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Highlights from the FASB’s February 3 meeting

Feb 05, 2016

At its February 3, 2016, meeting, the FASB discussed (1) its technical agenda and (2) financial statements of not-for-profit entities.

Discussion paper — technical agenda

The FASB decided to include the following financial reporting issues in its upcoming agenda discussion paper:

  • Pensions and other postretirement employee benefit plans.
  • Intangible assets.
  • Distinguishing liabilities from equity.
  • Financial performance reporting.

In addition, the FASB will continue to perform preagenda research on consolidations as well as inventory and costs of sales.

For more information, see the tentative Board decisions on the FASB’s Web site.

Financial statements of not-for-profit entities

The FASB discussed feedback on its proposed ASU Presentation of Financial Statements of Not-for-Profit Entities and made tentative decisions related to (1) "[n]etting of external and direct internal investment expenses against investment return," (2) "[d]isclosure of netted investment expenses," (3) "[e]xpenses by nature and analysis of expenses by function and nature," and (4) "[e]nhanced disclosures about cost allocations and improved guidance on management and general activities." For more information, see the tentative Board decisions on the FASB’s Web site.

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SEC updates EDGAR filer manual and technical specifications

Feb 02, 2016

The SEC has updated its Electronic Data Gathering, Analysis, and Retrieval (EDGAR) System Filer Manual (volumes I and II) to include new submission forms related to the funding portal.

In addition, the SEC has issued the technical specifications for CF Portal EDGAR XML submission types.

For more in­for­ma­tion, see EDGAR page on the SEC’s Web site.

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FASB proposes guidance on certain cash flow classification issues

Jan 29, 2016

The FASB has issued a proposed Accounting Standards Update (ASU), “Classification of Certain Cash Receipts and Cash Payments,” in response to the EITF consensus-for-exposure on Issue 15-F.

Specifically, the proposal addresses eight cash flow classification issues that have been creating diversity in practice:

  1. Debt prepayment or debt extinguishment costs.
  2. Settlement of zero-coupon bonds.
  3. Contingent consideration payments made after a business combination.
  4. Proceeds from the settlement of insurance claims.
  5. Proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies.
  6. Distributions received from equity method investees.
  7. Beneficial interests in securitization transactions.
  8. Separately identifiable cash flows and application of the predominance principle.

Com­ments on the pro­posal are due by March 29, 2016. For more in­for­ma­tion, see De­loitte’s Heads Up and November 2015 EITF Snapshot as well as the pro­posed ASU on the FASB’s Web site.

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IASB publishes amendments to IAS 7

Jan 29, 2016

The IASB has published amendments to IAS 7, “Statement of Cash Flows,” as part of its disclosure initiative (i.e., projects to improve the effectiveness of financial reporting disclosures). The objective of the amendments is to clarify IAS 7 to improve information provided to financial statement users about an entity’s financing activities.

The amendments require that an entity disclose, as necessary, the following changes in
li­a­bil­i­ties arising from financing ac­tiv­i­ties:

(a)   changes from financing cash flows;
(b)   changes arising from obtaining or losing control of sub­sidiaries or other busi­nesses;
(c)   the effect of changes in foreign exchange rates;
(d)   changes in fair values; and
(e)   other changes.

The IASB defines li­a­bil­i­ties arising from financing ac­tiv­i­ties as li­a­bil­i­ties “for which cash flows were, or future cash flows will be, clas­si­fied in the statement of cash flows as cash flows from financing ac­tiv­i­ties.” The amendments indicate that the new dis­clo­sure re­quire­ments also apply to changes in financial assets that meet this de­f­i­n­i­tion. The amend­ments state that one way to meet the new dis­clo­sure re­quire­ments is to provide “a rec­on­cil­i­a­tion between the opening and closing balances in the statement of financial position for li­a­bil­i­ties arising from financing ac­tiv­i­ties.”

The amend­ments are effective for annual periods beginning on or after January 1, 2017. Earlier ap­pli­ca­tion is permitted. Because the amend­ments are being issued less than one year before the effective date, entities need not provide com­par­a­tive in­for­ma­tion when they first apply the amend­ments.

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FASB issues proposed ASUs on pensions and other postretirement benefit plans

Jan 26, 2016

The FASB has issued two proposed ASUs: (1) “Changes to the Disclosure Requirements for Defined Benefit Plans” and (2) “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.”

Changes to the disclosure requirements for defined benefit plans

This proposal would “modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans” and disaggregate these disclosures between domestic and foreign plans.

Improving the presentation of net periodic pension cost and net periodic postretirement benefit cost

Under this proposal, an employer would be required to report the service cost component in the same line item(s) as other compensation costs arising from services rendered by the pertinent employees during the period. The proposal also allows only the service cost component to be eligible for capitalization when applicable.

Next steps

Comments on both proposals are due by April 25, 2016. For more information about the proposed ASUs, see Deloitte's related Heads Up newsletter as well as the press release, FASB in Focus newsletter, and informational document on the FASB’s Web site.


