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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.

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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.

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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.

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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.

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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.

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Reduced Amortization Period for Callable Debt Securities Proposed

The Financial Accounting Standards Board (“FASB”) wants to reduce the amortization period for premium paid for callable debt securities when purchased above market value. In Proposed Accounting Standards Update (“ASU”) No. 2016-340, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities, the FASB proposes the premium amortization to be more aligned with the market’s expectations for the securities. The amortization period would end on the earliest call date, as opposed to the instrument’s maturity date. Due to a tax incentive allowing municipal bond issuers to sell 30-year bonds with above-market coupons and 10-year call provisions,. Read More.

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