Overview

This ASU is part of FASB’s simplification project to reduce the unnecessary complications of determining the current and noncurrent portions of deferred taxes. The ASU addresses feedback from stakeholders about the costs and benefits of current requirements. Specifically, the separation of deferred income tax liabilities and assets into current and noncurrent components offers limited benefit to users of financial statements because the classification does not generally align with the time period in which the recognized deferred tax amounts are expected to be recovered or settled.

Scope

This ASU is applicable to all entities who present a classified balance sheet (statement of financial position).

Requirements

This ASU, when effective, will require that an entity within the scope present deferred tax assets or deferred tax liabilities only as noncurrent. The requirement to offset deferred tax assets and liabilities is not affected by the issuance of this ASU.

Effective dates

Application details include the following:

• For public business entities: Effective for fiscal periods beginning after December 15, 2016, including interim periods within those periods.
• For all other entities: Effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within fiscal years beginning after December 15, 2018.
• Early application is permitted for all entities as of the beginning of an interim or annual period.

Applied prospectively or retrospectively for all periods presented, and disclosure of the change is needed in the first period in which the change is adopted. If retrospectively adopted, quantitative information about the effects of the change in accounting on prior periods is needed.

Overview

This ASU provides guidance for both the initial and subsequent recognition of financial assets and financial liabilities, as well as presentation and disclosure issues. The objective of the ASU is to provide a more enhanced or robust reporting model for financial instruments.

Scope

Applicable to all entities that hold financial assets or financial liabilities.

Requirements

The ASU segregates the accounting for debt and equity securities by modifying FASB ASC 320, Investments — Debt and Equity Securities, to include guidance related only to debt securities. The ASU has created a new FASB ASC topic, FASB ASC 321, Investments — Equity Securities, to provide guidance for equity securities.

New FASB ASC Topic 321

Under existing GAAP, a reporting entity determines whether marketable equity securities are classified as “trading” securities or “available-for-sale” securities. Both classifications required measurement at fair value, with differences in how the unrealized gain or loss was presented. Trading unrealized gains and losses are included in net income, although unrealized gains and losses from available-for-sale securities are included in other comprehensive income.

This ASU eliminates the distinction between trading and available-for-sale securities. All equity investments (with exceptions noted as follows) will now be measured at fair value with the unrealized gain or loss recognized in net income.

Equity investments that meet the following criteria are not subject to the provisions of this update:

• Equity investments accounted for under the equity method
• Equity investments that result in the consolidation of the investee

Equity securities without readily determinable fair values (ASC 321-10-35-2)

An entity may elect to measure an equity security without a readily determinable fair value by measuring such security at cost less impairment. This measurement is further supplemented by requiring an adjustment (plus or minus) resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer.

The election to treat such equity securities should remain in effect until such time as the security no longer qualifies to be accounted for within this section. The entity should reassess at each reporting period whether the equity investment continues to qualify as an equity security without a readily determinable fair value.

Impairment of equity securities without readily determinable fair values (ASC 321-10-35-3)

If an entity holds an equity security without a readily determinable fair value (that does not qualify for the practical expedient to estimate fair value under ASC 820-10-35-59), a qualitative assessment is now available under ASC 321-10-35-3. The equity security should be written down to its fair value if the qualitative assessment indicates the security is impaired. The following factors should be considered in the qualitative assessment:

• A significant deterioration in the earnings performance, credit rating, asset quality, or business prospects of the investee
• A significant adverse change in the regulatory, economic, or technological environment of the investee
• A significant adverse change in the general market conditions of either the geographical area or the industry in which the investee operates
• A bona fide offer to purchase, an offer by the investee to sell, or a completed auction process for the same or similar investment for an amount less than the carrying amount of the investment
• Factors that raise significant concern, such as negative cash flows from operations, working capital deficiencies, or noncompliance with statutory capital requirements or debt covenants

The preceding list of items is not considered to be all-inclusive. Any other factors that an entity would consider in determining if impairment exists should be considered.

Investments–debt securities (ASC 320)

Presentation issues for comprehensive income

Certain financial liabilities that elect to be accounted for under the fair value option in ASC 825-10-25-1 will now be required to present separately in other comprehensive income, the portion of the total change in the fair value of the liability resulting from a change in the instrument-specific credit risk.

Presentation and disclosure issues — balance sheet

An entity must present separately on the face of the balance sheet or in the notes to the financial statements the following information:

• Financial assets by measurement category
  • Trading
  • Available-for-sale
  • Held to maturity
• Financial assets by form of financial asset
  • Securities
  • Loans
  • Receivables
• Financial liabilities by measurement category
• Financial liabilities by form of financial liability

Consideration of a valuation allowance for a deferred tax asset

The ASU clarifies the need for an entity to evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets.

Effective dates

Public business entities: Effective for fiscal years beginning after December 15, 2017, including interim periods within those years.

All other entities, including not-for-profit entities and employee benefit plans within the scope of FASB ASC 960–985: Effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.

There is a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption.

The ASU is applied prospectively to equity securities without readily determinable fair values that exist as of the date of the adoption.

Issue date

March 2016

Who is affected

This ASU affects entities that issue certain prepaid stored-value products, whether in physical or digital form, such as gift cards that customers may redeem with merchants accepting such products within a certain network, prepaid telecommunication (phone) cards, and travelers’ checks.

Background

This ASU seeks to minimize current and future diversity in practice when an entity derecognizes prepaid stored-value product liability.

Today there is diversity in practice in how entities account for prepaid stored-value product liabilities, with some entities viewing them as financial liabilities and others viewing them as nonfinancial liabilities. FASB ASC 405-20, Liabilities — Extinguishments of Liabilities, includes derecognition guidance for both financial and nonfinancial liabilities. But entities use diverse methodologies for recognizing “breakage” (that is, the portion of the dollar value of prepaid stored-value products that goes unredeemed); and no such guidance currently exists in the subtopic.

Discussion of significant changes

This ASU aligns FASB ASC 405 with the authoritative breakage guidance in FASB ASC 606, Revenue from Contracts with Customers, by allowing entities to follow the guidance in FASB ASC 606 to recognize breakage on prepaid stored-value products. An excerpt from the pending guidance in FASB ASC 405 follows:

If an entity expects to be entitled to a breakage amount for a liability resulting from the sale of a prepaid stored-value product in the scope of paragraph 405-20-40-3, the entity shall derecognize the amount related to the expected breakage in proportion to the pattern of rights expected to be exercised by the product holder only to the extent that it is probable that a significant reversal of the recognized breakage amount will not subsequently occur. If an entity does not expect to be entitled to a breakage amount for prepaid stored-value products in the scope of paragraph 405-20-40-3, the entity shall derecognize the amount related to breakage when the likelihood of the product holder exercising its remaining rights becomes remote. At the end of each period, an entity shall update the estimated breakage amount to represent faithfully the circumstances present at the end of the period and the changes in circumstances during the period. Changes to an entity’s estimated breakage amount shall be accounted for as a change in accounting estimate in accordance with paragraphs 250-10-45-17 through 45-20.

This ASU provides a narrow-scope exception per the preceding but does not apply to

• products that can be redeemed only for cash.
• products subject to escheatment laws.
• products associated with customer loyalty programs.
• products attached to a segregated bank account.

Effective date and transition requirements

Issue date

March 2016

Background

Parties to a derivative investment may change over time for various reasons, including mergers or regulatory requirements, through “novation” (meaning, to replace one party to a derivative instrument with another party). This ASU clarifies whether novation in a derivative instrument that has been designated a hedging instrument under Topic 815 terminates the hedging relationship, requiring the entity to de-designate the hedging relationship and cease hedge accounting. This ASU seeks to mitigate diversity in practice.

Who is affected

This ASU affects entities that experience a change in counterparty to a derivative instrument that has been designated as a hedging instrument under Topic 815.

Main provisions

If the only change to a hedging instrument is novation, this ASU provides that de-designation of that hedging relationship is not required, provided that all other hedge accounting criteria continue to be met. This would include criteria in FASB ASC 815-20-35-14 through 35-18.

Discussion of changes

Current GAAP is limited and not sufficiently clear about whether novation affects the ongoing hedging instrument status. This ASU clarifies that novation does not terminate the hedge relationship and that de-designation is not required.

