Minor Changes Proposed to Top Accounting Standards
In the next few months, the Financial Accounting Standards Board (“FASB”) plans to issue proposed updates with several limited revisions to its leases and classification and measurement standards. Announced during the FASB’s June 21 meeting, the proposed amendments will be released separately from the usual group of technical corrections the board issues each year due to the importance of the affected Accounting Standards Updates (“ASU”).
The changes involve 16 amendments to ASU No. 2016-02, Leases (Topic 842), including fixing cross references, aligning terminology with other aspects of U.S. GAAP, and clarifying the categorization of leases if the terms and conditions are modified. Separately, six changes are being proposed to ASU No. 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. These amendments include clarifications to the guidance for transitioning to the new standard and applying the fair value option. This option assesses financial instruments at fair value, as opposed to other techniques.
An FASB spokesperson said the proposed updates are likely to be released in the third quarter of this year.