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FASB issues guidance on certain cash flow classification issues

  • FASB document Image

Aug 26, 2016

The FASB has issued Accounting Standards Update (ASU) No. 2016-15, “Classification of Certain Cash Receipts and Cash Payments,” in response to EITF Issue 15-F.

The ASU 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 debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing.
  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.

For more in­for­ma­tion, see Deloitte's related Heads Up newsletter as well as the ASU on the FASB’s Web site.

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