Upload
others
View
2
Download
0
Embed Size (px)
Citation preview
2019 Deloitte Renewable Energy SeminarPowering a bright futureOctober 2-4, 2019
Accounting Hot Topics
Conor Tamms, Senior Manager, Deloitte & Touche LLPMichael Gorter, Manager, Deloitte & Touche LLP
Copyright © 2019 Deloitte Development LLC. All rights reserved. 3Accounting Hot Topics
Agenda
Summary of ASUs issued in 2019
Targeted transition relief to Topic 326 (ASU 2019-05)
Codification improvements to Topic 326, Topic 815, and Topic 825 (ASU 2019-04)
Summary of ASUs issued in 2018
Customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract (ASU 2018-15)
Recognition under Topic 805 for an assumed liability in a revenue contract − Research Project
Simplifying the balance sheet classification of debt − Proposed ASU
Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842): Effective dates – Proposed ASU
Agenda consultation
Disclosure effectiveness
Identifiable intangible assets and subsequent accounting for goodwill
Copyright © 2019 Deloitte Development LLC. All rights reserved. 4Accounting Hot Topics
Summary of ASUs issued in 2019
Copyright © 2019 Deloitte Development LLC. All rights reserved. 5Accounting Hot Topics
Accounting Standards Updates issued in 2019
ASU Effective Date for PBEs
Effective Date for Non-PBEs
Early Adoption Allowed?
ASU 2019-07, Codification Updates to SEC Sections—Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization, and Miscellaneous Updates (SEC Update)
Updates are effective upon issuance; the SEC Final Rule Releases contained the following effective dates as originally released:-No. 33-10532 effective date: 11/5/18- No. 33-10231 effective date: 1/17/17 with exceptions listed in this rule- No. 33-10442 effective date: 1/16/18 to 3/31/2016 as defined in this rule
N/A
ASU 2019-06, Intangibles—Goodwill and Other (Topic 350), Business Combinations (Topic 805), and Not-for-Profit Entities (Topic 958): Extending the Private Company Accounting Alternatives on Goodwill and Certain Identifiable Intangible Assets to Not-for-Profit Entities
Effective upon issuance (the ASU only applies to not-for-profit entities)
N/A
Copyright © 2019 Deloitte Development LLC. All rights reserved. 6Accounting Hot Topics
Accounting Standards Updates issued in 2019
ASU Effective Date for PBEs
Effective Date for Non-PBEs
Early Adoption Allowed?
ASU 2019-05, Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief
Aligned with the effective date of ASU 2016-13 (CECL). For entities that already adopted ASU 2016-13, fiscal years and interim periods beginning after 12/15/19
Yes, as long as ASU 2016-13 has also been adopted.
ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments
Various provisions of the ASU have different effective dates. Most provisions are effective for all entities for fiscal years and interim periods beginning after 12/15/19. Effective dates for amendments to ASUs 2016-13 and 2017-12 are aligned with the effective dates of those ASUs, if not yet adopted.
Yes, as long as the related ASUs have been adopted.
ASU 2019-03, Not-for-Profit Entities (Topic 958): Updating the Definition of Collections
Fiscal years beginning after 12/15/19; interim periods beginning after 12/15/20
Fiscal years beginning after 12/15/19; interim periods beginning after 12/15/20
Yes
Copyright © 2019 Deloitte Development LLC. All rights reserved. 7Accounting Hot Topics
Accounting Standards Updates issued in 2019 (cont.)
ASU Effective Date for PBEs
Effective Date for Non-PBEs
Early Adoption Allowed?