Effective date and transition requirements

Issue date

March 2016

Background

This ASU seeks to address certain questions about the “four-step decision sequence” provided as implementation guidance by the Derivatives Implementation Group (DIG), and how the implementation guidance interacts with the original guidance in FASB ASC 815, Derivatives and Hedging, for assessing embedded contingent call (or put) options in debt instruments. Currently, entities use two different approaches, which may lead to different conclusions about whether the embedded call (or put) option is “clearly and closely related” to its debt host, and, thus, should be bifurcated and accounted for separately as derivatives. This ASU seeks to resolve the diversity in practice.

Who is affected

This ASU affects issuers of, or investors in, debt instruments (or hybrid financial instruments that are determined to have a debt host) with embedded call (or put) options.

Main provisions

This ASU clarifies that entities should apply the four-step decision sequence in determining whether contingent call (or put) options are clearly and closely related to their debt hosts. Guidance requiring the contingent call (or put) options to be indexed to interest rates or credit risks has been removed and will no longer preclude those instruments from meeting the clearly and closely related criterion.

Effective date and transition requirements

Issue date

March 2016

Background

As part of FASB’s simplification initiative, the board identified the issues in this ASU through outreach, research by the Private Company Council, and the August 2014 Post-Implementation Review Report on FASB Statements No 123(F), Share-Based Payment.

Who is affected

This ASU affects all entities that issue share-based payment awards to their employees. Some of the simplified guidance applies solely to nonpublic entities.

Main provisions and significant changes

This ASU simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, and classification in the statement of cash flows. Nonpublic entities may apply two practical expedients to estimate the expected term of an award and make a one-time election to switch from fair value measurement to intrinsic value measurement for liability-classified awards.

Accounting for income taxes

• Recognize all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) as income tax expense or benefit in the income statement.

  Change: The excess benefits are no longer recognized in additional paid-in capital and tax deficiencies may no longer offset excess tax benefits.

• Treat the tax effects of exercised or vested awards as discrete items in the reporting period in which they occur.

• Recognize excess tax benefits regardless of whether the benefit reduces taxes payable in the current period.

  Change: No longer required to defer excess tax benefits until the deduction reduces taxes payable.

• Classify excess tax benefits (along with other income tax flows) in the statement of cash flows as an operating activity.

  Change: No longer required to separate these flows from other income tax cash flows and classify as a financing activity.

Forfeitures

• An entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur.

  Change: An entity may continue to estimate the number of awards that will vest or account for forfeitures as they occur.

Statutory withholding requirements

• The threshold to qualify for equity classification permits withholding up to the maximum statutory tax rates in the applicable jurisdictions.

  Change: Under current GAAP the threshold for qualification as equity is that an entity could not partially settle an award in cash in excess of the employer’s minimum statutory withholding requirements.

Employee taxes paid

• When directly withholding shares for tax withholding purposes, classify cash paid by an employer as a financing activity cash in the Statement of Cash Flows.

  Change: Current GAAP has no guidance.

Practical expedient — nonpublic entities only

• Make an accounting policy election to estimate the expected term for all awards with performance or service conditions that meet certain conditions.

• Make a one-time accounting policy election to switch from measuring all liability-classified awards at fair value to intrinsic value.

  Changes: Current GAAP requires entities to estimate the period of time that an option will be outstanding. Nonpublic entities currently have the option at initial adoption of Topic 718, Compensation — Stock Compensation, to measure liability-classified awards at intrinsic value, although some nonpublic entities were apparently unaware of the option.

Effective date and transition requirements

Issue date

August 2016

Background and overview

The last time financial statement presentation for NFP entities changed was in 1933. The intent of this ASU is to provide NFPs with more relevant information about their resources, along with the changes in those resources, by improving financial statement presentation and disclosures. In this way, more relevant information will be available to donors, grantors, creditors, and other financial statement users by making the financial statements easier to understand.

Scope

This ASU applies to NFP entities that are subject to the financial statements and note requirements described in FASB ASC 958, Not-for-Profit Entities.

Significant changes to NFP presentation and disclosures

This 270-page ASU details significant change to the financial statement presentation of NFPs. Broad highlights of these significant changes are as follows:

• Reduces the number of net asset classes from three to two. The new classes will be net assets with donor restrictions and net assets without donor restrictions.
• Requires reporting of the underwater amounts of donor-restricted endowment funds in net assets with donor restrictions and enhances disclosures about underwater endowments.
• Continues to allow preparers to choose between the direct method and indirect method for presenting operating cash flows, eliminating the requirement for those who use the direct method to perform reconciliation with the indirect method.
• Requires that the NFP provide in the notes:
  • Qualitative information on how it manages its liquid available resources and liquidity risks, and
  • Quantitative information that communicates the availability of the NFP’s financial assets at the balance sheet date to meet cash needs for general expenditures within one year. This requirement may be presented on the face of the financial statement, in the notes, or both.
• Requires reporting of expenses by function and nature, as well as an analysis of expenses by both function and nature.

It is suggested that you refer directly to the guidance in the ASU, including the implementation guidance contained directly in the standard, and consider the several NFP resources described following.

Effective date and transition

• The ASU is effective for annual financial statements issued for fiscal years beginning after December 15, 2017, and for interim periods within fiscal years beginning after December 15, 2018.
• Early application is permitted.
• Applied on a retrospectively in the year of adoption. If the NFP presents comparative financial statements, they have an option to omit some select information for any period(s) presented before the period of adoption.
• Keep in mind that the ASU includes transitional guidance for the year of adoption, which includes specific disclosures.

Resources

The AICPA has a dedicated section for NFPs, containing articles and tools relating to this ASU as well as other broader NFP considerations.

Those interested in or involved with NFPs may want to consider joining the AICPA Not-for-Profit Section. This section supports NFPs and the professionals who serve NFPs. The Section provides useful tools and resources that facilitate compliance with standards and regulations, promotes excellence in the NFP sector, and serve as a hub for peer-to-peer learning and information sharing. The section covers NFP requirements in Accounting & Financial Reporting, Tax Compliance, Governance, and Assurance. Here is a link to the AICPA’s not-for-profit interest area, https://www.aicpa.org/interestareas/notforprofit.html.

Issue date

August 2016

Background

This ASU was issued to reduce the existing diversity in practice relating to eight specific cash flow issues. These issues pertain to the presentation and classification of certain cash receipts and cash payments in the statement of cash flow, along with some other topics.

Scope

The amendments in this ASU are applicable to all entities required to present a statement of cash flows under FASB ASC 230, Statement of Cash Flows, including not-for-profit entities.

Overview

There are times when a cash receipt has more than one cash flow characteristic. If this occurs, the ASU directs the financial statement preparer to first apply the specific GAAP guidance in order to determine the applicable cash flow category. The ASU describes how a transferor’s beneficial interest obtained in a securitization of a financial asset will need to be disclosed as a noncash activity.

The following table addresses the specific cash flow issues relating to the statement of cash flows described in the ASU:

Effective dates and transition

• Effective for public business entities for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years.
• Effective for all other entities for fiscal years beginning after December 15, 2018 and interim periods within fiscal years beginning after December 15, 2019.
• Early adoption is permitted, including adoption in an interim period. Keep in mind that all parts of the ASU must be adopted within the same period. Adjustments arising for an early adoption will be reflected as of the beginning of the fiscal year.
• The ASU is applied retrospectively for each period presented. If retrospective application is impracticable, the ASU would be applied prospectively as of the earliest date practicable.

Issue date

October 2016

Overview

This ASU was issued as part of FASB’s simplification initiative to reduce the complexity and diversity in practice relating to the accounting for the income tax consequences of intra-entity transfers of assets other than inventory.

Prior to the issuance of this ASU, the recognition of current and deferred income taxes for an intra-entity asset transfer was prohibited until the asset was sold to a third party. FASB provided limited guidance to address this, leading to a variety of ways entities have accounted for intra-entity transfers of intellectual property.

To address this issue, FASB has simplified the guidance, allowing the recognition of current and deferred income taxes for an intra-entity asset transfer, other than transfers of inventory. Examples that would fall within this change would include intellectual property and property, plant, and equipment.

This ASU did not create any additional disclosure requirements.

Effective dates and transition

• For public business entities — effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods.
• For private and other entities — effective for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual periods beginning after December 15, 2019.
• Early adoption is permitted as of the beginning of an annual reporting period providing the financial statements have not been issued or made available for issuance.
• The ASU is applied using a modified retrospective approach, in the year of adoption, with a cumulative-effect adjustment made directly to the beginning retained earnings balance.

Issue date

November 2016

Scope

The amendments in this ASU are applicable to all entities required to present a statement of cash flows and have restricted cash or restricted cash equivalents.

