FASB Chairman Wants to Improve Financial Performance Reporting
In a letter this month to constituents, the Financial Accounting Standards Board’s (“FASB”) Russell Golden said the board is considering a project that would improve financial performance reporting to potentially restrict non-GAAP measures. The project, which is in the research stage, gives attention to companies possibly disclosing more descriptive information in their income statements or requiring additional subtotals. The FASB chairman’s letter reflected his opinion that an improved performance or income statement can reduce the amount of nonstandard numbers reported by companies. Golden stressed the importance of studying commonly used non-GAAP measures, commenting that the FASB’s mission is to create. Read More.
FASB Clarifies Definition of a Business
Improving the guidance for defining whether a transaction includes the purchase or sale of a business or an asset, the Financial Accounting Standards Board (“FASB”) has issued Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. Per ASU No. 2017-01, in order to be considered a business, an asset or group of assets should include an input and a practical process that form outputs. FASB Chairman Russell Golden said the new standard addresses stakeholders’ concerns about the U.S. GAAP’s business definition being applied too broadly, and that several transactions disclosed as business acquisitions are. Read More.
Comment Letters Ask FASB to Limit Future Projects
Some trade groups want the Financial Accounting Standards Board (“FASB”) to provide more leeway for implementing current accounting standards before taking on new projects. In feedback to the FASB’s Invitation to Comment, Agenda Consultation, groups like the American Bankers Association (“ABA”) asked the board to consider the time and costs needed when new standards are implemented. The ABA also noted that standards involving revenue, leases, credit losses and financial instrument measurement and classification require significant undertaking that could last over several years. Other comment letters to the agenda consultation document came from the Institute of Management Accountants (“IMA”), which advised. Read More.
Topics: American Bankers Association "ABA", Credit Losses, Financial Accounting Standards Board "FASB", Financial Instruments, financial reporting, Institute of Management Accountants "IMA", leases, U.S. GAAP
Consolidation Guidance for Entities under Common Control Amended
New guidance has been issued for businesses that evaluate the consolidation of a variable interest entity under common control. The amendments under Accounting Standards Update (“ASU”) No. 2016-17, Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control, change the assessment of whether a reporting entity is the variable interest entity’s primary beneficiary. ASU 2015-02 required that entities that were the single decision making treat related parties that were under common control differently that other related parties. The new guidance will now require a single decision maker to consider interests held through related parties under common control. Read More.
Slight Correction Proposed to New Nonprofit Accounting Guidance
Following its October 19 meeting on approved technical corrections to the U.S. GAAP , the Financial Accounting Standards Board (“FASB”) is proposing a slight change to Accounting Standards Update (“ASU”) No. 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities. In the proposed ASU, Technical Correction to Update No. 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities – Endowment Reporting, the FASB seeks to remove the phrase “that contain no purpose restrictions” from paragraph 958-205-50-1B(e)(3) of its August-issued accounting standard. The amendment would help clarify the requirements for nonprofits to disclose endowment funds, as well as restore the correct guidance that was changed by. Read More.
FASB Approves Technical Corrections to U.S. GAAP
A handful of routine corrections and clarifications to U.S. GAAP will soon be published as final amendments. Approved October 19 by the Financial Accounting Standards Board (“FASB”), two of changes were introduced in April as part of Proposed Accounting Standards Update (ASU) No. 2016-220, Technical Corrections and Improvements: Subtopic 820-10, Fair Value Measurement — Overall. The updated guidance clarifies the difference between a valuation approach and a valuation technique. An organization now must disclose when it changes to a valuation approach or valuation technique, and explain why the change occurred. ASU No. 2015-05, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting. Read More.