ASU 2019-02, Entertainment—Films—Other Assets—Film Costs (Subtopic 926-20) and Entertainment—Broadcasters—Intangibles—Goodwill and Other (Subtopic 920-350): Improvements to Accounting for Costs of Films and License Agreements for Program Materials (a consensus of the Emerging Issues Task Force)
Fiscal years and interim periods beginning after 12/15/19
Fiscal years and interim periods beginning after 12/15/20
Yes
ASU 2019-01, Leases (Topic 842): Codification Improvements
Fiscal years and interim periods beginning after 12/15/19
Fiscal years beginning after 12/15/19; interim periods beginning after 12/15/20
Yes
Copyright © 2019 Deloitte Development LLC. All rights reserved. 8Accounting Hot Topics
Targeted transition relief to Topic 326 (ASU 2019-05)
Copyright © 2019 Deloitte Development LLC. All rights reserved. 9Accounting Hot Topics
Targeted transition relief to Topic 326 (ASU 2019-05)
Main provisions• Amends ASU 2016-13 to allow companies to irrevocably elect, upon adoption of ASU 2016-13, the fair
value option on financial instruments that:− were previously recorded at amortized cost and
− are within the scope of ASC 326-20 if the instruments are eligible for the fair value option under ASC 825-10.
• The fair value option election does not apply to held-to-maturity debt securities. • Entities are required to make this election on an instrument by-instrument basis.
Effective date and transition• For entities that have adopted ASU 2016-13, the amendments in ASU 2019-05 are effective for fiscal years
beginning after December 15, 2019, including interim periods therein. • An entity may early adopt the ASU in any interim period after its issuance if the entity has adopted ASU
2016-13. • The amendments should be applied on a modified-retrospective basis.
Copyright © 2019 Deloitte Development LLC. All rights reserved. 10Accounting Hot Topics
Codification improvements to Topic 326, Topic 815, and Topic 825 (ASU 2019-04)
Copyright © 2019 Deloitte Development LLC. All rights reserved. 11Accounting Hot Topics
Codification improvements to Topic 326, Topic 815, and Topic 825 (ASU 2019-04)
Overview• Clarifies certain aspects of accounting for credit losses, hedging activities, and financial instruments
(addressed by ASUs 2016-13, 2017-12, and 2016-01, respectively).
• Changes contained in the amendments apply to all entities within the scope of the affected guidance.
Notable Changes Made to ASU 2016-13• Provides certain alternatives for the measurement of the allowance for credit losses on accrued interest
receivable.
• Clarifies that entities should include expected recoveries on financial assets in the calculation of expected credit losses.
• Clarifies the application of the vintage disclosure table to line-of-credit (LOC) arrangements.− The amortized cost basis of LOC arrangements that are converted to term loans must be presented in a
separate column of the vintage disclosure table.
• Indicates that extension and renewal options that are not unconditionally cancelable by the entity (excluding those accounted for as derivatives under ASC 815) that are included in the original or modified contract should be considered in the entity’s determination of expected credit losses.
Copyright © 2019 Deloitte Development LLC. All rights reserved. 12Accounting Hot Topics
Codification improvements to Topic 326, Topic 815, and Topic 825 (ASU 2019-04) (cont.)
Effective date:• For entities that have adopted ASU 2016-13, the amendments are effective for fiscal years beginning after
December 15, 2019, and interim periods therein.
• For all other entities, the effective date will be the same as the effective date in ASU 2016-13.
Notable Changes Made to ASU 2017-12Significant amendments made to the provisions of ASU 2017-12 by ASU 2019-04 are summarized by topic below. The amendments address feedback received from stakeholders.
• Partial-term fair value hedges of interest rate risk
• Amortization of fair value hedge basis adjustments
• Disclosure of fair value hedge basis adjustments
• Consideration of the hedged contractually specified interest rate under the hypothetical derivative method
• Application of a first-payments-received cash flow hedging technique to overall cash flows on a group of variable interest payments
Copyright © 2019 Deloitte Development LLC. All rights reserved. 13Accounting Hot Topics
Codification improvements to Topic 326, Topic 815, and Topic 825 (ASU 2019-04) (cont.)
Notable Changes Made to ASU 2017-12, cont.• Not-for-profit entities
• Private companies that are not financial institutions
• Transition guidance
Effective date:• For entities that have adopted ASU 2017-12, the amendments are effective as of the beginning of the first
annual reporting period beginning after the date of issuance of ASU 2019-04.
• For all other entities, the effective date will be the same as the effective date in ASU 2017-12.