Overview

This ASU was issued to eliminate the current diversity in practice regarding the classification and presentation of restricted cash and restricted cash equivalents on the statement of cash flows.

Although the ASU did not provide a definition for restricted cash or restricted cash equivalents, when effective, an entity with either restricted cash or restricted cash equivalents, or both, will explain the changes in their respective totals in the statement of cash flows. Therefore, these amounts will be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows.

Keep in mind that transfers between cash, cash equivalents, and restricted cash or restricted cash equivalents are not part of the entity’s operating, investing, and financing activities, and details of those transfers are not reported as cash flow activities in the statement of cash flows.

Presentation and disclosures

The nature of restrictions on an entity’s cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents will need to be disclosed. Additionally, when cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents are presented in more than one line item within the statement of financial position, disclosure on the face of the statement of cash flows or disclosure in the notes to the financial statements is needed for each period that a statement of financial position is presented. This disclosure would include (in narrative or tabular format):

• The line items and amounts of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents reported within the statement of financial position
• The amounts, disaggregated by the line item in which they appear within the statement of financial position
• The total amount of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents at the end of the corresponding period shown in the statement of cash flows

Effective dates and transition

• Public business entities: Effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.
• All other entities: Effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019.
• Early adoption is permitted, with any adjustments reflected in the beginning of the fiscal year of adoption.
• Retrospective application required for each period presented

Amounts included in restricted cash represent those required to be set aside by a contractual agreement with an insurer for the payment of specific workers’ compensation claims. Restricted cash included in other long-term assets on the statement of financial position represents amounts pledged as collateral for long-term financing arrangements as contractually required by a lender. The restriction will lapse when the related long-term debt is paid off.

In addition to the preceding example, the ASU contains several statements of cash flows examples, using both the indirect and direct methods; therefore, consider referring to the illustrations in the ASU.

Issue date

January 2017

Scope

This ASU is applicable to all entities needing to determine whether they have sold or acquired a business.

Overview

The current definition of a business is interpreted broadly and can be difficult for entities to apply when determining whether they have or have not sold or purchased a business. Therefore, this ASU provides a more robust framework to use in determining when a set of assets and activities is a business.

The new guidance defines a business as

an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs, or other economic benefits directly to investors or other owners, members, or participants.

In order to be considered a business, it must consist of inputs and processes applied to those inputs that have the ability to create and contribute to the creation of outputs. Keep in mind that although businesses usually have outputs, outputs are not required for an integrated set to qualify as a business. Further, amendments in this ASU narrow the definition of the term output so that the term is consistent with how outputs are described in FASB ASC 606.

This ASU has created the following terms and guidance to assist in clarifying the definition of a business:

• Single or Similar Asset Threshold
• Single Identifiable Asset
• Similar Assets

Effective dates and transition

• Public business entities: Effective for annual periods beginning after December 15, 2017, including interim periods within the period.
• All other entities: Effective for annual periods beginning after December 15, 2018, and interim periods beginning after December 15, 2019.
• The guidance in this ASU is applied prospectively.
• Early application is permitted provided the applicable transactions have not been reported in financial statements that have been issued or made available for issuance.

Issue date

February 2017

Scope

An entity is within the scope of this ASU if

• it enters into a contract to transfer a nonfinancial asset, a group of nonfinancial assets, or an ownership interest in a consolidated subsidiary that is not a business or not-for-profit activity to a noncustomer.
• historically its real estate transactions fell within the scope of specific derecognition guidance.
• it contributes to a joint venture or other noncontrolled investee nonfinancial assets that are considered to not meet the criteria of a business or not-for-profit activity.

Overview

This ASU changes and simplifies how all entities (excluding the conveyances of oil and gas mineral rights or contracts with customers) account for the derecognition of a business or not-for-profit activity, by eliminating an existing scope exception. Therefore entities will no longer have to consider whether the business or not-for-profit activity was also considered an “in substance real estate or an in substance nonfinancial asset.”

The simplification brought about by this ASU eliminates several accounting differences between transactions involving assets and transactions involving businesses, thereby requiring an entity to initially measure a retained noncontrolling interest in a nonfinancial asset at fair value, which is consistent with how a retained noncontrolling interest in a business is measured.

If within the scope of FASB ASC 610, Other Income, an entity that transfers ownership interests in a consolidated subsidiary while it continues to maintain a controlling financial interest in that subsidiary will be required to account for that transaction (transfer) as an equity transaction.

To eliminate further diversity in practice, the guidance in this ASU does the following:

• Defines an in substance nonfinancial asset.
  • FASB ASC 610-20-15-5 states: “An in substance nonfinancial asset is a financial asset (for example, a receivable) promised to a counterparty in a contract if substantially all of the fair value of the assets (recognized and unrecognized) that are promised to the counterparty in the contract is concentrated in nonfinancial assets. If substantially all of the fair value of the assets that are promised to counterparty in a contract is concentrated in nonfinancial assets, then all of the financial assets promised to the counterparty in the contract are in substance nonfinancial assets. For purposes of this evaluation, when a contract includes the transfer of ownership interests in one or more consolidated subsidiaries that are not a business, an entity shall evaluate the underlying assets in those subsidiaries.”
• Explains how there is no longer a need to distinguish between contributions to joint ventures and other types of investees because contributions to joint ventures will now be considered within the scope of FASB ASC 610. (This change is different from existing GAAP and entities primarily in the real estate industry, as well as other industries such as power and utilities, alternative energy, life sciences, and shipping may be affected).
• Requires that all entities fall within the scope of FASB ASC 810, Consolidation, when accounting for derecognition of a business or not-for-profit activity (except those related to conveyances of oil and gas mineral rights or contracts with customers). This has eliminated certain existing scope exceptions in GAAP, such as certain specific requirements relating to derecognition of an equity method investment in accordance with FASB ASC 860, Transfers and Servicing.

Effective dates and transition

This ASU has the same effective date as ASU No. 2014-09, and therefore

• for public entities, this ASU is effective for annual reporting periods beginning after December 15, 2017, (meaning January 1, 2018, for calendar year-end entities), including interim periods within that reporting period. Early application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.
• for nonpublic entities, this ASU is effective for annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. Nonpublic entities may elect to adopt the standard earlier, only as of either of the following:
  • An annual reporting period beginning after December 15, 2016, including interim periods within that reporting period
  • An annual reporting period beginning after December 15, 2016, and interim reporting periods within annual periods beginning one year after the annual reporting period in which an entity first applied ASU No. 2014-09

Entities may elect to transition into the guidance in this ASU as follows:

• A full retrospective adoption for each prior reporting period presented, or
• A modified retrospective adoption with a cumulative-effect adjustment

Keep in mind that an entity may elect to apply all of the guidance in this ASU using the same transition method used for ASU No. 2014-09, or alternatively, it may elect to apply

• the same transition method used for transactions with customers that are within the scope of FASB ASC 606, and
• a different transition method for transactions with noncustomers, meaning transactions outside the scope of FASB ASC 606 such as those within the scope of FASB ASC 610.

Regardless of the transition method chosen, when applying the guidance in this ASU to transactions with noncustomers, the definition of a business and the guidance in ASU No. 2017-01 (previously described in this chapter) will apply.

Resources for implementation

Consider referring directly to the guidance in this ASU for examples showing the application of this guidance.

Issue date

March 2017

Scope

Applicable to all employers, including not-for-profit entities, that offer employees defined benefit pension plans, other postretirement benefit plans, or other types of benefits accounted for FASB ASC 715, Compensation-Retirement benefits.

Overview

The ASU was issued to improve the consistency, transparency, and usefulness of financial information to users regarding the presentation of net periodic pension costs and net periodic postretirement benefit costs.

Requirements

This ASU requires that employers:

• Report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period.
• Present other components of net benefit cost as defined in FASB ASC paragraphs 715-30-35-4 and 715-60-35-9 in the income statement separately from the service cost component and outside of the subtotal of income from operations, if one is presented. If a separate line item or items are used to present the other components of net benefit cost, that line item or items would need to be appropriately described. If a separate line item or items are not provided, then the line item or items used in the income statement to present the other components of net benefit cost must be disclosed.

The ASU describes how only the service cost component is eligible for capitalization and requires that an employer disaggregate the service cost component from the other components of net benefit cost. Explicit guidance on how to present the service cost component and the other components of net benefit cost in the income statement is provided in the ASU.

Effective date and transition

• Public business entities: Effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods
• For other entities: Effective for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019

Early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance. Therefore early adoption should be within the first interim period if an employer issues interim financial statements along with a disclosure of the reason for the change in accounting principle.

Applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement.

Applied prospectively on and after the effective date for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets.

The election of a practical expedient is available allowing the use of the amounts disclosed in the employer’s pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. Disclosure of the practical expedient election is required.

Issue date

May 2017

Scope

Any entity that changes the terms or conditions of a share-based payment award is within the scope of this ASU.

Overview

This ASU was issued to reduce diversity in practice and the cost and complexity associated with a change in a term or condition of a share-based payment award within the scope of FASB ASC 718, Compensation — Stock Compensation.

The guidance in this ASU clarifies when an entity is required to apply modification accounting to changes to the terms or conditions of a share-based payment award. Specifically, modification accounting is applied unless all of the following are met:

• The fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the original award immediately before the modification. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification.
• The vesting conditions of the modified award are the same as the original award immediately before the modification.
• The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the modification.

The ASU has not changed the disclosure requirements of FASB ASC 718 regardless of whether an entity is required to apply modification accounting.

Effective date and transition

• Effective for all entities for annual periods and interim periods within those annual periods, beginning after December 15, 2017.
• Early adoption, including interim adoption, is permitted for reporting periods for which financial statements have not yet been issued or been made available for issuance.
• Applied prospectively to a modified award on or after the adoption date.

Issue date

May 2017

Scope

The accounting described in the ASU is applicable to operating entities for service concession arrangements within the scope of FASB ASC 853, Service Concession Arrangements.

Overview

This ASU was issued to address the diversity in practice regarding how an operating entity determines whether a transaction is within the scope of FASB ASC 853.

A service concession arrangement is an arrangement between a grantor and an operating entity whereby the operating entity will operate the grantor’s infrastructure (for example, airports, roads, bridges, tunnels, prisons, and hospitals) for a specified period of time. The operating entity may also maintain the infrastructure, and may be required to provide periodic capital-intensive maintenance (major maintenance) to enhance or extend the life of the infrastructure. The infrastructure may be constructed by the operating entity during the period of the service concession arrangement or may already exist.

This ASU has clarified that a grantor is the customer of the operation services in all cases for these arrangements.

Example

The ASU provides an example of a public-sector entity grantor (government) that enters into an arrangement with an operating entity under that will provide operation services (which include operation and general maintenance of the infrastructure) for a toll road that will be used by third-party users (drivers). The example clarifies that the grantor (government), rather than the third-party drivers, is the customer of the operation services in all cases for service concession arrangements.

Effective date and transition

Issue date

February 2018

Overview

This ASU was issued to clarify certain aspects of ASU No. 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.

The corrections or improvements in this ASU address the following issues:

• Discontinuation of using a measurement alternative for equity securities without a readily determinable fair value
• Adjustments made under a measurement alternative for equity securities without a readily determinable fair value
• The requirement to re-measure the entire value of forward contracts and purchased options on equity securities for which the measurement alternative is expected to be applied when observable transactions occur on the underlying equity securities
• The application of paragraph 825-10-45-5 of FASB ASC 825 to certain hybrid financial liabilities when the fair value option has been elected
• Fair value option liabilities denominated in a foreign currency
• Transition guidance for equity securities without a readily determinable fair value

Effective dates and transition

• Public business entities: Effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years beginning after June 15, 2018.
• Public business entities with fiscal years beginning between December 15, 2017, and June 15, 2018, are not required to adopt the guidance in this ASU until the interim period beginning after June 15, 2018.
• Public business entities with fiscal years beginning between June 15, 2018, and December 15, 2018, are not required to adopt the guidance in this ASU before adopting the amendments in ASU No. 2016-01.
• For all other entities, the effective date in this ASU is the same as the effective date in ASU No. 2016-01.

All entities may opt for early adoption of the guidance in this ASU for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, providing they have adopted ASU No. 2016-01.

Issue date

March 2018

Overview

Various SEC paragraphs relating to FASB ASC 320, Debt Securities, and FASB ASC 980, Regulated Operations were added and superseded in response to the issuance of SEC Staff Accounting Bulletin No. 117 and SEC Release No. 33-9273. These changes were made on March 9, 2018.

Issue date

March 2018

Overview

In response to SEC Staff Accounting Bulletin No. 118 this ASU has added paragraphs 740-10-S25-2, 740-10-S50-3, 740-10-S55-8, and 740-10S99-2A and Sections 740-10-S30, 740-10-S35, and 740-10-S45 to FASB ASC 740, to address the income tax accounting implications of the Tax Cuts and Jobs Act. These amendments were made to FASB ASC on March 13, 2018.

Issue date

May 2018

Scope

FASB does not believe that the guidance in this ASU will have an effect on reporting entities.

Overview

The intention of this ASU is to remove outdated guidance related to the Office of the Comptroller of the Currency's Banking Circular 202, “Accounting for Net Deferred Tax Charges” from the FASB codification because that guidance has been rescinded and is no longer is relevant.

Effective dates and transition

The ASU became effective upon issuance, with an issuance date of May 7, 2018.

Issue date

June 2018

Scope

Applicable to all entities, including NFPs and business entities that

• receive or make contributions of cash and other assets, including promises to give within the scope of FASB ASAC 958 — 605, Not-for-Profit Entities — Revenue Recognition, and
• Contributions made within the scope of FASB ASC 720--25, Other Expenses — Contributions Made.

Note that the terms used for contribution revenue may differ and is not a factor when determining whether an agreement is within the scope of this ASU. This ASU is applicable to both resources received by a recipient and resources given by a resource provider.

Transfers of assets from government entities to business entities are outside the scope of this ASU.

Overview

This ASU intends to reduce diversity in practice and clarify and assist entities with the following:

• Evaluating whether transactions should be accounted for as contributions (nonreciprocal transactions) within the scope of FASB ASC 958, or as exchange (reciprocal) transactions subject to other guidance, and
• Determining whether a contribution is conditional.

An entity will need to evaluate their transaction with a resource provider in order to determine whether a transfer of assets, or the reduction, settlement, or cancellation of liabilities is a contribution or an exchange transaction.

When evaluating whether the resource provider is participating in an exchange transaction by receiving commensurate value in return for the resources transferred, an entity will need to consider the following:

• That a resource provider might include a foundation, a government agency, or other, but that the term is not synonymous with the general public — meaning that if the general public benefits as a result of the assets being transferred, that benefit would not be used when determining the commensurate value received by the resource provider.
• Commensurate value received by a resource provider for purposes of determining whether a transfer of assets is a contribution or an exchange would not take into consideration the execution of the resource provider’s mission or the positive sentiment from acting as a donor.

At times, the resource provider may not be directly receiving commensurate value for the resources provided, but instead there is a transfer of assets representing a payment from a third-party payer on behalf of their behalf. Transactions such as these, generally fall outside the scope of this ASU and within the scope of other GAAP, such as FASB ASC 606 or other FASB ASC topics.

The ASU also requires that an entity evaluate the facts and circumstances of an agreement to determine whether a stipulation represents a barrier that must be overcome before the recipient is entitled to the assets transferred or promised. A barrier often places specific requirements on an organization about the use of the transferred assets to be entitled to those assets. A probability assessment about whether the recipient is likely to meet the stipulation is not a factor when determining whether an agreement contains a barrier.

The presence of both a barrier and a right of return or a right of release indicates that a recipient is not entitled to the transferred assets or a future transfer of assets until it has overcome the barrier in the agreement.

Don’t lose sight of the difference between a condition stipulated by a donor and a restriction on the use of a contribution imposed by a donor. A donor-imposed condition depends on whether the agreement includes a barrier that must be overcome before a recipient is entitled to the assets transferred or promised.

Effective dates

Entities that serve as a resource recipient

• Public business entities or NFPs that have issued, or are conduit bond obligors for securities that are traded, listed, or quoted on an exchange or an over-the-counter market — Effective for annual periods beginning after June 15, 2018, including interim periods within those annual periods for transactions involving contributions received
• All other entities – Effective for annual periods beginning after December 15, 2018 and interim periods within annual periods beginning after December 15, 2019.

Entities that serve as a resource provider

• Public business entities or NFPs that have issued, or are conduit bond obligors for securities that are traded, listed, or quoted on an exchange or an over-the-counter market – Effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods for transactions involving contributions made.
• All other entities – Effective for annual periods beginning after December 15, 2019, and interim periods within annual periods beginning after December 15, 2020.
• Early adoption of the amendments is permitted.

