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Consolidation Amendments Proposed to Help Private Companies

Giving private companies an easier way to apply its guidance for consolidation reporting, the Financial Accounting Standards Board (“FASB”) has issued Proposed Accounting Standards Update No. 2017-240, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. The proposed changes to Accounting Standards Codification 810, Consolidation, exempts private companies from using guidance on variable interest entities for certain common control lease arrangements and related legal structures. Instead, private companies must use an accounting policy alternative for other businesses under common control that follow the same criteria. Only some common control arrangements, however, would qualify for the alternative. The. Read More.

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Proposal for Nonemployee Share-Based Payments Issued

The Financial Accounting Standards Board (“FASB”) issued for public comment the proposed Accounting Standards Update (“ASU”), Compensation— Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. The proposal is aimed to lower costs and confusion over financial reporting for non-employee share-based payments. If approved, the scope of Topic 718, Compensation—Stock Compensation, would be expanded to include payments to non-employees. In addition, standard would replace Subtopic 505-50, Equity—Equity Based Payments to Non-Employees. Comments are due Monday, June 5. An effective date for the proposed ASU will be decided after the FASB reviews all submitted feedback. More on the proposal is available at FASB.org.

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FASB Makes Decisions on Targeted Improvements to Liabilities and Equity

During its March 22 meeting, the Financial Accounting Standards Board (“FASB”) reviewed comment letters received on its proposed Accounting Standards Update—Distinguishing Liabilities from Equity (Topic 480): I. Accounting for Certain Financial Instruments with Down Round Features, and II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. As a result of the discussions held and feedback received, the FASB asked staff members to conduct research on a possible alternative that would impact the measurement of down round features, but not the classification. Further, the FASB. Read More.

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FASB Reaches Decisions on Proposed Hedge Accounting Updates

Last week while discussing its proposed Accounting Standards Update, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, the Financial Accounting Standards Board agreed to include a cross currency basis spread in a currency swap to the list of excluded amounts from hedge effectiveness assessments. In addition, the FASB agreed on using an amortization approach with respect to the base recognition model for excluded components. Companies will also be allowed to use a mark-to-market through earnings method. Further, when a hedging relationship ends and an amortization approach is applied, the fair value changes of excluded components in. Read More.

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FASB Task Force Approves Proposed Guidance on Infrastructure Deals

An update to U.S. GAAP could provide clearer guidance on certain agreements between government entities and private-sector businesses. On March 16, the Financial Accounting Standards Board’s (“FASB”) Emerging Issues Task Force (“EITF”) unanimously approved an amendment which covers deals involving a private organization that operates public infrastructure. The operator normally pays a fee to the government, and in turn receives all, or a part of, the revenues. In some arrangements, the government entity pays the private company to operate the facility but collects a portion of the proceeds. The EITF-approved amendment is part of Proposed Accounting Standards Update No. EITF-16C. Read More.

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FASB Reaches Decisions on Hedge Accounting Project

During a review last week on its proposed Accounting Standards Update, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, the Financial Accounting Standards Board (“FASB”) reached conclusions on the following topics: The market yield test. The FASB decided to exclude the market yield test from the final standard. Companies would have been required to use the total contractual coupon cash flows to determine fair value of the hedge item attributable to interest rate risk, if the hedge item’s market yield is below the benchmark interest rate at hedge inception. Companies now have the freedom to use. Read More.

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