Copyright © 2019 Deloitte Development LLC. All rights reserved. 14Accounting Hot Topics
Codification improvements to Topic 326, Topic 815, and Topic 825 (ASU 2019-04) (cont.)
Notable Changes Made to ASU 2016-01• Indicates that the measurement alternative in ASC 321-10-35-2 for equity securities without readily
determinable fair values represents a nonrecurring fair value measurement under ASC 820
− Therefore, such securities should be remeasured at fair value when an entity identifies an orderly transaction “for an identical or similar investment of the same issuer,” and applicable ASC 820 disclosures are required.
• Clarifies that an entity should remeasure equity securities without readily determinable fair values subject to the measurement alternative at historical exchange rates
− The historical exchange rate used should be that at the later of the acquisition date or the most recent fair value measurement date.
Effective date:• Effective for fiscal years beginning after December 15, 2019, including interim periods therein.
• Early adoption is permitted in any interim period for those entities that have already adopted ASU 2016-01.
Copyright © 2019 Deloitte Development LLC. All rights reserved. 15Accounting Hot Topics
Summary of ASUs issued in 2018
Copyright © 2019 Deloitte Development LLC. All rights reserved. 16Accounting Hot Topics
Accounting Standards Updates issued in 2018
ASU Effective Date for PBEs
Effective Date for Non-PBEs
Early Adoption Allowed?
ASU 2018-20, Leases (Topic 842): Narrow-Scope Improvements for Lessors
Aligned with the new leasing standard’s effective datesFor entities that already adopted ASC 842, either (1) the lessor’s first reporting period beginning or first reporting period ending after the issuance of the ASU or (2) the mandatory effective date of ASC 842
N/A
ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses
For SEC filers, fiscal years and interim periods beginning after 12/15/19For non-SEC filers, fiscal years and interim periods beginning after 12/15/20
Fiscal years and interim periods beginning after 12/15/21
Yes, as of fiscal years beginning after 12/15/18
Copyright © 2019 Deloitte Development LLC. All rights reserved. 17Accounting Hot Topics
Accounting Standards Updates issued in 2018
ASU Effective Date for PBEs
Effective Date for Non-PBEs
Early Adoption Allowed?
ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606
Fiscal years and interim periods beginning after 12/15/19
Fiscal years beginning after 12/15/20; interim periods beginning after 12/15/21
Yes, but not prior to the adoption date of ASC 606
ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities
Fiscal years and interim periods beginning after 12/15/19
Fiscal years beginning after 12/15/20; interim periods beginning after 12/15/21
Yes
ASU 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes
Aligned with the effective dates of ASU 2017-12For entities that already adopted ASU 2017-12, fiscal years and interim periods beginning after 12/15/18 (for PBEs) or after 12/15/19 (for non-PBEs)
Yes
Copyright © 2019 Deloitte Development LLC. All rights reserved. 18Accounting Hot Topics
Accounting Standards Updates issued in 2018
ASU Effective Date for PBEs
Effective Date for Non-PBEs
Early Adoption Allowed?
ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force)
Fiscal years and interim periods beginning after 12/15/19
Fiscal years beginning after 12/15/20; interim periods beginning after 12/15/21
Yes
ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans
Fiscal years ending after 12/15/20
Fiscal years ending after 12/15/21
Yes
Copyright © 2019 Deloitte Development LLC. All rights reserved. 19Accounting Hot Topics
Accounting Standards Updates issued in 2018
ASU Effective Date for PBEs
Effective Date for Non-PBEs
Early Adoption Allowed?
ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement
Fiscal years and interim periods beginning after 12/15/19
Fiscal years and interim periods beginning after 12/15/19
Yes, including option for partial early adoption
ASU 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts
Fiscal years and interim periods beginning after 12/15/20
Fiscal years beginning after 12/15/21; interim periods beginning after 12/15/22
Yes
ASU 2018-11, Leases (Topic 842): Targeted Improvements
Aligned with the new leasing standard’s effective datesFor entities that already adopted ASC 842, either (1) the lessor’s first reporting period after the issuance of the ASU or (2) the mandatory effective date of ASC 842
N/A
Copyright © 2019 Deloitte Development LLC. All rights reserved. 20Accounting Hot Topics
Accounting Standards Updates issued in 2018
ASU Effective Date for PBEs
Effective Date for Non-PBEs
Early Adoption Allowed?