Issue date

July 2018

Scope

The ASU is applicable to all reporting entities within the scope of the wide variety of FASB ASC topics impacted by this ASU.

Overview

The guidance in this ASU provides clarification, correction of unintended application of guidance, or minor improvements to FASB ASC. The intention of codification improvements is to not have a significant effect on current accounting practice or create a significant cost to implement. This ASU has made a variety of codification improvements to the following FASB ASC topics:

• FASB ASC 220-10, Income Statement — Reporting Comprehensive Income — Overall
• FASB ASC 470-50, Debt — Modifications and Extinguishments
• FASB ASC 480-10, Distinguishing Liabilities from Equity — Overall
• FASB ASC 718-740, Compensation — Stock Compensation — Income Taxes
• FASB ASC 805-740, Business Combinations — Income Taxes
• FASB ASC 815-10, Derivatives and Hedging — Overall
• FASB ASC 820-10, Fair Value Measurement — Overall
• FASB ASC 940-405, Financial Services — Brokers and Dealers — Liabilities
• FASB ASC 962-325, Plan Accounting — Defined Contribution Pension Plans — Investments — Other

If any of the preceding FASB ASC topics are applicable to you, consider reviewing the changes contained in this ASU.

Transition and effective dates

This ASU contains the following effective dates:

• For guidance that does not require transition, it became effective upon the ASU’s issuance date of July 16, 2018.
• For certain changes the effective date for public business entities is for annual periods beginning after December 15, 2018.
• For changes made to recently issued guidance that is not yet effective, an entity will be required to follow the transition and effective dates of that guidance.

Effective dates

• The original effective dates of the ASU No. 2014-09: Revenue from Contracts with Customers (FASB topic 606) was revised by the issuance of the following ASUs:
• 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date
• 2017-13. Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments (SEC Update)

The revised effective dates are as follows:

• For public entities, ASU No. 2014-09 is effective for annual reporting periods beginning after December 15, 2017 (meaning January 1, 2018, for calendar year-end entities), including interim periods within that reporting period. Early application was permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.
• For nonpublic entities, ASU No. 2014-09 is ASU is effective for annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. Nonpublic entities may elect to adopt ASU No. 2014-09 earlier, only as of either of the following:
  • An annual reporting period beginning after December 15, 2016, including interim periods within that reporting period
  • An annual reporting period beginning after December 15, 2016, and interim reporting periods within annual periods beginning one year after the annual reporting period in which an entity first applied ASU No. 2014-09
• Special consideration for certain public business entities: ASU No. 2017-13 explains that the SEC staff has stated that they would not object to a public business entity using the nonpublic entity’s effectives providing the public business entity would not otherwise meet the definition of a public business entity except for a requirement to include or the inclusion of its financial statements or financial information in another entity’s filing with the SEC.

Effective dates

The new leasing standard is effective as follows:

• Public business entities are required to adopt the standard for reporting periods beginning after December 15, 2018. That means an effective date of January 1, 2019 for public entities with a December 31 year end.
• Nonpublic entities have an extra year to adopt.
• All entities may elect adopt the standard early.
• Special consideration are available for certain public business entities, described in ASU No. 2017-13 which explains that the Securities and Exchange Commission (SEC) staff would not object to a public business entity using the nonpublic entity’s effectives providing the public business entity would not otherwise meet the definition of a public business entity except for a requirement to include or the inclusion of its financial statements or financial information in another entity’s filing with the SEC.
• Entities may elect a practical expedient to not assess whether existing or expired land easements that were not previously accounted for as leases.

Issue date

June 2016

Background

The release of this new standard marks the end of accounting for credit losses using the incurred loss model.

Historically, an entity would estimate credit losses based on events that have already incurred, whether specifically known or not, as of a reporting date. To meet the threshold, the loss had to be both probable that it had incurred and reasonably estimable. There were several models prescribed in the accounting literature to measuring impairment. The accounting model used was determined based on the characteristics of the specific instrument (debt instrument, individual impairment, collective (pooling) impairment, troubled debt). The ASU seeks to reduce this complexity by requiring one model for estimating credit impairment. However, the ASU does not prescribe a specific credit loss method to be followed to derive the estimates.

Scope

The ASU affects entities that hold financial assets and net investment in leases that are not accounted for at fair value with changes in fair value reported in net income, such as

• debt securities,
• trade receivables,
• off balance sheet credit exposures,
• reinsurance receivables. and
• any other financial assets not excluded from the scope that have the contractual right to receive cash.

Therefore, the ASU will

• apply to most debt instruments, trade receivables, lease receivables, reinsurance receivables, financial guarantee contracts and loan commitments.

Keep in mind that financial instruments measured at fair value, some equity instruments, and available-for-sale debt securities will still be excluded.

Overview

This ASU fundamentally changes how companies recognize credit losses by moving from an incurred loss model to an expected loss model. The ASU accomplishes the following:

• Eliminates the probable recognition threshold to allow for current estimates of credit losses over the instruments’ contractual term
• Allows entities to consider forward looking information
• Increases usefulness by requiring more timely inclusion of forecasted information in developing loss estimates
• Increases comparability of purchased financial assets with credit deterioration (PCD) with originated and non-PCD assets
• Increases users’ understanding of underwriting standards by requiring additional disclosures about credit quality indicators by year of origination
• For available-for-sale debt securities, aligns the income statement recognition of credit losses with the reporting period in which changes occur by recording credit losses (and subsequent reversals) through an allowance rather than a write-down

Therefore the following are true:

• Entities would recognize as an allowance the estimate of contractual cash flows not expected to be collected.
• Entities would consider all available relevant information in making the estimate, including historical charge-offs and other past events, current conditions, and reasonable and supportable forecasts and their implications for expected credit losses.
• Entities would revert to an unadjusted historical credit loss experience for the period beyond which it can make its reasonable and supportable projections.

Disclosures

Although many disclosures that are described in FASB ASC relating to the credit quality of financing receivables and the allowance for credit losses remain, this ASU has updated them to reflect the change from an incurred loss methodology to an expected credit loss methodology. Additionally, the disclosure of credit quality indicators relating to the amortized cost of financing receivables will need to be disclosed by year of origination for public business entities; this is optional for those that are not public business entities. Consider referring to the specific guidance described in the ASU for all necessary disclosure requirements.

Effective dates and transition

• The ASU becomes effective for public business entities that are SEC filers in fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Thus, for a calendar year company it would be effective January 1, 2020.
• For public business entities that are not SEC filers, the ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Thus, for a calendar year company it would be effective January 1, 2021. For all other organizations, the ASU is effective for fiscal years beginning after December 15, 2021. Thus, for a calendar year company it would be effective January 1, 2022.
• Nonpublic, not-for-profit, and employee benefit plan entities are required to apply the guidance for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021.
• Entities adopting the standard will do so using a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (modified retrospective approach).
• Early application of the guidance is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.
• FASB has allowed transition relief related to credit quality disclosures for public entities that do not meet the definition of an SEC filer in the first three years of application. These entities can phase in the disclosure of credit quality indicators by year of origin by presenting on the three most recent origination years in the year of adoption, and in each subsequent fiscal year adding the then-current origination year to the disclosure until a total of five origination years are presented.

Implementation issues

FASB has formed a Transition Resource Group (TRG) to solicit, analyze, and discuss stakeholder issues arising from the implementation of the new credit impairment guidance. The TRG does not have the authority to issue guidance. Rather, the TRG will share their views and recommendations with FASB to take action.

Issue date

November 2018

Scope

Applicable to entities within the scope of ASU No. 2016-13

Overview

This ASU provide improvements and clarifies specific guidance issued in ASU No. 2016-13. ASU No. 2018-19:

• It requires that the adoption of ASU No. 2016-13 for non-public business entities be effective for fiscal years beginning after December 15, 2021 including interim periods within those fiscal years.
• Also, it clarifies that receivables arising from operating leases are not within the scope ASU No. 2016-13. Instead, the impairment of receivables arising from operating leases is accounted for in accordance with FASB ASC 842, Leases.

Effective dates and transition

The effective date and transition requirements for this ASU are the same as the effective dates and transition requirements in ASU No. 2016-13, as amended by this ASU.

Issue date

January 2017

Scope

The amendments in this ASU are applicable to entities that report goodwill on their financial statements. Application of the amendments is required for public business entities, as wells as other entities (such as NFPs) that have goodwill reported in their financial statements and have not elected the private company accounting alternative for subsequent measurement. Private entities that have elected the accounting alternative should refer to the transition guidance in FASB ASC 350-20-65-3 to determine application requirements.

