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Bridging the GAAP: May 2026

Centri’s Bridging the GAAP newsletter highlights this month’s news, developments and emerging issues in the accounting and financial reporting world. 

Standard Setter Updates

Financial Accounting Standards Board (FASB)

FASB Issues New Guidance on Initial Measurement of Paid-in-Kind Dividends

On April 23, the FASB issued ASU 2026-01, Initial measurement of Paid-in-Kind Dividends on Equity-Classified Preferred Stock. The ASU requires paid-in-kind (PIK) dividends to be initially measured based on the PIK dividend rate stated in the preferred stock agreement. This measurement will be used for both recording the dividend in the financial statements and calculating earnings per share. The new guidance does not change when PIK dividends are recorded or when they impact earnings per share.

It is effective for all entities for annual reporting periods beginning after December 15, 2026 (and interim periods within those annual periods). Early adoption is permitted.

May 13, 2026 Meeting

The Board discussed feedback on the Equity Method of Accounting: Targeted Improvements project. The Board decided to require a single threshold (significant influence) for applying the equity method, regardless of the type of entity. The Board also decided to make the following improvements to the significant influence guidance in ASC 323-10, Investments—Equity Method and Joint Ventures—Overall:

1. Change the 20 percent presumptive threshold to remove the presumption that an entity does not have significant influence when it holds less than 20 percent of an investee
2. Amend the board of directors indicator to include functionally equivalent governing bodies
3. Add a requirement that a noncontrolling general partner (or functional equivalent) has significant influence.

The Board also added projects on fair value measurement by investment companies of equity securities subject to contractual sale restrictions, private credit disclosures by investment companies and nonrefundable transferable tax credits. The Board also discussed its research project on intangibles.

For more information, see the FASB’s Tentative Board Decisions.

Upcoming May 27, 2026 Meeting

The Board will continue deliberations on the Accounting for Commodities project and discuss scoping, disclosure, transition, and other items. The Board will discuss whether to add a project to its technical agenda to address whether recapture rights should be considered when measuring mortgage servicing rights, consistent with the March 2026 recommendation of the Emerging Issues Task Force. The Board will discuss whether to add a project to its technical agenda to address the accounting for subjective acceleration clauses and begin initial deliberations, consistent with the recommendations of the Private Company Council.

This meeting will be live streamed on the FASB website. To access the webcast, go to the Live Meeting Webcasts link on the Upcoming Meetings section of the FASB website.

FASB to Host Public Roundtable on May 27, 2026

The FASB will host a public roundtable meeting on the implementation of the Accounting Standards Update No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (DISE Standard). The purpose of the roundtable is to help the Board and staff gather additional feedback as they monitor implementation of the DISE Standard. The FASB is seeking participation from a broad cross-section of stakeholders across all industries. Topics will include preparers’ adoption efforts and how investors are preparing for the upcoming changes.

The roundtable meeting will be live streamed on the FASB website.  To access the webcast, go to the Live Meeting Webcasts link on the Upcoming Meetings section of the FASB website.

SEC Regulatory Updates

SEC and CFTC Jointly Propose Amendments to Form PF 

The SEC and Commodity Futures Trading Commission (CFTC) jointly proposed amendments to Form PF, the confidential reporting form for certain SEC-registered investment advisers to private funds, aimed at reducing reporting burdens while continuing to collect information necessary for the Financial Stability Oversight Council (FSOC) systemic risk monitoring and investor protection efforts. The proposed amendments would raise the filing threshold from $150 million to $1 billion in private fund assets under management, eliminating the Form PF filing requirement for nearly half of the advisers currently required to file. The proposal would also raise the reporting threshold for large hedge fund advisers from $1.5 billion to $10 billion in hedge fund assets under management and would eliminate or streamline many other Form PF requirements.

Comments are due by June 23.

Rikki Williams

Senior Director | CPA

Rikki is a Senior Director at Centri Business Consulting. He has more than 18 years of public and private accounting experience. View Rikki Williams's Full Bio