Audit & Assurance

Friday, 26 March 2021

Convertible instruments: FASB encourages early adoption of new rules

Written by Thomson Reuters

In August 2020, the Financial Accounting Standards Board (FASB) issued updated guidance to simplify the accounting rules for convertible instruments and contracts in an entity’s own equity. The changes will provide investors with less-costly, more-comparable information that’s easier to understand. The updated guidance allows for early adoption but generally no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. A company can adopt the guidance only as of the beginning of its fiscal year...

Published in Audit & Assurance
Friday, 26 March 2021

FASB approves new rules for goodwill triggering events

Written by Thomson Reuters

On February 10, the Financial Accounting Standards Board (FASB) voted 6 to 1 to finalize its December 2020 proposal on the assessment of events that may trigger a goodwill impairment test. However, the scope of the guidance has been expanded to cover a broader number of private companies and not-for-profits in the final rules. Triggering events Goodwill is an accounting term used for a specific acquired intangible asset that’s recorded on the balance sheet in a merger or acquisition. It’s determined by deducting the fair market value of tangible assets, identifiable intangible assets and liabilities obtained in the purchase, from the cost to buy a business...

Published in Audit & Assurance
Tuesday, 09 March 2021

Simplifying the rules for reporting franchise fees

Written by Thomson Reuters

On January 28, 2021, the Financial Accounting Standards Board (FASB) published an accounting workaround to the complicated revenue recognition rules for private franchise businesses. The updated guidance will provide a simpler way for franchisors to account for revenues gleaned for helping franchisees to set up shop. The details Accounting Standards Update (ASU) No. 2021-02, Franchisors — Revenue from Contracts with Customers: Practical Expedient, introduces a practical expedient to Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers...

Published in Audit & Assurance
Tuesday, 09 March 2021

Coming soon: Changes to income tax reporting

Written by Thomson Reuters

In December 2019, the Financial Accounting Standards Board (FASB) issued an updated accounting standard that simplifies the complex income tax accounting requirements. Here are the details. 6 key changes Accounting Standards Update (ASU) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, removes specific technical exceptions to general principles found in Accounting Standards Codification (ASC) Topic 740, Income Taxes...

Published in Audit & Assurance
Tuesday, 09 March 2021

Time is running out to transition away from LIBOR

Written by Thomson Reuters

Time is running out to transition away from LIBOR The London Interbank Offered Rate (LIBOR) was once the most common reference rate in the global financial markets. However, due to previous scandals, banks and other entities will cease using LIBOR as a benchmark interest rate by the end of 2021. Reference rate reform impacts trillions of dollars in loans, derivatives and other financial contracts. Companies in all industries with contracts that reference LIBOR (or another benchmark rate planned for discontinuance), should feel a sense of urgency to shift their operations away from LIBOR, if they haven’t yet addressed the effects of rate reform in their financial statements...

Published in Audit & Assurance
Monday, 08 February 2021

FASB issues proposal on acquired contracts for revenue

Written by Thomson Reuters

On December 15, 2020, the Financial Accounting Standards Board (FASB) issued a proposal that clarifies how companies should recognize and measure revenue-generating contracts that have been acquired in business combinations. The proposal may help eliminate accounting differences among companies’ financial reporting practices.  Main points Currently, companies follow the fair value measurement principle in Accounting Standards Codification Topic 805, Business Combinations, for reporting acquired contracts that have a lot of upfront payments and, therefore, deferred revenue. Why does this standard cause differences in financial reporting?..

Published in Audit & Assurance
Monday, 08 February 2021

Reporting credit loss and debt restructuring during the COVID-19 pandemic

Written by Thomson Reuters

The Consolidated Appropriations Act (CAA) contains various COVID-19 economic relief measures. The law includes provisions that extend previous relief provided to large banks on the accounting rules related to credit loss as well as troubled debt restructuring (TDR) until January 1, 2022. CECL guidance In 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments...

Published in Audit & Assurance
Monday, 08 February 2021

Eye on ESG disclosures

Written by Thomson Reuters

Across the globe, efforts to put more emphasis on environmental, social and corporate governance (ESG) matters in financial statements are gaining momentum. Here’s an overview of the current ESG guidance in the United States and whether the Financial Accounting Standards Board (FASB) plans to expand the financial reporting guidance related to these matters. Sustainability disclosures Sustainability encompasses a broad range of nonfinancial issues that may affect a company’s financial condition and performance. For example, it may include environmental issues, such as the size of the company’s carbon footprint, efforts to replace fossil fuels with renewable energy sources and overall use of natural resources...

Published in Audit & Assurance
Monday, 11 January 2021

Goodwill: How a recent proposal would change the rules

Written by Thomson Reuters

On December 20, the Financial Accounting Standards Board (FASB) proposed an accounting alternative that would enable private companies and not-for-profit entities to perform a triggering event evaluation for goodwill only at the annual reporting date, thereby skipping having to do so during interim periods. Here are the details. Background Goodwill is an accounting term used for a specific acquired intangible asset that’s recorded on the balance sheet in a merger or acquisition. It’s determined by deducting the fair market value of tangible assets, identifiable intangible assets and liabilities obtained in the purchase, from the cost to buy a business...

Published in Audit & Assurance
Monday, 11 January 2021

6 ideas to prepare for audit season

Written by Thomson Reuters

External auditors usually perform audit fieldwork for calendar-year entities in January through April of the following year. Businesses and not-for-profit entities that are prepared facilitate the process by minimizing adjustments and surprises, lowering future accounting fees, and getting more value out of the audit process. Here are six practical tips for you to consider. 1...

Published in Audit & Assurance
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