Overview

This ASU was issued to simplify the goodwill impairment testing by eliminating step 2 from goodwill impairment testing.

Keep in mind that this ASU has not eliminated impairment testing, and therefore:

• Entities will continue to perform their annual, or interim, goodwill impairment testing, which is done by comparing the fair value of a reporting unit with its carrying amount (formerly referred to as step 1).
• Impairment charge shall continue to be recognized; however, the amount of the loss cannot exceed the total amount of goodwill allocated to that reporting unit, and if applicable, the income tax effect from any tax-deductible impairment loss from goodwill should be taken into consideration.

The requirements relating to reporting units with a zero or negative carrying amount having to perform a qualitative assessment if it failed that qualitative test has also been eliminated by the issuance of this ASU. Therefore the guidance relating to goodwill impairment assessment will be the same for all reporting units. Keep in mind that an entity will need to disclose the amount of goodwill they have allocated to each reporting unit that has a zero or negative carrying amount of net assets.

Although this ASU has eliminated step 2 relating to the impairment testing of goodwill, entities still may elect to perform the qualitative assessment for a reporting unit, commonly referred to in the past as Step 0, in order to determine if the quantitative impairment test (formerly step 1) is necessary.

Effective dates and transition

• For public business entity that is a SEC filer: Effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019.
• For public business entity that are NOT SEC filers: Effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2020.
• All other entities, which includes NFPs — effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2021.
• Early adoption is permitted, after January 1, 2017, for interim or annual goodwill impairment tests performed.
• The guidance in this ASU is applied prospectively and requires disclosure in the first annual period and in the interim period within the first annual period when adopted of the nature and the reason for the change in accounting principle.
• FASB ASC 350-20-65-3 states that, “Private companies that have adopted the private company accounting alternative for the subsequent measurement of goodwill but have not adopted the private company alternative for subsuming certain intangible assets into goodwill are allowed, but not required, to adopt this guidance prospectively on or before the effective date without having to justify preferability of the accounting change. Private companies that have adopted the private company alternative to subsume certain intangible assets into goodwill and, thus, also adopted the goodwill alternative are not permitted to adopt this guidance upon issuance without following the guidance in Topic 250 on accounting changes and error corrections, including justifying why it is preferable to change their accounting policies.”

Resources for implementation

Consider referring directly to the guidance in this ASU for impairment testing and disclosure examples.

Issue date

February 2017

Scope

The guidance in this ASU is applicable to reporting entities within the scope of FASB ASC plan accounting topics 960, 962, or 965.

Overview

This ASU improves the usefulness of information reported in the financial statements of employee benefit plans. The ASU primarily focuses on the reporting of an employee benefit plan’s (a plan) interest in a master trust.

A master trust is a trust in which assets of more than one plan sponsored by a single employer or by a group of employers under common control are held. A regulated financial institution (bank, trust company, or similar financial institution that is regulated, supervised, and subject to periodic examination by a state or federal agency) will serve as a trustee or custodian of the trust.

To reduce diversity in practice this ASU:

• Requires that for each master trust in which a plan holds an interest, and any change in that interest to be presented in separate line items in the statement of net assets available for benefits and in the statement of changes in net assets available for benefits, respectively.
• Remove the requirement to disclose the percentage interest in the master trust for plans with divided interests and require that all plans disclose the dollar amount of their interest in each of those general types of investments.
• Require all plans to disclose their master trust’s other asset and liability balances and the dollar amount of the plan’s interest in each of those balances.

In addition, to reduce redundancy, this ASU:

• Does not require that the investment disclosures relating to the 401(h) account assets be provided in the health and welfare benefit plan’s financial statements. However, the ASU does require the disclosure of the name of the defined benefit pension plan in which those investment disclosures are provided, so participants can easily access those statements for information about the 401(h) account assets, if needed.

Effective date and transition

Effective for fiscal years beginning after December 15, 2018 with early adoption permitted. The guidance in this ASU is applied retrospectively to each period for which financial statements are presented.

Issue date

March 2017

Scope

This ASU applies to all entities that hold investments in callable debt securities that have an amortized cost basis in excess of the amount that is repayable by the issuer at the earliest call date, in other words, at a premium.

Overview

The guidance in this ASU shortens the amortization period for certain callable debt securities held at a premium, requiring the premium to be amortized to the earliest call date. This change more closely aligns interest income recorded on bonds held at a premium or a discount with the economics of the underlying instrument.

The ASU does not require an accounting change for securities held at a discount which continues to be amortized to maturity.

Effective date and transition

• For public business entities: Effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018.
• For all other entities: Effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020.

Early adoption, including during an interim period, is permitted. Adjustments related to the adoption are reflected as of the beginning of the fiscal year, including the interim period.

Entities will transition into this ASU using a modified retrospective approach, with a cumulative-effect adjustment made directly to retained earnings as of the beginning of the period of adoption along with a disclosure in the period of adoption about the change in accounting principle.

Issue date

July 2017

Scope

• The guidance in part I of this ASU affect all entities that issue financial instruments (for example, warrants or convertible instruments) that include down round features.
• The guidance in part II. does not have an accounting effect.

Overview

This ASU addresses narrow issues identified as a result of the complexity associated with applying GAAP to certain financial instruments with characteristics of liabilities and equity.

Part I of the ASU changes the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features by no longer precluding equity classification when assessing whether the instrument is indexed to an entity’s own stock.

The ASU also clarifies existing disclosure requirements for equity-classified instruments.

Part II of the ASU recharacterized the indefinite deferral of certain provisions of FASB ASC 480 that are presented as pending content in the scope section of the subtopic “Overall.”

Effective date and transition

Issue date

August 2017

Scope

Applicable to any entity electing to apply hedge accounting.

Overview

The objective of the ASU is to simplify the application of hedge accounting by aligning it with an entity’s risk management activities in their financial statements.

Changes to align hedge accounting with a company’s risk management activities

In order to better align an entity’s hedge accounting with its risk management activities, the ASU expands hedge accounting for both financial and nonfinancial risk components by permitting more flexibility when hedging interest rate risk for both variable rate and fixed-rate financial instruments, along with the ability to hedge risk components for nonfinancial hedges. Specifically, the ASU makes the following changes:

• Amends the guidance for designating fair value hedges of interest rate risk and for measuring the change in fair value of the hedged item in fair value hedges of interest rate risk to better align an entity’s risk management approach with financial reporting.
• Requires an entity to present the earnings effect of the hedging instrument in the same income statement line item in which the earnings effect of the hedged item is reported.
• Introduces an approach that no longer separately measures and reports hedge ineffectiveness.
• Expands and changes the reporting of amounts excluded from the assessment of hedge ineffectiveness to allow entities to use an amortization approach or to continue mark-to-market accounting consistent with current U.S. GAAP.

The amendments are expected to have operational benefits because additional time is allowed to prepare hedge documentation and effectiveness assessments may be performed on a qualitative basis after hedge inception.

Presentation and disclosure

The ASU has enhanced the presentation of hedge results in the financial statements and disclosures by:

• Requiring an entity to present changes in the value of the hedging instrument in the same income statement line item as the earnings effect of the hedged item
• Requiring more disclosure information about basis adjustments in fair value hedges, such as tabular disclosures relating to the cumulative basis adjustments for fair value hedges, and the effects on the income statement of fair value and cash flow hedge.
• Amending current tabular disclosure of hedging activities

Effective dates and transition

• For public business entities: Effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years
• For all other entities: Effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020

Early application is permitted in any interim period after the date this ASU was issued.

Issue date

December 2017

Scope

Applicable to all entities with unrecognized deferred taxes related to statutory reserve deposits made on or before December 15, 1992.

Overview

This ASU supersedes guidance in FASB ASC 995, U.S. Steamship Entities, addressing unrecognized deferred taxes related to certain statutory reserve deposits, because it is no longer relevant.

Entities will now need to apply the guidance in FASB ASC 740, Income Taxes, requiring them to recognize their unrecognized deferred income taxes related to statutory deposits made on or before December 15, 1992.

Disclosure

Disclosure about the change in accounting principle is required in the year of adoption.

Entities should disclose the amounts and types of temporary differences not previously recognized as a deferred tax liability.

Effective dates and transition

• Effective for fiscal years and first interim periods beginning after December 15, 2018.
• Early adoption, including interim period adoption, is permitted.
• An entity will apply the guidance in this ASU on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption.

