Presentation Transcript

1. FASB Update

2. ACCOUNTING STANDARD UPDATES

3. ASUS ISSUED SINCE OCTOBER 2012
4. ASUS ISSUED SINCE OCTOBER 2012
5. ASUS ISSUED SINCE OCTOBER 2012
6. ASUS ISSUED SINCE OCTOBER 2012
7. ASUS ISSUED SINCE OCTOBER 2012
8. CLASSIFICATION OF SALES PROCEEDS OF DONATED FINANCIAL ASSETS (ASU 2012-05) Cash receipts from the sale of financial assets that upon receipt are directed without any NFP-imposed limitations for sale, and which were converted nearly immediatelyinto cash, are classified as operating or financing activities in the statement of cash flows, rather than as investing activities Operating unless restricted to a long-term purpose, e.g., endowment or plant, then classified as financing activities Consistent with cash contributions Effective for f/y beginning after 6-15-2013 Retrospective application, early adoption permitted.
9. OBLIGATIONS RESULTING FROM JOINT AND SEVERAL LIABILITY ARRANGEMENTS (ASU 2013-04) Requires an entity to measure such obligations for which the total amount of the obligation is fixed at the reporting date as the sum of: (a) amount the entity agreed to pay on the basis of its arrangement among its co-obligors, and (b)any additional amount the entity expects to pay on behalf of its co-obligors. Also requires disclosures about nature and amount of obligation and other information about those obligation Effective date: Public entities: f/y beginning after 12-15-2013 Nonpublic entities: f/y ending after 12-15-2014 Retrospective application; early adoption permitted
10. SERVICES RECEIVED FROM PERSONNEL OF AN AFFILIATE (ASU 2013-06) Personnel services received from an affiliate (parent/sub or common control) for which the affiliate doesn’t charge the recipient NFP Recipient NFP recognizes. Measured at cost incurred by the affiliate Contributed services criteria no longer applicable FV practicability exception if cost will significantly over-state or understate the value of the services received Entities under Topic 954 (healthcare) would report as equity transfer Effective for f/y beginning after 6-15-2014. Modified retrospective application; early adoption permitted
11. DEFINITION OF PUBLIC BUSINESS ENTITY (ASU 2013-12) A Business Entity That Meets Any One: Follows Current GAAP New

12. REVENUE FROM CONTRACTS WITH CUSTOMERS

13. OVERVIEW Core Principle: Steps to apply the core principle: 4. Allocate transaction price to the performance obligations in the contract 3. Determine the transaction price 1. Identify the contract(s) with the customer 2. Identify the performance obligations in the contract 5. Recognize revenue when (or as) the entity satisfies a performance obligation Recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services
14. IMPLEMENTATION GUIDANCE: LICENSES Account for bundle of goods or services as a single performance obligation Step 2: Identify the performance obligation(s). Is the license distinct? No Yes Apply criteria to determine whether license provides a customer with: a right to use, which entitles the customer to use the entity’s intellectual property as it exists at the point in time when the license is granted (a performance obligation satisfied at a point in time) Accessto the entity’s intellectual property in its current form throughout the license period (a performance obligation satisfied over time)
15. DISCLOSURE REQUIREMENTS 15 Disaggregate revenue into categories that depict how revenue and cash flows are affected by economic factors Explain the relationship with segment disclosures Disaggregation of revenue Opening and closing balances Amount of revenue recognized from contract liabilities Explanation of significant changes in contract balances Information about contract balances Remaining performance obligations Transaction price allocated to remaining performance obligations Quantitative or qualitative explanation of when amounts will be recognized as revenue Interim requirements All quantitative disclosures in annual and interim (Public entities only)

16. LEASES

17. LESSEE INCOME STATEMENT IMPACT End of lease Start of lease Most equipment/ vehicle leases (Type A) Asset consumption more than insignificant Asset consumption not more than insignificant Most real estate leases (Type B)
18. LESSEE ACCOUNTING MODEL Cash Flow Statement Balance Sheet Income Statement Type A Type B
19. LESSEE ACCOUNTING: HIGH LEVEL FEEDBACK Investors and analysts General support for proposals Leases create assets and liabilities Current disclosures insufficient Proposals an improvement to financial reporting Industry-specific analysts agree with income statement proposals Some concerns Any change affects trend information Some prefer “whole asset”/ongoing commitments approach to measurement Some prefer single model—treat all leases as financing Some question costs versus benefits
20. LESSEE ACCOUNTING: HIGH LEVEL FEEDBACK Preparers Mixed views Many support recognition of assets and liabilities Many do not support proposals—costs outweigh benefits Concerns about cost and complexity Lessors concerned about lessee behavior changes Concerned about other effects (for example, debt covenants) Others (regulators, standard setters, audit firms) Support recognition of assets and liabilities Many prefer single model—treat all leases as financing Some audit firms have cost/benefit concerns
21. LESSOR ACCOUNTING OVERVIEW Cash Flow Statement Balance Sheet Income Statement Type A Type B
22. LESSOR ACCOUNTING: HIGH LEVEL FEEDBACK Investors and analysts Many suggest no change to lessor accounting Some support the proposals Better information about credit risk and asset risk useful Concerns about applying Type A accounting to leases of longer-lived assets (for example, railcars, drilling rigs, and aircraft) Lessors and others Some support change because it is more consistent with lessee approach Some agree that proposals better reflect business model, others disagree Many suggest no change to lessor accounting—costs outweigh benefits
23. LESSEE MODEL: FOUR POSSIBLE APPROACHES – PRACTICAL EFFECT 1 Land, buildings, or integral equipment 1 Land, buildings, or integral equipment
24. LESSOR MODEL: THREE POSSIBLE APPROACHES

25. GOVERNMENT ASSISTANCE

26. GOVERNMENT ASSISTANCE Research effort for potential project. Scope would include all entities, not just NFPs. (Unlike IFRS, GAAP lacks guidance for business entities.) Key Issues Recently Discussed with the NAC: Pervasiveness of government assistance in the NFP sector and diversity of practices Possible scope of project, with respect to: Levels of government (federal, state and local, foreign) Forms of assistance (income taxes, property taxes, cost-sharing arrangements, grants, many others) Board expected to make decision on project in Q4

27. PRIVATE COMPANY COUNCIL UPDATE

28. PRIVATE COMPANY COUNCIL UPDATE Final Alternatives* Update No. 2014-02, Accounting for Goodwill Update No. 2014-03, Accounting for Certain Receive-Variable, Pay-Fixed Interest Rate Swaps—Simplified Hedge Accounting Approach Current Projects* Issue No. 13-01A, Accounting for Identifiable Intangible Assets in a Business Combination Future Activities * The Board has a standing project to consider applicability of any alternatives developed by the PCC for NFPs (as well as public business entities and employee benefit plans).