This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

July

FASB proposes improvements to guidance on convertible instruments and the derivatives scope exception

Jul 31, 2019

The FASB has issued a proposed Accounting Standards Update (ASU), “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.”

As the FASB’s press release notes, the proposed ASU “would reduce the number of accounting models for convertible debt instruments and convertible preferred stock. It would revise the derivatives scope exception guidance to reduce form-over-substance-based accounting conclusions driven by remote contingent events. The proposed ASU also would improve and amend the related disclosure and earnings-per-share guidance.”

Comments on the proposed ASU are due by October 14, 2019. For more information, see the press release and FASB in Focus newsletter on the FASB’s Web site.

 

FASB issues proposed ASU on interaction between standards on equity method and financial instruments

Jul 30, 2019

The FASB has issued a proposed Accounting Standards Update (ASU), “Clarifying the Interactions Between Topic 321, Topic 323, and Topic 815.”

The pro­posed ASU, which is being released in response to an EITF consensus-for-exposure, clarifies that (1) when an entity applies the ASC 321 measurement alternative, it should consider observable transactions that require it to either apply or discontinue the equity method immediately before applying or after discontinuing ASC 323 and (2) an entity should apply ASC 321 rather than ASC 323 to account for forward contracts and purchased options to acquire an equity instrument that do not meet the definition of a derivative under ASC 815.

Com­ments on the pro­posed ASU are due by August 29, 2019. For more in­for­ma­tion, see Deloitte’s June 2019 EITF Snapshot as well as the press release and pro­posed ASU on the FASB’s Web site.

CAQ releases highlights of June 2019 joint meeting with the SEC staff

Jul 29, 2019

The Center for Audit Quality (CAQ) has published highlights of the June 25, 2019, CAQ SEC Regulations Committee joint meeting with the SEC staff.

Topics discussed at the meeting include:

  • Use of income averaging for purposes of testing significance when registrant has applied the full retrospective method of adopting ASC 606 but has not revised the earliest two periods.
  • Emerging Growth Company (EGC) Transition Issues.
  • Application of amended MD&A provisions that permit the omission of the earliest period of MD&A in a filing in circumstances where there has been a retrospective change to the financial statements.
  • Interim periods required for changes in stockholders’ equity in a registration or proxy statement.
  • Non-GAAP measures, including individually tailored non-GAAP financial measures.

For more information, see the highlights on the CAQ's Web site. 

 

FASB updates SEC sections of Codification

Jul 29, 2019

The FASB has issued an Accounting Standards Update (ASU), “Codification Updates to SEC Sections — Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization, and Miscellaneous Updates (SEC Update).”

The ASU aligns the guidance in various SEC sections of the Codification with the requirements of certain SEC final rules.

For more in­for­ma­tion, see the ASU on the FASB’s Web site.

FASB and IASB hold joint education meeting

Jul 26, 2019

On July 23, 2019, the FASB and IASB held a joint education meeting to discuss standards that the boards developed together, or that are largely converged, as well as new projects that both boards have on their work plans.

Specif­i­cally, the boards dis­cussed the fol­low­ing topics:

  • Segment re­port­ing.
  • Primary fi­nan­cial state­ments and fi­nan­cial per­for­mance re­port­ing.
  • Financial instruments with characteristics of equity and distinguishing liabilities from equity.
  • IBOR reform and reference rate reform.
  • Good­will and im­pair­ment, and identifiable intangible assets and subsequent accounting for goodwill.
  • Disclosure initiative and disclosure framework.
  • Im­ple­men­ta­tion of the revenue recog­ni­tion and leasing stan­dards.

No decisions were made.

Highlights of the FASB’s July 17 meeting

Jul 19, 2019

At its July 17, 2019, meeting, the FASB discussed (1) reference rate reform; (2) effective date considerations for private companies, not-for-profit organizations, and small public companies; (3) the lessor’s accounting for operating lease receivables under ASC 842, “Leases”; and (4) implementation of the contract combination guidance in ASC 606, “Revenue From Contracts With Customers,” by colleges and universities.