Issue date

February 2018

Scope

An entity that presents items of other comprehensive income with related tax effects is within the scope of this ASU.

Overview

This ASU was issued in response to the impact the U.S. federal government enacted a tax bill, H.R.1, An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018 (Tax Cuts and Jobs Act) will have on the presentation of certain income tax effects reported in the other comprehensive income.

An entity is permitted to elect to reclassify the income tax effects of the Tax Cuts and Jobs Act on items within accumulated other comprehensive income to retained earnings, and the amount of that reclassification will include:

• The effect of the change in the U.S. federal corporate income tax rate on the gross deferred tax amounts and related valuation allowances, if any, at the date of enactment of the Tax Cuts and Jobs Act related to items remaining in accumulated other comprehensive income. An entity cannot include the effect of the change in the U.S. federal corporate income tax rate on gross valuation allowances that were originally charged to income from continuing operations in the reclassification.
• Other income tax effects of the Tax Cuts and Jobs Act on items remaining in accumulated other comprehensive income that an entity elects to reclassify, subject to certain disclosures.

An entity is required to disclose their accounting policy for releasing income tax effects from accumulated other comprehensive income, whether or not they elect to reclassify the income tax effects of the Tax Cuts and Jobs Act on items within accumulated other comprehensive income to retained earnings.

Additional disclosures are required for entities electing the reclassification.

Effective dates and transition

• Effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.
• Early adoption, including interim period, is permitted for reporting period for which the financial statements have not yet been issued or been made available for issuance.
• The guidance in this ASU is applied in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized.

Issue date

June 2018

Scope

This ASU applies to all entities (the grantor) that enter into share-based payment transactions with nonemployees to acquire goods and services to be used or consumed in the grantor’s own operation, with certain areas only applicable to nonpublic entities.

This ASU does not apply to share-based payments used to effectively provide either of the following:

• Financing to the issuer, or
• Awards granted in conjunction with selling goods or services to customers as part of a contract accounted for in accordance with FASB ASC 606, Revenue from Contracts with Customers.

The guidance does not apply to the inputs used in an option pricing model and the attribution of cost, that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period.

Overview

As part of FASB’s “Simplification Initiative” the guidance in this ASU expands the scope of FASB ASC 718, Compensation — Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees, with certain areas only applicable to nonpublic entities.

Prior to the issuance of this ASU, FASB ASC 505 — 50, Equity — Equity-Based Payments to Non-Employees, addressed the accounting for nonemployee share-based payment transactions. This ASU supersedes that guidance and expands the guidance in FASB ASC 718 to include share-based payment transactions for acquiring goods and services from nonemployees. Therefore, FASB ASC 718 is applicable to both employee and nonemployee share-based payment transactions, with certain exceptions. Under the guidance in this ASU, an entity (grantor) is required to

• Measure nonemployee share-based payment transactions by estimating the fair value of the equity instruments that it is obligated to issue.
• Measure equity-classified nonemployee share-based payment awards at the grant date.
• Consider the probability of satisfying performance conditions when accounting for nonemployee share-based payment awards with such conditions.

A grantor continues to recognize cost in the same period(s) and in the same manner as if the grantor had paid cash for the goods or services instead of paying with or using share-based payment awards.

The issuance of ASU No. 2018-07 specifically improved the following areas of nonemployee share-based payment accounting:

Measurement

• Nonemployee share-based payment awards are measured at the grant-date fair value of the equity instruments that an entity is obligated to issue when the good has been delivered or the service has been rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied. This measurement is consistent with current treatment of employee share-based payment awards, but a significant change from existing GAAP. Prior to the issuance of this ASU, nonemployee share-based payment awards were measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever can be more reliably measured.
• The grant date is defined as the date at which a grantor and a grantee reach a mutual understanding of the key terms and conditions of a share-based payment award. This date is the date equity-classified nonemployee share-based payment awards are measured. Prior to the issuance of this ASU the measurement date was the earlier of the date at which a commitment for performance by the counterparty is reached and the date at which the counterparty’s performance is complete.

Performance conditions

• Similar to the accounting for employee share-based payment awards, nonemployee share-based payment awards containing performance conditions, an entity will consider the probability of satisfying performance conditions. This differs from prior GAAP which measured the nonemployee share-based payment awards with performance conditions at the lowest aggregate fair value.

Classification reassessment

• In order to eliminate the requirement to reassess classification of equity-classified nonemployee share-based payment awards upon vesting, generally they will continue to be subject the requirements of FASB ASC 718, unless there is a subsequent modification, and the nonemployee is no longer providing goods or services. This modification may occur after the goods have been delivered, services have already been rendered, or other conditions necessary to earn the right to benefit have already been satisfied. In the past, prior to this ASU, the classification of equity-classified nonemployee share-based payment awards was subject to other topics in FASB ASC, resulting in the need to reassess classification.

Non-public entities

• When it is not practicable for a non-public entity to estimate the expected volatility of its share price the historical volatility of an appropriate industry-sector index may be is used as inputs to value the share options and similar instruments issued to nonemployees. Prior to the issuance of this ASU, non-public entities inputs to the valuation of equity share options and similar instruments issued to nonemployees included an estimate of the expected volatility.
• A one-time election to switch from measuring liability-classified nonemployee share-based payment awards at fair value to intrinsic value is available. Liability classified awards are still subject to remeasurement until they are exercised regardless of whether the non-public entity elects to switch from fair value to intrinsic value. Prior to this ASU, no such election to use intrinsic value was available.

Effective dates

• Effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year
• Effective for all other entities for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020
• Early adoption is permitted, but no earlier than an entity’s adoption date of FASB ASC 606

Transition

A cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption will need to be recorded to account for the remeasurement of

• liability-classified awards that have not been settled by the date of adoption, and
• equity-classified awards for which a measurement date has not been established.

An entity is required upon transition to measure these nonemployee awards at fair value as of the adoption date but must not remeasure assets that are completed — for example, finished goods inventory or equipment that has begun amortization.

Upon transition, an entity is required to disclose the nature and reason for the change in accounting principle and, if applicable, quantitative information about the cumulative effect of the change on retained earnings or other components of equity.

Issue date

August 2018

Scope

All insurance entities that issue long duration contracts as defined in FASB ASC 944, Financial Services — Insurance, are within the scope of this ASU.

The following are outside the scope of this ASU:

• Holders (or policyholders) of long-duration contracts
• Noninsurance entities

Overview

FASB made several targeted improvements to the accounting for long-duration contacts in the following areas: assumptions used to measure the liability for future policy benefits for traditional and limited-payment contracts; amortization of deferred acquisition costs and other balances; and disclosure.

Effective dates

• For public business entities — Effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020
• For all other entities — Effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022
• Early application of the amendments is permitted

Issue date

August 2018

Scope

Entities that are required to disclosure information about recurring or nonrecurring fair value measurements are within the scope of this ASU.

Overview

Based on the concepts in FASB Concepts Statement, Conceptual Framework for Financial Reporting — Chapter 8: Notes to Financial Statements, FASB removed, modified and added disclosure guidance for fair value measurements within FASB ASC 820, Fair Value Measurement.

Effective dates

• Effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.
• Early adoption is permitted based upon the issuance date of this ASU which is August 28, 2018.
• If early adoption is elected, an entity is permitted to early adopt any removed or modified disclosures and delay adoption of the additional disclosures until their effective date.

Transition

Issue date

August 2018

Scope

Applicable to all employers that sponsor defined benefit pension or other postretirement plans.

Overview

This ASU is part of FASB’s disclosure framework project to improve the effectiveness of disclosures in the notes to financial statements by applying concepts in the FASB Concepts Statement, Conceptual Framework for Financial Reporting — Chapter 8: Notes to Financial Statements.

This framework project has made the following changes to the disclosure and reporting requirements of single-employer defined benefit pension or other postretirement benefit plans.

Effective dates and transition

• For public business entities – Effective for fiscal years ending after December 15, 2020
• For all other entities – Effective for fiscal years ending after December 15, 2021
• Early adoption is permitted.
• Retrospective application is required for all periods presented.

Issue date

August 2018

Scope

Applicable to entities that are

• customers in a hosting arrangement that is a service contacts, and
• need to account for implementation costs, which would include setup and other upfront costs.

Overview

FASB issued this ASU to clarify and improve GAAP. The amendments align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software and hosting arrangements that include an internal-use software license.

An entity will first need to assess which implementation costs to capitalize as an asset related to the service contract and which costs to expense. Cost such as training costs and certain data conversion costs cannot be capitalized for a hosting arrangement that is a service contract.

