FASB Makes Small Changes to Proposed Leases Standard
At its May 13th meeting, the Financial Accounting Standards Board (“FASB”) will move forward with four minor changes to its proposed standard regarding how companies disclose most lease expenses on balance sheets. Per the board’s decision, the changes to proposed Accounting Standards Update No. 2013-270, Leases, are as follows: Lessor Accounting Model—Collectability. The FASB will align the accounting lease model with its revenue recognition standard by incorporating a collectability threshold. This would require lessors to estimate the probability of their customers to make payments. Also, the FASB will adjust the accounting guidance for impairment of certain lease assets and when. Read More.
Exposure Draft Issued for Revenue Recognition Clarifying Guidance
The Financial Accounting Standards Board (“FASB”) has issued proposed Accounting Standards Update, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. Leaving the core principle unchanged, the proposed amendments would impact the following parts of Topic 606: Identifying performance obligations. The proposed amendments add guidance that simplifies the cost and complication of being implemented when acknowledging promised goods or services, such as eliminating the requirement that a company has to identify promised goods or services that are irrelevant to the contract. For example, the Board gave an example of some questioning whether having a customer support phone. Read More.
Petition Seeks Expanded Disclosures for Company Board Nominees
In a petition to the Securities and Exchange Commission (“SEC”) on Tuesday, March 31st, public employee pension funds from several states asked the agency to expand its disclosure requirements for company board nominees. Recently posted to the SEC’s website, the petition requests the disclosed rules include information such as a potential candidate’s gender, race and ethnicity. The petition expressed the need for increased disclosure since existing rules provide scarce information, forcing investors to independently research candidates’ backgrounds. Since demographic diversity is highly influential in their voting decisions, some investors consider companies with diverse board members are more likely to experience. Read More.
AICPA Committee Delays Issuance of Prospective Financial Information Proposals
After reviewing proposed standards concerning prospective financial information, the American Institute of Certified Public Accountants’ (“ACIPA”) Accounting and Review Services Committee (“the Committee”) has opted to delay publishing Assembly of Prospective Financial Information and Compilation of Prospective Financial Information for public comment. Discussed at its three-day meeting in Durham, North Carolina, last month, the decision to delay issuance was due to the Committee wanting more time to work through the proposals. Additionally, the Committee wants to ensure a smooth transition when the proposed guidance within the standards is integrated into the Statements on Standards for Accounting and Review Services (SSARSs). Read More.
Investors Want More Disclosures for Calculating Loan Losses Standard
In a discussion over the proposal for measuring credit loan losses at its May 11th meeting, panelists of the Financial Accounting Standards Board’s (“FASB”) Investor Advisory Committee (“the Committee”) shared their appeal for more disclosure requirements in the final standard. According to the investors, the final standard would benefit financial institutions if required to disclose in financial statements how the losses are calculated. The investors also want the standard to differentiate between the losses on loans initiated by a lender and those bought in a secondary market at a reduced rate due to their decline in quality. Seeking reassurance, the. Read More.
LIFO and RIM Receive Exceptions in FASB Inventory Project
When the Financial Accounting Standards Board (“FASB”) began working on ways to simplify how a company calculates its inventory’s value, the project was viewed as a short-term endeavor. However, after Wal-Mart and Target said the effort would actually make calculating inventory worse for larger retailers that use last-in-first-out (LIFO) accounting and the retail inventory method (RIM), the FASB decided to address their concerns. On Wednesday, May 13th, the standard setter agreed to move the project forward with LIFO and RIM left intact. Proposed Accounting Standard Update No. 2014-210, Inventory (Topic 330): Simplifying the Measurement of Inventory, would require the calculation. Read More.