ASU 2018-01, Land Easement Practical Expedient for Transition to ASC 842, was recently released by the FASB to ease theadoption of ASU 2016-02, Leases (ASC 842), for entities with land easements that exist or expire before an entity’s adoption of ASC 842. The ASU will benefit entities that do not account for those land easements as leases under existing GAAP (ASC 840).
At the July 20th EITF meeting, the SEC Observer announced that the SEC staff will allow an entity that qualifies as a public business entity (PBE) solely because its financial statements or financial information is included in another entity’s filing with the SEC to adopt ASU No. 2014-09 – Revenue from Contracts with Customers (ASC 606) and ASU No. 2016-02 – Leases (ASC 842) using the effective dates applicable to private entities.
On June 22, 2017, the FASB proposed Accounting Standards Update to Consolidation (ASC 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities to reduce the cost and complexity and to improve financial reporting associated with consolidation of variable interest entities.
Year-end 2017 presents a unique set of challenges for taxpayers. At the top of the list are the uncertainties created by the possibilities within proposed tax reform legislation – what changes might be made, and whether those changes would be retroactive for 2017.
Read More: 2017-Year End Tax Planning Report
On July 13, 2017, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-11, Earnings PerShare (ASC 260), Distinguishing Liabilities from Equity (ASC 480), Derivatives and Hedging (ASC 815): I. Accounting for Certain Financial Instruments with Down Round Features and II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Nonc ontrolling Interest with a Scope Exception.
The Financial Accounting Standards Board (“FASB”) issued ASU 2016-02 in February of 2016 to create ASC 842, Leases, and supersede the leases requirements in ASC 840, Leases. The objective of ASC 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease.
The Financial Accounting Standards Board (“FASB”) issued ASC 606, Revenues from Contracts with Customers, and ASC 340-40, Other Assets and Deferred Costs – Contracts with Customers, and the International Accounting Standards Boards (“IASB”) issued IFRS 15, Revenue from Contracts with Customers in May 2014. It generally converged both revenue standards eliminating most differences between U.S. GAAP and IFRS in accounting for revenue from contracts with customers.
The FASB recently issued ASU 2017-09, Scope of Modification Accounting, to clarify which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting under ASC 718, Stock Compensation. The ASU is available becomes effective for all entities for fiscal years beginning after December 15, 2017.
The FASB recently issued ASU 2017-04 to simplify how all entities assess goodwill for impairment by eliminating Step 2 from the goodwill impairment test. As amended, the goodwill impairment test will consist of one step comparing the fair value of a reporting unit with its carrying amount. An entity should recognize a goodwill impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value.
The FASB recently issued ASU 2017-01 to clarify the definition of a business, which is fundamental in the determination of whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses in accordance with ASC 805, Business Combinations. This determination is important given the diverging accounting models used for each type of transaction. The guidance is generally expected to result in fewer transactions qualifying as business combinations.
Recently, the SEC adopted technical amendments to several rules and forms to reflect securities law amendments included in the JOBS Act of 2012. Title I of the JOBS Act created the “emerging growth company” filer status, which permits reduced disclosures in an IPO registration statement and provides a temporary exemption from certain financial reporting and governance requirements thereafter.
Read more: Centri’s Focus on SEC_April 2017
Due to the pervasive nature of the changes of the new revenue recognition standard, commonly referred to as Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers, it is important to be proactive in considering the effect on your company. While still a few years from adoption, the changes have likely already begun to affect you in 2016: be prepared! Changes in revenue recognition could affect management bonuses, EPS estimates, key performance indicators and debt covenants.
Read more: Centri Rev Rec Alert
At Centri we assist management with the implementation of their internal control compliance programs by utilizing the 2013 COSO Framework. Our experts work with management in order to ensure that an effective control environment has been established and maintained in order to ensure that the company is in compliance with Section 404 of the Sarbanes-Oxley Act of 2002. In addition, our personnel act as the liaisons between management and the external auditors to ensure that a program has been established in order to allow for the external auditors to place reliance on management’s procedures and therefore reduce their testing procedures while allowing for an effective and efficient process.
Article by Kevin McLaughlin, CPA
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Article by Carl Dietz, CPA
At Centri, we provide a dynamic approach to every engagement by working hands-on to successfully execute your business needs. Centri’s tailored solutions can expand and contract to fit the ever-changing needs of your organization and regulatory environment. Our solutions consider the critical relationship between senior management, industry risk and business risk – relationships that are critical to a company’s success.
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Centri specializes in financial reporting, internal controls and technical accounting research for companies of various sizes and industries. Our approach is to select team members with the appropriate experience to ensure that their fit within your organization is seamless. We offer a full range of accounting and finance services and our experts are ready to help.
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Centri Business Consulting is dedicated to providing the highest quality finance and accounting consulting services to its clients by being reliable and responsive to their needs. Centri provides companies with the expertise they need to meet their strategic accounting and reporting demands. From complex technical accounting transactions to periodic financial reporting, our professionals can offer any organization specialized expertise and multilayered skill sets to ensure the work gets done right.
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