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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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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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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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FASB Advances Project to Simplify Hedge Accounting

Progress continues on the Financial Accounting Standards Board’s (“FASB”) attempts to simplify hedge accounting. At last week’s meeting, the FASB affirmed the more popular amendments under Proposed Accounting Standards Update (ASU) No. 2016-310, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. Amendments that were agreed upon include allowing the use of hedge accounting for certain parts of nonfinancial items. The FASB will add Securities Industry and Financial Markets Association Municipal Swap Rate as an acceptable benchmark interest rate for hedges of fixed-interest-rate items. The Board also agreed to provide relief from the penalty created by an. Read More.

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