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FASB Proposes Changes to Balance Sheet Debt Classification and Inventory Disclosures

In a January 10 news release , the Financial Accounting Standards Board (“FASB”) announced the issuance of two proposed Accounting Standards Updates impacting the balance sheet classification of debt and the inventory disclosure requirements under the Disclosure Framework project. Classification of Debt on a Balance Sheet: The FASB proposes simplifying the current debt classification guidance with an all-encompassing, consistent principle that addresses a borrower’s contractual rights and responsibilities. The proposed changes could create a shift in how some debt arrangements among noncurrent liabilities and current liabilities are classified. Comments on the proposal are due Friday, May 5. Disclosure Framework—Inventory: The FASB wants companies to. Read More.

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Amendment Proposed for Service Concession Arrangements

Businesses have asked for additional guidance on Topic 853, Service Concession Arrangements, and the Financial Accounting Standards Board (“FASB”) is answering the call. The FASB has issued Proposed Accounting Standards Update No. EITF-16C, Service Concession Arrangements (Topic 853) — Determining the Customer of the Operation Services: A Consensus of the FASB Emerging Issues Task Force, which includes a clarification to the customer’s identity in certain infrastructure deals between governmental entities and private-sector companies. The proposal calls for a government entity to be labeled the customer in transactions under Topic 853. Comments are due Friday, January 6.

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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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