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SEC staff updates interactive data (XBRL) interpretations and FAQs

Jan 26, 2016

The SEC staff has updated its "Staff Interpretations and FAQs Related to Interactive Data Disclosure" to add Question E.27, which describes the conditions for determining when a calculation relationship is required.

In XBRL, calculation relationships "provide key information that shows the relationships among elements and their corresponding numeric facts, and how they add and subtract to each other." The guidance indicates that the SEC's EDGAR Filer Manual (Volume 2) sets out the specific calculation relationship requirements and provides examples and exceptions.

For more information, see the Staff Interpretations and FAQs Related to Interactive Data Disclosure page on the SEC’s Web site.

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Highlights from the FASB’s January 20 meeting

Jan 22, 2016

At its January 20, 2016, meeting, the FASB discussed (1) technical corrections and improvements and (2) financial performance reporting.

Technical corrections and improvements

The FASB discussed a staff analysis of potential technical corrections, clarifications, and improvements to the FASB Accounting Standards Codification and tentatively decided to propose such changes related to insurance, troubled debt restructurings, fair value measurement, profit recognition, sales of financial assets, cloud-computing arrangements, and transition guidance. The Board directed its staff to begin drafting a proposed ASU for a vote by written ballot.

In addition, the Board tentatively decided to propose technical corrections and improvements related to revenue (see Deloitte's related journal entry) and consolidations (see Deloitte's related journal entry) and directed its staff to begin drafting two separate proposed ASUs for written ballot.

For more information, see the tentative Board decisions on the FASB’s Web site.

Financial performance reporting

The FASB discussed staff research on possible ways of reporting income statement information by function, by nature, or both, and directed its staff to “evaluate and clarify” the project’s objective. No decisions were made.

For more information, see the tentative Board decisions on the FASB’s Web site.

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IFRS Foundation publishes proposed IFRS taxonomy update for IFRS 16, “Leases”

Jan 21, 2016

The IFRS Foundation has published a proposed IFRS taxonomy update, “IFRS Taxonomy 2015 — IFRS 16 ‘Leases.’”

This proposed update includes taxonomy concepts that reflect the new guidance in IFRS 16, Leases, as well as amended ref­er­ences related to the deferral of the effective date of IFRS 15, Revenue From Contracts With Customers.

Comments on the proposed taxonomy update are due by March 21, 2016.

For more in­for­ma­tion, see the press release and proposed taxonomy update on the IASB’s Web site.

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IASB publishes amendments related to the recognition of deferred tax assets for unrealized losses

Jan 19, 2016

The IASB has published final amendments, “Recognition of Deferred Tax Assets for Unrealised Losses,” to the guidance in IAS 12, “Income Taxes.”

The amendments clarify the following:
  • Un­re­al­ized losses on debt in­stru­ments mea­sured at fair value and mea­sured at cost for tax pur­poses “give rise to a de­ductible tem­po­rary dif­fer­ence [re­gard­less] of whether the debt in­stru­ment’s holder expects to recover the car­ry­ing amount of the debt in­stru­ment by sale or by use.”
  • “The car­ry­ing amount of an asset does not limit the es­ti­ma­tion of prob­a­ble future taxable profit.”
  • Es­ti­mates of future taxable profit exclude “tax de­duc­tions re­sult­ing from the re­ver­sal of de­ductible tem­po­rary dif­fer­ences.”
  • An entity as­sesses a de­ferred tax asset in com­bi­na­tion with other de­ferred tax assets. When tax law re­stricts the uti­liza­tion of tax losses, an entity assesses a de­ferred tax asset in com­bi­na­tion with other de­ferred tax assets of the same type.

The amendments are effective for annual periods beginning on or after January 1, 2017; earlier application is permitted. As transition relief, an entity may recognize the change in the opening equity for the earliest comparative period in opening retained earnings on initial application without allocating the change between opening retained earnings and other components of equity. The Board has not added additional transition relief for first-time adopters.

For more information, see Deloitte's IFRS in Focus newsletter, as well as the press release and amendments on the IASB's Web site.

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SEC adopts rules implementing FAST Act provisions

Jan 14, 2016

The SEC has issued interim final rules that implement provisions mandated by the Fixing America’s Surface Transportation (FAST) Act, passed by Congress in December 2015. The interim final rules revise financial reporting forms for emerging growth companies (EGCs) and smaller reporting companies.

The rules revise Forms S-1 and F-1 to permit an EGC to omit financial information from registration statements filed before an IPO (or confidentially submitted to the SEC for review) for historical periods required by Regulation S-X if the EGC reasonably believes that it will not be required to include these historical periods at the time of the contemplated offering. In addition, the rules revise Form S-1 to allow smaller reporting companies (entities that, as of the last business day of their second fiscal quarter, have a public float of less than $75 million) to automatically update information in a Form S-1 resale prospectus by incorporating by reference any documents filed with the SEC after the Form S-1 registration statement becomes effective.

The interim final rules will become effective on the date of their publication in the Federal Register.

For more information, see Deloitte’s journal entry on the FAST Act legislation as well as the press release and interim final rules on the SEC’s Web site.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.