ASU 2018-10, Codification Improvements to Topic 842, Leases
Aligned with the new leasing standard’s effective datesFor entities that already adopted ASC 842, effective upon issuance
N/A
ASU 2018-09, Codification Improvements
Varies – most either effective upon issuance or for fiscal years beginning after 12/15/18
Varies – most either effective upon issuance or for fiscal years beginning after 12/15/19
Varies – most either N/A or not allowed
Copyright © 2019 Deloitte Development LLC. All rights reserved. 21Accounting Hot Topics
Accounting Standards Updates issued in 2018
ASU Effective Date for PBEs
Effective Date for Non-PBEs
Early Adoption Allowed?
ASU 2018-08, Not-For-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made
Fiscal years and interim periods beginning after 06/15/18 for resource recipients and after 12/15/18 for resource providers
Fiscal years beginning after 12/15/18 and interim periods beginning after 12/15/19 for resource recipients and fiscal years beginning after 12/15/19 and interim periods beginning after 12/15/20 for recourse providers.
Yes
ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting
Fiscal years and interim periods beginning after 12/15/18
Fiscal years beginning after 12/15/19 and interim periods beginning after 12/15/20
Yes, but no earlier than the adoption date of ASC 606
Copyright © 2019 Deloitte Development LLC. All rights reserved. 22Accounting Hot Topics
Accounting Standards Updates issued in 2018
ASU Effective Date for PBEs
Effective Date for Non-PBEs
Early Adoption Allowed?
ASU 2018-06, Codification Improvements to Topic 942, Financial Services—Depository and Lending
Effective upon issuance Effective upon issuance N/A
ASU 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (SEC Update)
Effective upon issuance Effective upon issuance N/A
ASU 2018-04, Investments—Debt Securities (Topic 320) and Regulated Operations (Topic 980): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 117 and SEC Release No. 33-9273 (SEC Update)
Amendments to ASC 320 aligned with effective dates of ASU 2016-01Other amendments effective upon issuance
N/A
Copyright © 2019 Deloitte Development LLC. All rights reserved. 23Accounting Hot Topics
Accounting Standards Updates issued in 2018
ASU Effective Date for PBEs
Effective Date for Non-PBEs
Early Adoption Allowed?
ASU 2018-03, Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities
Fiscal years beginning after 12/15/17, including any interim periods beginning after 06/15/18 within fiscal years beginning after 12/15/17
Fiscal years beginning after 12/15/19 and interim periods beginning after 12/15/20
Yes, if the entity has adopted ASU 2016-01
ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income
Fiscal years and interim periods beginning after 12/15/18
Fiscal years and interim periods beginning after 12/15/18
Yes
ASU 2018-01, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842
Aligned with the new leasing standard’s effective dates
Aligned with the new leasing standard’s effective dates
Yes
Copyright © 2019 Deloitte Development LLC. All rights reserved. 24Accounting Hot Topics
Customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract (ASU 2018-15)
Copyright © 2019 Deloitte Development LLC. All rights reserved. 25Accounting Hot Topics
Main provisions• Aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a
service contract with those for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license)
• Apply ASC 350-40 to determine which types of costs may be capitalized
• Determine which project stage an implementation activity relates to in order to determine whether eligible costs should be capitalized, as follows:− Preliminary project stage (expense)− Application development stage (capitalize)− Postimplementation-operation stage (expense)
Customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract (ASU 2018-15)
Eligible Costs Ineligible CostsCosts of software that allows for access to or conversion of old data by new systems
All other data conversion costs
External direct costs of materials and services MaintenancePayroll and payroll-related costs TrainingInterest
Copyright © 2019 Deloitte Development LLC. All rights reserved. 26Accounting Hot Topics
Subsequent measurement of capitalized costs• Capitalized implementation costs should be expensed over the term of the hosting arrangement, which
may include renewal periods (similar to ASC 842)• Requires evaluation of impairment at the asset grouping level in accordance with ASC 360-10 and
abandonment at the individual module levelPresentation and disclosure• The cost, asset, and cash flows related to capitalized implementation costs in a service contract should be
presented on the same line items in the income statement, balance sheet, and statement of cash flows as the related hosting/service fees (e.g., prepaid expense, operating expense and operating cash flows)
• The only new disclosure requirement is to disclose the nature of hosting arrangements that are service contractsEffective date and transition:• Public business entities — Fiscal years beginning after December 15, 2019, and interim periods within
those fiscal years• All other entities — Fiscal years beginning after December 15, 2020, and interim periods within fiscal years
beginning after December 15, 2021• Early adoption is permitted and an entity may apply either a retrospective or prospective transition method
Customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract (ASU 2018-15) (cont.)