After this assessment, the ASU requires that an entity expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement, which would include reasonably certain renewals.

An entity who is the customer in a hosting arrangement that is a service contract will need to determine the stages of the project, for example:

• Preliminary project stage. Costs incurred during the preliminary project stages are expensed as the activities are performed
• Application development stage. Costs for implementation activities in the application development stage are capitalized depending on the nature of the costs.
• Post-implementation stage. Costs incurred during post implementation stages are expensed as the activities as they are performed.

Capitalized implementation costs are subject to existing impairment as if the costs were long-lived assets.

Presentation

The ASU requires that an entity do the following:

• Present the expense related to the capitalized implementation costs in the same line item in the statement of income as the fees associated with the hosting element (service) of the arrangement.
• Classify payments for capitalized implementation costs in the statement of cash flows in the same manner as payments made for fees associated with the hosting element.
• Present the capitalized implementation costs in the statement of financial position in the same line item that a prepayment for the fees of the associated hosting arrangement would be presented.

Effective dates and transition

• Public business entities — Effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.
• All other entities — Effective for annual reporting periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021.
• Early adoption is permitted, including interim period adoption.
• Applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption.

Issue date

October 2018

Scope

Applicable to all entities that elect to apply hedge accounting to benchmark interest rate hedges under FASB ASC 815, Derivatives and Hedging.

Overview

The guidance in the ASU amends FASB ASC 815 to permit the use of the Overnight Index Swap (OIS) rate based on Secured Overnight Financing Rate (SOFR) as an eligible U.S. benchmark interest rate for hedge accounting purposes. The IOS rate based on SOFR is an alternative to LIBOR that was identified through efforts initiated by the Federal Reserve System based on concerns about LIBOR’s sustainability. A benchmark interest rate is a rate that is widely recognized and quoted in an active market, theoretically free of risk and broadly indicative of the rates paid by high credit quality obligors. Other eligible benchmark interest rates identified in FASB ASC 815-20-25 include the following:

• Direct U.S. government treasury obligations
• The London Interbank Offered Rate (LIBOR) swap rate
• The OIS rate based on the Fed Funds Effective Rate
• The Securities Industry and Financial Markets Association (SIFMA) Municipal Swap Rate.

The following definition of the SOFR Overnight Index Swap Rate was added to the FASB ASC Master Glossary:

The fixed rate on a U.S. dollar, constant-notional interest rate swap that has its variable-rate leg referenced to the Secured Overnight Financing Rate (SOFR) (an overnight rate) with no additional spread over SOFR on that variable-rate leg. That fixed rate is the derived rate that would result in the swap having a zero fair value at inception because the present value of fixed cash flows, based on that rate, equates to the present value of the variable cash flows.

Effective dates and transition

Entities that have adopted the guidance in ASU No. 2017-12, will adopt the guidance in this ASU as follows:

• For public business entities — Effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.
• For all other entities — Effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.
• Early adoption is permitted in any interim period providing the entity already has adopted ASU No. 2017-12.

Entities that have not adopted the guidance in ASU No. 2017-12 will concurrently adopt the guidance in this ASU when they adopt ASU No. 2017-12.

Entities will transition into the guidance in this ASU on a prospective basis for qualifying new or redesignated hedging relationships entered into on or after the date of adoption.

Issue date

October 2018

Scope and Scope Exceptions in the Application of the Accounting Alternative for Entities Under Common Control

A private reporting company may elect to not apply VIE guidance to legal entities under common control (including common control leasing arrangements) if both the parent and the legal entity being evaluated for consolidation are not public business entities.

In situations in which a private reporting entity becomes a public business entity the accounting alternative election will no longer apply.

Overview

This accounting alternative is a policy election. If elected, the private reporting company will apply the accounting alternative to all legal entities within the scope of this ASU unless another scope exception applies and unless the legal entity is consolidated by the private reporting entity through accounting guidance other than VIE guidance.

In determining whether the private reporting company and the legal entity are under common control consideration should be given to indirect interests held through related parties in common control arrangements, on a proportional basis, for determining whether fees paid to decision makers and service providers are variable interests. This is consistent with how indirect interests held through related parties under common control are considered for determining whether a reporting entity must consolidate a VIE.

Disclosure

A private reporting entity electing this accounting policy will disclose the following:

1. The nature and risks associated with the involvement with the legal entity under common control.
2. How the involvement with the legal entity under common control affects the private reporting entity’s financial position, financial performance, and cash flows
3. The carrying amounts and classification of the assets and liabilities in the statement of financial position resulting from its involvement with the legal entity under common control.
4. The maximum exposure to loss resulting from the involvement with the legal entity under common control and if the amount cannot be quantified, that fact shall be disclosed.
5. If the maximum exposure to loss (as required by (d)) exceeds the carrying amount of the assets and liabilities as described in (c), qualitative and quantitative information is needed so users can understand the excess exposure. The information should include the arrangement terms, both explicit and implicit, that could require the need to provide financial support, for example, implicit guarantee to fund losses, to the legal entity under common control, including events or circumstances that could expose the private reporting entity to a loss.

The assessment of whether an implicit guarantee exists will be based on facts and circumstances, including but not limited to whether the private reporting entity:

• Has an economic incentive to act as a guarantor or to make funds available.
• Has acted as a guarantor for or made funds available to the legal entity in the past.

Additional disclosure information about the legal entity under common control may be required under other authoritative guidance, for example FASB ASC 460, Guarantees, FASB ASC 850, Related Party Disclosures, and FASB ASC 840, Leases or FASB ASC 842, Leases. Combining these disclosures into a single note is not prohibited.

Effective dates

• Effective for entities other than private companies: For fiscal years beginning after December 15, 2019 and interim periods within those fiscal years.
• Effective for private companies: For fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021.
• Early adoption is permitted.

Issue date

November 2018

Scope

Applicable to all entities that enter into collaborative arrangements

Overview

This ASU describes and clarifies certain transactions between collaborative arrangement participants by:

• Explaining when an entity will apply the guidance in FASB ASC 606. Specifically, if the collaborative arrangement participant is a customer in the context of a unit of account, certain transactions should be accounted for as revenue under FASB ASC 606. A customer is a party that has contracted with an entity to obtain goods or services that are an output of the entity’s ordinary activities in exchange for consideration. A unit of account is the level at which an asset or liability is aggregated or disaggregated in a FASB ASC topic for recognition purposes.
• Aligning the terms unit of accounting described in FASB ASC 808 and unit of account described in FASB ASC 606 to assist in the assessment of whether a collaborative arrangement is partially or wholly within the scope of FASB ASC 606.
• Requiring that transactions with collaborative arrangement participants not directly related to third party sales be presented together with revenue recognition transactions within the scope of FASB ASC 606, provided that they are customers. If the collaborative arrangement participant is not a customer, the requirement would not apply.

Effective dates

• For public business entities — Effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.
• For all other entities — Effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021.
• Early adoption is permitted providing the adoption date is not early that the entity’s adoption date of FASB ASC 606. This early adoption would include any interim period:
  • For public business entities for periods for which financial statements have not yet been issued, and
  • For all other entities for periods for which financial statements have not yet been made available for issuance.

Issue date

March 2019

Scope

Applicable to broadcasters and entities that produce and distribute films and episodic television series.

Overview

The guidance in this ASU does the following:

• Aligns the accounting for production costs of an episodic television series with the accounting for production costs of films by removing the content distinction for capitalization.
• Requires an entity to reassess estimates of the use of a film for a film in a film group and account for any changes prospectively.
• Requires that an entity test a film or license agreement for program material for impairment at a film group level when the film or license agreement is predominantly monetized with other films and/or license agreements. Keep in mind that a film group is the lowest level at which identifiable cash flows are largely independent of the cash flows of other films and/or license agreements.
• Adds examples of events or changes in circumstances when assessing impairment.
• Requires an entity to reassess the predominant monetization strategy when a significant change in the monetization strategy occurs
• Aligns the impairment model with the fair value model.
• Requires the write off of unamortized film costs when a film is substantively abandoned.
• Addresses presentation and requires new disclosures about content that is either produced or licensed, and addresses cash flow classification for license agreements.

Effective dates and transition

• For public business entities — Effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years
• For all other entities – Effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years
• Early adoption is permitted, including early adoption in an interim period for providing the financial statements have not yet been issued or been made available for issuance.
• An entity will transition into the guidance in this ASU prospectively at the beginning of the period that includes the adoption date.