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FASB Proposes Amendments on Acquired Liabilities in Customer Contracts

A new Financial Accounting Standards Board (“FASB”) proposal aims to clarify U.S. GAAP’s business combinations guidance concerning specific issues following implementation of Accounting Standards Update (“ASU”) No. 2014-09, Revenue From Contracts With Customers. Issued as Proposed ASU No. 2019-300, Business Combinations (Topic 805): Revenue from Contracts with Customers—Recognizing an Assumed Liability, a consensus of the FASB Emerging Issues Task Force, the proposal offers clarifications regarding when an entity acquiring another entity must recognize a contract liability in a business combination. The amendments would require the acquiring entity to recognize a liability from a customer contract in a business combination if the liability. Read More.

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Tuition Revenue Recognition Guidance Issued

The National Association of College and University Business Officers (“NACUBO”) has released a new advisory using tuition to illustrate guidance under Accounting Standards Codification (“ASC”) Topic 606, Revenue From Contracts With Customers. Accounting Advisory 19-01, FASB ASC 606, Revenue From Contracts with Customers: Tuition Revenue, states that a student’s signed financial responsibility agreement authorizes a college or university to consideration, in exchange for promised services, on the date payment is due. The advisory also explains various terms and requirements, including performance obligations, portfolio approach and contract liabilities. More on this Accounting Advisory is available on the NACUBO website.

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AICPA Updates Two Technical Questions and Answers

The American Institute of Certified Public Accountants (“AICPA”) has amended the following Technical Questions and Answers (“TQA”) sections: Section 1200.01, “Disclosure of Revenues of an Agent”: The amendment this TQA Section acknowledges that the AICPA has yet to revise the TQA to reflect Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), and ensuing ASUs amending Accounting Standards Codification Topic 606, Revenue from Contracts with Customers. The AICPA will delete this TQA upon ASU No. 2014-09’s effective date for all entities. Section 6910.25, “Considerations in Evaluating Whether Certain Liabilities Constitute ‘Debt’. Read More.

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AICPA Revenue Recognition Working Drafts Issued

The American Institute of Certified Public Accountants’ (“AICPA”) Financial Reporting Executive Committee has released the following working drafts concerning revenue recognition guidance: Issue #6-9B, Gaming Entity’s Accounting for Management Contract Revenues, Including Costs Reimbursed by Managed Properties Issue #15-3, Contract Modifications The working drafts propose guidance for implementation matters with the five-step revenue recognition model under Topic 606, Revenue from Contracts with Customers. Specifically, Issue #6-9B relates to the gaming industry and Issue #15-3 focuses on the telecommunications industry. Feedback on both working drafts is due by Monday, July 2.

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AICPA and Healthcare Trade Group to Issue Guidance for Revenue Standard

To help healthcare companies with Accounting Standards Update No. 2014-09, Revenue From Contracts With Customers (Topic 606), the Healthcare Financial Management Association and the American Institute of Certified Public Accountants are planning to offer additional industry-specific guidance. The interpretive guidance is expected to address when healthcare providers should record revenue from special state funding methods that cover deficits between Medicaid reimbursements and patient care costs. Frustration over recognizing revenue related to provider tax programs was discussed at last month’s meeting between the FASB and the Healthcare Financial Management Association’s Principles and Practices Board. Brian Conner, a national practice leader for hospitals. Read More.

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FASB Proposes Improved Collaborative Arrangements Guidance

A newly proposed Accounting Standards Update (“ASU”) by the Financial Accounting Standards Board (“FASB”) offers organizations improved guidance regarding collaborative arrangements. The proposed ASU, Collaborative Arrangements (Topic 808): Targeted Improvements , focuses on changes to generally accepted accounting principles related to collaborative arrangements. One proposed change includes adding unit-of-account guidance under Topic 808, which would align the guidance with Topic 606, Revenue from Contracts with Customers, limited to when a company is reviewing the nature of Topic 606. The FASB also proposes two clarifications, such as defining when certain transactions concerning collaborative participants must be accounted for as revenue under Topic 606 when the collaborative member. Read More.

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