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FASB Nonprofit Consolidation Guidance Changes Proposed

Seeking to clarify consolidation guidance for nonprofits with respect to the effective date of Accounting Standards Update (“ASU”) No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, the Financial Accounting Standards Board (“FASB”) has issued the proposed ASU, Not-for-Profit Entities – Consolidation (Subtopic 958-810): Clarifying When a Not-for-Profit Entity That Is a General Partner Should Consolidate a For-Profit Limited Partnership or Similar Entity. The proposed amendments would retain the consolidation guidance under Subtopic 810-20 by adding it to Subtopic 958-10. Per the proposal, nonprofits acting as general partners will continue to be assumed to oversee a for-profit limited partnership. Read More.

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FASB Approves Credit Loss Standard

After reviewing the costs and benefits of its new guidance for writing down bad loans and securities , the Financial Accounting Standards Board (“FASB”) voted last week to proceed with a final standard based on the proposed Accounting Standards Update, Financial Instruments—Credit Losses (Subtopic 825-15). The standard will help companies with the financial reporting of credit losses on loans and other financial instruments, and is expected to be released in June. Relative to its decision, the FASB has deferred the new standard’s effective date by one year for public companies that fall under the Securities and Exchange Commission filer requirements. Such public companies must apply the forthcoming guidance to fiscal years, and interim periods. Read More.

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Exposure Draft on Statement of Cash Flows Issued

The Financial Accounting Standards Board (“FASB”) has issued an Exposure Draft for Proposed Accounting Standards Update, Statement of Cash Flows (Topic 230): Restricted Cash. The Exposure Draft addresses how entities classify and present restricted cash changes on cash flow statements under Topic 230. There has been diversity in practice as to how transfers between cash and restricted cash are classified. In addition, some entities have treated direct cash receipts into, and direct cash payments made from, a bank account that holds restricted cash are sometimes presented as cash inflows and cash outflows. Meanwhile, other entities disclose such cash flows as noncash investing. Read More.

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FASB Nonprofit Project Focuses on Investment Expenses

Working to complete the draft guidance in Proposed Accounting Standards Update (ASU) No. 2015-230, Not-for-Profit Entities (Topic 958) and Health Care Entities (Topic 954): Presentation of Financial Statements of Not-for-Profit Entities, the Financial Accounting Standards Board (“FASB”) met recently to discuss how nonprofits report their investment returns and expenses. During the February 3rd meeting, the FASB unanimously agreed that nonprofit organizations will have to report investment returns net of their external and direct internal investment expenses. The discussion focused on the terms “direct internal” as opposed to related expenses. The provision will provide clarity regarding the fees and expenses associated. Read More.

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Exposure Drafts on Retirement Benefits Issued

Announced on January 26th , the following Exposure Drafts have been issued by the Financial Standards Accounting Board: Proposed Accounting Standards Update (ASU), Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost . Proposed ASU, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Changes to the Disclosure Requirements for Defined Benefit Plans . Comments on these Exposure Drafts are due Monday, April 25th. Electronic Feedback Forms are available to submit comments regarding the proposed ASUs on Compensation—Retirement Benefits (Topic 715) and Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20) .

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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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