FASB to Clarify Collaborative Arrangements Guidance
Pharmaceutical and biotechnology companies that set up joint ventures to develop drugs will receive new accounting guidance soon. In a unanimous decision on July 26, the Financial Accounting Standards Board (“FASB”) agreed to finalize a small change to U.S. GAAP that would help companies account for transactions in collaborative arrangements as revenue. The FASB hopes the update will help companies follow the revenue guidance under Accounting Standards Codification (“ASC”) 606, Revenue From Contracts With Customers. Likely to be issued before year’s end, the update will reflect guidance under Proposed Accounting Standards Update (“ASU”) No. 2018-240, Collaborative Arrangements (Topic 808): Targeted Improvement. The. Read More.
Insurers Seek Extension of Insurance Standard’s Effective Date
Principal Financial Group and the American Council of Life Insurers want the Financial Accounting Standards Board (“FASB”) to delay the effective date of its proposed insurance standard by at least one year. In separate letters to the FASB, the insurance companies argue a lack of resources and the need to overhaul existing systems will prevent them and other insurers from implementing the accounting changes before the projected 2021 effective date for public companies. The FASB is currently reviewing the delay request. In the meantime, the board is targeting an August release for its final amendments to guidance concerning insurance company-issued long duration contracts . Based on a proposed Accounting Standards. Read More.
FASB Suggests Aligning Collections Definition for Museums
Last week, the Financial Accounting Standards Board (“FASB”) announced a proposal to match the U.S. GAAP definition of a “collection” of priceless artwork and historical treasures with the description museums rely on for operability and accreditation. Issued in Proposed Accounting Standards Update No. 2018-250, Not-for-Profit Entities (Topic 958): Updating the Definition of Collections, the amendment would change one of the criteria under the collection definition. It would also let proceeds from a sold art piece or artifact to be used to protect the rest of the collection. As a result of the amendment, museums and related entities would only have. Read More.
FASB Discusses Improvements to Insurance Company-Issued Long-Duration Contracts
Deliberations continued last week on the Financial Accounting Standards Board’s (“FASB”) proposed Accounting Standards Update, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. The proposal aims to improve financial reporting for long-duration contracts issued by insurance companies. In discussing the proposed standard, the FASB focused on the discount rate reset upon initial adoption, affecting the liability for future policy benefits for traditional and limited-payment contracts. The FASB decided to update the modified retrospective transition method discount rate, by which as of the transition date, an insurance company would maintain the discount rate assumption for calculating net premiums. Read More.
FASB Proposes Improved Collaborative Arrangements Guidance
A newly proposed Accounting Standards Update (“ASU”) by the Financial Accounting Standards Board (“FASB”) offers organizations improved guidance regarding collaborative arrangements. The proposed ASU, Collaborative Arrangements (Topic 808): Targeted Improvements , focuses on changes to generally accepted accounting principles related to collaborative arrangements. One proposed change includes adding unit-of-account guidance under Topic 808, which would align the guidance with Topic 606, Revenue from Contracts with Customers, limited to when a company is reviewing the nature of Topic 606. The FASB also proposes two clarifications, such as defining when certain transactions concerning collaborative participants must be accounted for as revenue under Topic 606 when the collaborative member. Read More.
FASB to Curtail Fair Value Disclosure Requirements
The Financial Accounting Standards Board (“FASB”) has finalized amendments that would prevent companies from disclosing irrelevant and unnecessary information on financial statement footnotes related to how they measure the fair value of select assets and liabilities. Decided at the FASB’s March 7 meeting, the amendments will be based on Proposed Accounting Standards Update No. 2015-350, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement. The FASB believes the changes will lower costs for companies and improve disclosures for investors and analysts. Companies will have to adopt the amended disclosure requirements for fiscal. Read More.