Copyright © 2019 Deloitte Development LLC. All rights reserved. 27Accounting Hot Topics
Recognition under Topic 805 for an assumed liability in a revenue contract − Research Project
Copyright © 2019 Deloitte Development LLC. All rights reserved. 28Accounting Hot Topics
Affects: Entities that acquire a revenue contract in a business combination after the acquirer has adopted ASC 606.Background and Tentative Decisions: • ASC 805 requires the recognition of assumed liabilities in a business combination.
• In March 2018, the FASB added to the EITF’s agenda a project to address recognition of liabilities related to revenue contracts acquired in a business combination after adopting ASC 606.
• In their June 2018 meeting, the EITF tentatively decided:
− An entity should recognize an assumed liability resulting from a revenue contract acquired in a business combination if the liability represents a performance obligation under ASC 606
− It is not appropriate for an acquirer to use a carry-over basis to measure an assumed liability in a revenue contract acquired in a business combination
− An acquirer’s measurement of an assumed liability’s fair value should take into account the other assets and liabilities in the acquired set
• The FASB issued a proposed ASU in February 2019 that would require an acquirer to “recognize a liability assumed in a business combination from a contract with a customer if that liability represents an unsatisfied performance obligation under Topic 606 for which the acquiree has received consideration (or the amount is due) from the customer.”
Research ProjectRecognition under Topic 805 for an assumed liability in a revenue contract
Copyright © 2019 Deloitte Development LLC. All rights reserved. 29Accounting Hot Topics
Background (cont.):• In February 2019, the FASB also issued a separate Invitation to Comment (ITC) regarding the measurement of an assumed liability in a revenue contract. Specifically, the ITC requested feedback on (1) the effect of payment terms on revenue recognized after the business combination (which could have implications on the Board’s determination of how the fair value of the liability should be measured) and (2) what costs should be included when measuring the fair value of an assumed liability in a revenue contract.
• In June 2019, the EITF discussed comment letters received on both the ITC and the proposed ASU and recommended that the FASB add to its technical agenda a project on measuring assumed contract liabilities in a revenue contract acquired in a business combination. The EITF also decided not to affirm its consensus-for-exposure until the FASB addresses measurement and other issues raised in the ITC.
• In July 2019, the FASB decided to subsume the EITF project on recognition of assumed liabilities in a revenue contract into its broader project on measurement and other topics related to revenue contracts in a business combination.
Next Steps:• The FASB directed its staff to conduct further research on the potential alternatives identified. No decisions
have yet been finalized.
Research ProjectRecognition under Topic 805 for an assumed liability in a revenue contract (cont.)
Copyright © 2019 Deloitte Development LLC. All rights reserved. 30Accounting Hot Topics
Simplifying the balance sheet classification of debt − Proposed ASU
Copyright © 2019 Deloitte Development LLC. All rights reserved. 31Accounting Hot Topics
Background• Current guidance in ASC 470-10 is very fact-specific with many exceptions. Goal of this project is to
reduce the cost and complexity of applying this guidance by introducing a principles-based approach.
