Short-Term Fixes to Liabilities and Equity Accounting in the Works
As accountants continue to struggle with differentiating liabilities and equity, Financial Accounting Standards Board (“FASB”) members have agreed to take action. Last week, Chairman Russell Golden ordered the FASB’s research team to develop short-term solutions that the board could quickly implement, and also continuously monitor significant problems that may require long-term answers. Golden said this approach would take longer, but making targeted changes to Topic 480, Distinguishing Liabilities From Equity, will be helpful. Possible changes may include new disclosures regarding financial instruments with characteristics of both equity and liabilities, streamlining how to split the measurement of hybrid instruments, and reorganizing. Read More.
FASB and FASAC Discuss Technology’s Role in Future Standard-Setting
Without providing a clear picture of how the Financial Accounting Standards Board’s (“FASB”) agenda will be impacted by technological advances, the board’s Financial Accounting Standards Advisory Council (“FASAC”) considered the future of financial reporting at its June 15 meeting. FASB and FASAC members both agreed investment firms’ technology use has evolved to the point that financial reporting may also change. FASB member and former fund manager Harold Schroeder stressed that companies, auditors, and standard-setters are facing a rapidly changing business environment with multiple users that rely on financial information. Schroeder said as time goes on, the evolving financial landscape changes. Read More.
Forthcoming Revenue Standard Proposal to Help Nonprofits
New Financial Accounting Standards Board (“FASB”) guidance could make it easier for nonprofits to record revenue from grants and donations with restrictions. On June 7, the FASB unanimously agreed on a proposal to help nonprofits differentiate between a condition and a restriction in U.S. GAAP for received grants and donations. Accounting Standards Update No. 2014-09, Revenue From Contracts With Customers (Topic 606) removed guidance on “exchange” transactions. Furthermore, many nonprofit organizations have had trouble distinguishing between a condition and restrictions. To address the matter, the FASB will clarify that when a gift comes with a donor-imposed condition, the agreement must. Read More.
Topics: Accounting Standards Update "ASU", Charitable Giving, FASB, Financial Accounting Standards Board "FASB", Nonprofits, Revenue from Contracts with Customers (Topic 606), Revenue Recognition, U.S. GAAP
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.
Topics: Emerging Issues Task Force "EITF", FASB, Financial Accounting Standards Board "FASB", Infrastructure, Proposed Accounting Standards Update, Service Concession Arrangements (Topic 853), U.S. GAAP
The New Revenue Recognition World
By: Michael Brown, Senior Manager The effective date for the new revenue recognition standard is fast approaching and will be here before we know it. By now, you have probably heard speculation about the impact of the standard to your company. Speculation has been from no impact at all to the world is going to be entirely different post implementation. As always, the reality is somewhere in the middle. Generally speaking, for the government contracting industry, the end result of when and how much revenue is recognized will be similar as in the past or at least should not significantly. Read More.
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.