectual property licenses, which is considered one of the complex parts of the FASB and International Accounting Standards Board’s upcoming revenue recognition standards. The FASB has ordered its research staff to draft an update to be published by the end of the first quarter. The amendments will likely be based on Proposed Accounting Standards Update (ASU) No. 2015-250, Revenue From Contracts With Customers (Topic 606): Identifying Performance Obligations and Licensing.

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Upcoming FASB Proposal Offers Simplified Goodwill Impairment Test

In late March, the Financial Accounting Standards Board (“FASB”) is expected to release a proposal that shortens the goodwill impairment test public companies perform after an acquisition. The upcoming proposal would eliminate the second part of the two-step impairment test that calculates the decreased value amount of acquired goodwill. A one-step process would bring U.S. GAAP more in line with International Financial Reporting Standards and address complaints that the calculation of goodwill impairment is an expensive and unnecessary process. The FASB wants to issue the proposal for a comment period of 60 days.

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Will New Revenue Standards on Customer Contracts Impact You?

By: Sara Crabtree , Manager, Government Contractor Services Group U.S. Generally Accepted Accounting Principles (GAAP), as codified in the Accounting Standards Codification, does not provide one, all-inclusive general standard on revenue recognition that applies across the board to all transactions and entities. Companies follow various subtopics in the Codification or industry specific standards to determine the proper procedures for recognizing revenue. That will all change for contracts with customers once new revenue recognition standards go into effect. In May 2014, the International Accounting Standards Board (“IASB”) and Financial Accounting Standards Board (“FASB”) issued new requirements on recognizing revenue that derives from customer-based. Read More.

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FASB Financial Instruments Standard Issued

After spending the past decade working to simplify the accounting for financial instruments, the Financial Accounting Standards Board (“FASB”) has issued its long-anticipated guidance, Accounting Standards Update (ASU) No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. FASB Chairman Russell Golden said the new standard will provide more useful information to financial statement users, and improves the accounting model to better address economic complexities. When the project initially started, the FASB attempted to overhaul the accounting for financial instruments. Things took a turn after the 2008 financial crisis, and the final standard. Read More.

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Materiality Proposal Receives Praise and Criticism

Comment letters on the Financial Accounting Standards Board’s (“FASB”) materiality proposal reveal mixed sentiment among companies, investors and consumer groups. Proposed Accounting Standards Update No. 2015-310, Notes to Financial Statements (Topic 235): Assessing Whether Disclosures Are Material, would establish materiality as a legal concept to help companies determine what information to include in their financial statement footnotes. Numerous companies have voiced their support of the plan. Comcast Corp., for instance, said the proposed clarification to the definition of materiality would be consistent with the FASB’s efforts of making disclosures more useful for investors. Another supporter, Financial Executives International, commented that. Read More.

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FASB Discusses Impairment of Financial Assets Project

During the Financial Accounting Standards Board’s (“FASB”) December 21st meeting, the board continued redeliberations on its proposed Accounting Standards Update, Financial Instruments—Credit Losses (Subtopic 825-15). In particular, the FASB discussed the following issues: Accounting for Purchased Financial Assets with Credit Deterioration (PCD Assets). The FASB determined that when the credit losses allowance is estimated without a method that discounts future anticipated cash flows, the allowance should be based on the average of the PCD asset. When the credit losses allowance is estimated with a method that discounts future anticipated cash flows, entities should use the discount rate that associates the. Read More.

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