• The Board decided to modify the proposed scope to clarify that the classification principle also should apply to lease liabilities.
Summary of Key Tentative Proposals• Classification Principle – As of the financial reporting date, an entity would classify a debt arrangement as
noncurrent if either (1) the liability is contractually due to be settled more than 12 months after the balance sheet date or (2) the entity has a contractual right to defer settlement of the liability for at least 12 months after the balance sheet date.
• Unused Long-term Financing Commitments – Unused long-term financing commitments would be disregarded in determining the classification of debt.
• Refinancing of Short-term Obligations – A short-term obligation that is subsequently refinanced on a long-term basis after the balance sheet date, but before the financial statements are issued or are available to be issued, will be classified as current as of the balance sheet date because the refinancing would be considered a nonrecognized subsequent event.
Proposed ASUSimplifying the balance sheet classification of debt
Copyright © 2019 Deloitte Development LLC. All rights reserved. 32Accounting Hot Topics
Summary of Key Tentative Proposals (cont.)• Subjective Acceleration Clauses (SACs) and Debt Covenants – SACs and covenants within long-term
obligations affect the classification of the debt only when triggered or violated, in which case disclosure of the SAC or covenant would be required.
• Covenant Violations Exception – An entity would not classify debt as current solely because of a debt covenant violation if it has received a covenant waiver after the balance sheet date, but before the financial statements are issued. However, entities would be required to present separately on the balance sheet the portion of debt that is classified as noncurrent as a result of the waiver exception.
Effective Date and Transition• Entities would apply this ASU prospectively.
• The effective date will be discussed at a future meeting.
Next Steps• On September 12, 2019, the Board issued a revised proposed ASU, with comments due by October 28,
2019.
Proposed ASUSimplifying the balance sheet classification of debt (cont.)
Copyright © 2019 Deloitte Development LLC. All rights reserved. 33Accounting Hot Topics
Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842): Effective dates – Proposed ASU
Copyright © 2019 Deloitte Development LLC. All rights reserved. 34Accounting Hot Topics
Affects: Private companies, not-for-profit organizations and certain public companies.
Background:
• On August 15, 2019 the FASB issued Proposed ASU, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates. The proposed Update would grant private companies, not-for-profit organizations and certain small public companies additional time to implement FASB standards on CECL, leases and hedging.
• The Board has issued many major standards over the past several years and as a result, the Board has been able to gain greater understanding about the operability challenges encountered by all entity types when transitioning to these new standards.
• The Board learned that although large public business entities (PBEs) may encounter difficulties in transitioning to a new standard, the challenges are magnified for smaller PBEs and nonpublic business entities (generally, private companies, not-for-profit organizations and employee benefit plans).
Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842): Effective datesProposed ASU
Copyright © 2019 Deloitte Development LLC. All rights reserved. 35Accounting Hot Topics
Summary of changes to effective dates for Hedging, CECL, and Leases (assuming a calendar year-end):
Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842): Effective dates (cont.)Proposed ASU
Copyright © 2019 Deloitte Development LLC. All rights reserved. 36Accounting Hot Topics
Agenda consultation
Copyright © 2019 Deloitte Development LLC. All rights reserved. 37Accounting Hot Topics
In 2016, the FASB issued an invitation to comment to solicit feedback about potential financial accounting and reporting topics, and specifically whether they should be added to the FASB’s agenda.
The Board has since voted to add projects on the following topics:
• Distinguishing Liabilities from Equity (Current Stage: Exposure Draft)
− Objective is to increase understandability and reduce complexity of current guidance.
− On April 3, 2019, the Board reached tentative decisions related to (1) convertible debt instruments, (2) the derivatives scope exception, (3) various other consequential amendments, and (4) transition.
− On June 19, 2019, the Board deliberated sweep issues and made decisions including the decision to modify the scope of Section 815-40-50, Derivatives and Hedging—Contracts in Entity’s Own Equity—Disclosure.
− On July 31, 2019, the Board issued a proposed ASU, with comments due by October 14, 2019.