Ref­er­ence rate reform

The Board made tentative decisions about reference rate reform, specifically facilitation of the effects of the transition away from interbank offered rates to alternative reference rates. Specific topics discussed included (1) hedge accounting relief related to the effects of reference rate reform and (2) the transition method, disclosures, relief period, comment period, and cost-benefit analysis related to future proposed guidance on this subject. The Board di­rected its staff to begin draft­ing a pro­posed ASU for a vote by written ballot.

For more in­for­ma­tion, see the meeting minutes on the FASB’s Web site.

Effective date considerations for private companies, not-for-profit organizations, and small public companies

The Board tentatively decided to amend how the effective dates of major standards are staggered for certain entities, including private companies, not-for-profit organizations, and small public companies. Specifically, the FASB decided to give such entities implementation relief by delaying the effective dates of its standards on credit losses, derivatives and hedging, leases, and insurance for two years after the effective dates for SEC filers (excluding smaller reporting companies, as defined by the SEC). The Board di­rected its staff to begin draft­ing two proposed ASUs that incorporate its decisions on the effective dates: one for the credit losses, derivatives and hedging, and leasing standards and one for the insurance standard.

For more in­for­ma­tion, see Deloitte’s July 18, 2019, Heads Up as well as the meeting minutes on the FASB’s Web site.

Leasing implementation issue

The Board discussed the accounting for impairment of operating lease receivables and affirmed the FASB staff’s view that two methods of accounting for the impairment of operating lease receivables are acceptable.

For more in­for­ma­tion, see Deloitte’s related journal entry as well as the meeting minutes on the FASB’s Web site.

Revenue implementation issue for colleges and universities

The Board dis­cussed an implementation issue under ASC 606, Revenue From Contracts With Customers, with respect to the combination of tuition and housing contracts provided by colleges and universities.

For more in­for­ma­tion, see the meeting minutes on the FASB’s Web site.

FASB staff issues Q&As on expected credit losses

Jul 18, 2019

The FASB staff has issued a Q&A document, “Topic 326, No. 2: Developing an Estimate of Expected Credit Losses on Financial Assets.”

The Q&As address the following topics:

  • “Use of historical loss information.”
  • “Making reasonable and supportable forecasts.”
  • “The reversion to historical loss information.”

For more in­for­ma­tion, see the press release and Q&A document on the FASB’s Web site.

IASB publishes proposed amendments to IAS 12

Jul 17, 2019

The IASB has published an exposure draft (ED), “Deferred Tax Related to Assets and Liabilities Arising From a Single Transaction — proposed amendments to IAS 12.”

Under the proposed amendments, the initial recognition exemption would not apply to transactions in which both deductible and taxable temporary differences arise on initial recognition and result in the recognition of deferred tax assets and liabilities in the same amount.

Comments on the ED are due by November 14, 2019. For more information, see the press release, ED, and In Brief overview on the IASB’s Web site.

SEC and NASAA issue statement on the application of securities laws to opportunity zone investments

Jul 16, 2019

The SEC and North American Securities Administrators Association (NASAA) have issued a joint statement, “Staff Statement on Opportunity Zones: Federal and State Securities Laws Considerations.”

The opportunity zone program, which was established by the Tax Cuts and Jobs Act, provides “tax incentives for long-term investing in designated economically distressed communities.” The purpose of the statement is to “help participants in the opportunity zone program understand the compliance implications for qualified opportunity funds under federal and state securities laws.”

For more information, see the press release and statement on the SEC’s Web site.

SEC issues statement on LIBOR transition

Jul 12, 2019

The SEC has issued a statement regarding the expected discontinuation of LIBOR after 2021 and how market participants can manage their transition from LIBOR by evaluating existing contracts, new contracts, and other business risks.

In addition, the statement details guidance from the Division of Corporation Finance, Division of Investment Management, and Division of Trading and Markets, as well as from the Office of the Chief Accountant, on the discontinuation of LIBOR and how registrants can respond to the risks.

For more information, see Deloitte's Heads Up newsletter as well as the press release and statement 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.