FASB Proposes Slight Updates to Three Major Accounting Standards
Multiple clarifications are in the works for three of the Financial Accounting Standards Board’s (“FASB”) top accounting standards. On November 19, the FASB issued a proposal featuring changes to the following Accounting Standards Updates (“ASU”): ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments The proposal features 11 changes to the credit loss standard. The proposed clarifications include how companies calculate the allowance for credit losses on accrued interest receivable balances and accounting for the allowance when moving debt securities between measurement categories. Also proposed are clarifications regarding when a company must. Read More.
Credit Loss Standard Effective Date Delayed for Community Banks and Credit Unions
An upcoming clarification to the Financial Accounting Standards Board’s (“FASB”) credit loss standard ensures that credit unions and small banks will get an extra year to implement Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326). By a unanimous vote on October 24, the FASB confirmed several amendments under Proposed ASU No. 2018-270, Codification Improvements to Topic 326, Financial Instruments—Credit Losses. The proposed changes include merging the implementation dates for private companies’ annual financial statements and their interim financial statements. Private companies must apply the standard for fiscal years, as well as interim periods within such years, starting. Read More.
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.