Agenda consultation
Copyright © 2019 Deloitte Development LLC. All rights reserved. 38Accounting Hot Topics
• Disaggregation of Performance Information (income statement presentation) (Current Stage: Initial Deliberations)
− Focus is on the potential disaggregation of lines that represent the cost of revenue and selling, general, and administrative expenses.
− On April 24, 2019, the Board discussed an internal view approach to disaggregating income statement expense information, which would disaggregate this expense information based on how management internally views consolidated expenses.
− The Board directed the staff to conduct outreach with preparers on the operability of the internal view approach as well as other follow-on issues and to conduct outreach with users in order to understand the usefulness of potential outcomes from the internal view approach
Agenda consultation (cont.)
Copyright © 2019 Deloitte Development LLC. All rights reserved. 39Accounting Hot Topics
• Segment Reporting (Current Stage: Initial Deliberations)
− On June 13, 2018, the Board approved the staff’s request to undertake extended outreach on the following alternatives: (1) re-order the process for determining reportable segments and move the quantitative thresholds earlier in that process, and (2) remove the aggregation criteria, resulting in each operating segment being reportable until a practical limit is reached.
− On December 19, 2018, the Board discussed feedback received on its 2018 segment aggregation study, which considered alternatives to improve the aggregation criteria and the reportable segments process.
− On February 13, 2019, the Board directed the staff to study how clarifying the meaning of regularly reviewed segment information would affect the pieces of information public entities report by segment.
− On April 10, 2019, the Board directed the staff to study the following: (1) expanding the list of required disclosures, (2) developing principles-based disclosure requirements in addition to the required disclosures, and (3) requiring an explanation for any required disclosures that are omitted.
− In June 2019, the Board issued a media release calling for public companies to participate in a study on potential improvements to the segment disclosure requirements. Participants in the study will be asked to provide information on how various potential improvements would affect their segment reporting.
Agenda consultation (cont.)
Copyright © 2019 Deloitte Development LLC. All rights reserved. 40Accounting Hot Topics
Disclosure effectiveness
Copyright © 2019 Deloitte Development LLC. All rights reserved. 41Accounting Hot Topics
Decision process (cont.)• On August 28, 2018, the Board issued Chapter 8, Notes to Financial Statements and modified Chapter 3,
Qualitative Characteristics of Useful Financial Information of FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting, which, among other things:
− Aligned the FASB’s definition of materiality with that of the SEC, PCAOB, AICPA, and U.S. judicial system.
− Described the purpose of notes, the nature of appropriate content, and general limitations.
Topics considered• As part of the disclosure effectiveness project, the Board has issued ASUs related to the following topics:
− Defined benefit pension and other postretirement plans (ASU 2018-14)
− Fair value measurements (ASU 2018-13)
• In addition, the Board has ongoing projects related to the following topics:
− Inventory
− Interim reporting
− Income taxes
Disclosure effectiveness
Copyright © 2019 Deloitte Development LLC. All rights reserved. 42Accounting Hot Topics
Income Taxes• The FASB staff held workshops with stakeholders in September 2018 to discuss this project, and the Board
continued discussing the project at its meetings in November 2018, January 2019, February 2019, and March 2019.
• On March 25, 2019, the Board issued a revised proposed ASU. The due date for comment letters was May 31, 2019.
• The proposed ASU would be applied prospectively.
• The effective date will be discussed at a future meeting.
Disclosure effectiveness (cont.)
Copyright © 2019 Deloitte Development LLC. All rights reserved. 43Accounting Hot Topics
Disclosure effectiveness (cont.)
Summary of Tentative Changes to ASC 740 Applicable to:PBEs Non-PBEs
New Disclosure Requirements:
Income (or loss) from continuing operations before income tax expense (or benefit) and before intra-entity eliminations disaggregated between domestic and foreign Yes Yes
Disaggregation of income tax expense (or benefit) and income taxes paid by federal or national, state, and foreign amounts. Income tax expense (or benefit) and income taxes paid on foreign earnings imposed by an entity’s country of domicile should be included in the federal amount.
