The Financial Accounting Standards Board (FASB) issued two new Accounting Standard Updates (ASUs) in the first quarter of 2025. The Government Accounting Standards Board (GASB) issued no new GASB Statements in the first quarter of 2025. The latest issue of the Rundown features a summary of the new standards issued. For summaries of standards issued in previous periods, view our previous rundowns here. In addition, we provide a comprehensive listing of all standards newly effective for calendar year-end December 31, 2025, broken down by public business entities, private entities and for December 31st year-end governments. Lastly, we normally have a list of those standards entities should consider early adopting, however, at this time we are not recommending the early adoption of any standards other than ASU 2025-02, as noted below.

First Quarter 2025 Newly Issued Standards

ASU 2025-01

Expense Disaggregation Disclosures: Clarifying the Effective Date

This ASU merely clarifies that ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Because of how the effective date guidance of ASU 2024-03 was written, a non-calendar year-end entity may have concluded that it would be required to initially adopt the disclosure requirements in Update 2024-03 in an interim reporting period, rather than in an annual reporting period. ASU 2025-01 clarifies that public business entities should initially adopt the disclosure requirements in annual reporting, not at interim. ASU 2024-03 is only applicable to public entities. You can view our analysis of ASU 2024-03 from our fourth quarter 2024 Rundown here. As a brief reminder, ASU 2024-03 requires that public entities disclose, in tabular format, the amounts spent on certain categories as listed in the ASU, along with a qualitative reconciliation to the captions on the face of the financial statements.

ASU 2025-02

Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 122

On March 31, 2022, the SEC issued Staff Accounting Bulletin (SAB) No. 121 in response to an increase in the number of entities that safeguard crypto assets, also known as “Crypto Wallets”. Prior to SAB 121, an entity generally would not record the safeguarded crypto assets of its users on its balance sheet unless the entity had control over those assets. SAB 121 resulted in a significant change to the financial reporting for these entities, because it required the fair value of the crypto assets being safeguarded to be recorded as a liability (with a corresponding asset) when an entity does not control the crypto assets and additional disclosures. SAB 121 posed several challenges, including the fact that it did not define “safeguarding” and balance sheet recognition created issues with certain regulated entities and capital or reserve requirements. As a result of these difficulties, the SEC issued SAB 122 just two years later, which rescinds SAB 121. SAB 121 was codified in the ASC in SEC paragraphs (“S99” paragraphs) of ASC 405 Liabilities, and as a result of ASU 2025-02, those paragraphs were also rescinded. After the rescissions, an entity with an obligation to safeguard crypto-assets for others should decide whether to recognize a liability related to the risk of loss under such obligations, using the contingent liability guidance in Financial ASC 450-20, Loss Contingencies.

As a result of ASU 2025-02, we expect most entities will no longer recognize the crypto assets of their users on their balance sheets unless a loss contingency exists under ASC 450-20. As a reminder, ASC 450-20 requires an entity to record an accrual for a loss contingency when it is probable that a loss has been incurred, and the amount can be reasonably estimated.

Full retrospective application of SAB 122 is required for annual periods beginning after December 15, 2024. However, earlier adoption, including interim periods, is permitted.

Given the aforementioned difficulties that SAB 121 posed, and given the magnitude of the potential impact, we expect most entities will early-adopt. For those entities that do not early adopt, they should consider the disclosure requirements in SAB Topic 11.M (SAB 74, Disclosure of the Impact That Recently Issued Accounting Standards Will Have on the Financial Statements of the Registrant When Adopted in a Future Period). In addition, we’d like to remind entities that adoption of ASU 2025-02 would constitute a change in accounting principles, and certain additional disclosures are required in accordance with ASC 250-10-45-5.

Lastly, SAB 121 required certain disclosures, and after its recission, those disclosure requirements are no longer explicitly required. However, entities should consider whether any of the information previously required by SAB 121 is relevant to users of their financial statements and should therefore continue to be disclosed pursuant to ASC 275 (e.g., ongoing risks and uncertainties).

List of Newly Effective Standards

Calendar Year-end Public Companies

The following ASUs are effective for public companies for calendar year 2025:

FN1 Effective for smaller reporting companies (SRCs)

FN2 Including interim periods within those fiscal years (e.g., Q1 2025 for calendar year-end public entities)

Calendar Year-end Private Companies

The following ASUs are effective for private companies for calendar year 2025:

Governmental Entities

The following GASB is effective for governmental entities for the calendar year end December 31, 2024:

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