Yes Yes
Interim taxes paid (for all entities that prepare interim financial statements) Yes YesValuation allowance associated with the tax-effected amounts of federal, state, and foreign carryforwards Yes No
Amount and explanation of the valuation allowance recognized or released during the reporting period Yes No
Line items in the statement of financial position in which unrecognized tax benefits are presented and the related amounts of such unrecognized tax benefits Yes No
Deferred tax asset for carryforwards (tax effected) before valuation allowance disaggregated by federal, state, and foreign, and further disaggregated by time period of expiration for each of the first five years after the reporting date, a total of the amounts for the remaining years, and a total for carryforwards that do not expire
Yes No
Copyright © 2019 Deloitte Development LLC. All rights reserved. 44Accounting Hot Topics
Disclosure effectiveness (cont.)
Summary of Tentative Changes to ASC 740Applicable to:PBEs Non-PBEs
Eliminated Disclosure Requirements:740-10-50-15(d) – Unrecognized tax benefits that could change in the next 12 months Yes Yes
740-30-50-2(b) – Cumulative amount of each type of temporary difference when a deferred tax liability is not recognized because of exceptions related to subsidiaries and corporate joint ventures
Yes Yes
Modified Disclosure Requirements:Requires disclosure of non-tax-effected amount of carryforwards, including disclosure of credit carryforwards separate from other carryforwards and carryforwards that do not expire separate from those that do expire, along with their expiration dates (or a range of expiration dates).
No Yes
Requires separate disclosure for any reconciling item that exceeds a certain threshold in the rate reconciliation, along with an explanation of year-to-year changes in reconciling items.
Yes No
Copyright © 2019 Deloitte Development LLC. All rights reserved. 45Accounting Hot Topics
Identifiable intangible assets and subsequent accounting for goodwill
Copyright © 2019 Deloitte Development LLC. All rights reserved. 46Accounting Hot Topics
Affects: All entities.
Background:
• The objective of this project is to revisit the subsequent accounting for goodwill and identifiable intangible assets, including considerations for improving the decision usefulness of the information and rebalancing the cost benefit factors.
• The Post-Implementation Review of FASB Statement No. 141 (Revised 2007), Business Combinations, issued in 2013 described stakeholders’ concerns about the cost to perform the goodwill impairment test. Since then, the FASB has issued various pieces of guidance to resolve those stakeholders’ concerns, including alternatives for private companies and not-for-profit entities such as:
− ASU No. 2014-02, Intangibles—Goodwill and Other (Topic 350): Accounting for Goodwill
− ASU No. 2014-18, Business Combinations (Topic 805): Accounting for Identifiable Intangible Assets in a Business Combination
− ASU No. 2019-06, Intangibles—Goodwill and Other (Topic 350), Business Combinations (Topic 805) and Not-for-Profit Entities (Topic 958): Extending the Private Company Accounting Alternatives on Goodwill and Certain Identifiable Intangible Assets to Not-for-Profit Entities.
Identifiable intangible assets and subsequent accounting for goodwill
Copyright © 2019 Deloitte Development LLC. All rights reserved. 47Accounting Hot Topics
Invitation to Comment:
• On October 24, 2018, the Board decided to add to its technical agenda a broad project to revisit the subsequent accounting for goodwill and the accounting for certain identifiable intangible assets.
• On July 9, 2019, the staff issued an Invitation to Comment to obtain formal input from stakeholders focusing on public business entities on the subsequent accounting for goodwill, the accounting for certain identifiable intangible assets, and the scope of the project on those topics.
• The Board has provided a 90-day comment period with comments due by October 7, 2019.
Identifiable intangible assets and subsequent accounting for goodwill (cont.)
Copyright © 2019 Deloitte Development LLC. All rights reserved. 48Accounting Hot Topics
Questions?
?
This publication contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of this publication, rendering business, financial, investment, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this publication.
About DeloitteDeloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about for a detailed description of DTTL and its member firms. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.
Copyright © 2019 Deloitte Development LLC. All rights reserved.
Designed by CoRe Creative Services. RITM0317101