Discontinued Operations: The FASB issued a standard in April 2014 that improves accounting standards by more faithfully representing when a company or other organization discontinues its operations. The standard revises the criteria for reporting a discontinued operation, resulting in more useful financial reporting for investors while eliminating an unnecessary source of cost and complexity for preparers.
Development Stage Entities: The FASB issued a standard in June 2014 that simplifies the accounting guidance by fostering more consistent consolidation analyses and decisions among public and private development stage organizations. The standard also provides more opportunities for cost savings for preparers, and improves the relevance of information provided to users of financial statements.
Completed Projects - Simplification Initiative
Accounting for Income Taxes, Balance Sheet Classification of Deferred Taxes: Accounting Standards Update No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, issued on November 20, 2015, eliminates the requirement for entities that present a classified statement of financial position to classify deferred tax assets and liabilities as current and noncurrent, and instead require that they classify all deferred tax assets and liabilities as noncurrent. Click here to download the Accounting Standards Update.
Accounting for Income Taxes, Intra-Entity Transfers of Assets Other Than Inventory: The FASB issued a standard in October 2016 that improves the accounting for income tax consequences of intra-entity transfers of assets other than inventory by requiring that an entity recognize the income tax consequences of those transfers when they occur. Click here to download the Accounting Standards Update.
Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement: The amendments in this Update provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The guidance in this Update supersedes paragraph 350-40-25-16 and, therefore, all software licenses within the scope of Subtopic 350-40 will be accounted for consistent with other licenses of intangible assets. The guidance does not change GAAP for a customer’s accounting for service contracts. Click here to download the Accounting Standards Update.
Employee Share-Based Payment Accounting: This Update affects all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions were simplified, including: the income tax consequences, the classification of awards as either equity or liabilities, and the classification on the statement of cash flows. Additionally, the ASU simplifies two areas specific to private companies. It allows private companies to apply a practical expedient to estimate the expected term for all awards with performance or service conditions that have certain characteristics. It also allows private companies to make a one-time election to switch from measuring all liability-classified awards at fair value to measuring them at intrinsic value. Click here to download the Accounting Standards Update.
Equity Method of Accounting: This Update eliminates the requirement that an entity retroactively adopt the equity method of accounting if an investment that was previously accounted for on other than the equity method becomes qualified for use of the equity method by an increase in the level of ownership interest. Click here to download the Accounting Standards Update.
Extraordinary Items: This Update eliminates from GAAP the concept of extraordinary items. Subtopic 225-20, Income Statement—Extraordinary and Unusual Items, required that an entity separately classify, present, and disclose extraordinary events and transactions. Eliminating the extraordinary classification simplifies income statement presentation by altogether removing the concept of extraordinary items from consideration. Click here to download the Accounting Standards Update.
Liabilities and Equity—Targeted Improvements: Accounting Standards Update No. 2017-11, Earnings per share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic) 815: Accounting for Certain Financial Instruments with Down Round Features, Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable noncontrolling Interests with a Scope Exception simplifies the accounting for certain financial instruments that have characteristics of liabilities and equity. The Update simplifies the accounting for certain financial instruments with down round features—a provision in an equity-linked financial instrument (or embedded feature) that provides a downward adjustment of the current exercise price based on the price of future equity offerings and also addresses navigational issues within the Codification related to the existence of an indefinite deferral in the guidance. Click here to download the Accounting Standards Update.
Measurement Date of Defined Benefit Pension Plan Assets: This Update permits an entity with a fiscal year-end that does not coincide with a month-end to measure defined benefit plan assets and obligations using the month-end that is closest to the entity’s fiscal year-end and apply that practical expedient consistently from year to year. The Update also permits an entity that has a significant event in an interim period that calls for a remeasurement of defined benefit plan assets and obligations (for example, a partial settlement) to remeasure defined benefit plan assets and obligations using the month-end that is closest to the date of the significant event. Click here to download the Accounting Standards Update.
Nonemployee Share-Based Payment Accounting Improvements: The Update expands the scope of Topic 718, Compensation—Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The ASU supersedes Subtopic 505-50, Equity—Equity-Based Payments to Non-Employees. Click here to download the Accounting Standards Update.
Presentation of Debt Issuance Costs: Subtopic 835-30, Interest—Imputation of Interest, required an entity to present debt issuance costs as a deferred charge on the balance sheet. This Update simplifies GAAP by aligning the presentation of debt issuance costs with debt discount or premium. As such, the amendments in this Update require that debt issuance costs related to a debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. Click here to download the Accounting Standards Update.
Simplifying the Accounting for Measurement-Period Adjustments: This Update eliminates the requirement to retrospectively account for measurement-period adjustments in a business combination. Instead, entities would recognize measurement-period adjustments in the period they are determined and would recognize the resulting effect on earnings, if any, in the same period’s income statement. In addition, an entity is required to present separately on the face of the income statement or disclose in the notes to the financial statements the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. Click here to download the Accounting Standards Update.
Simplifying the Measurement of Inventory: Accounting Standards Update No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, issued on July 22, 2015, addresses stakeholders’ concerns about the complexity of current guidance on measuring inventory by requiring organizations to estimate only net realizable value. Click here to download the Accounting Standards Update.
For more information on recent completed FASB projects, visit the FASB website.
For more information on Emerging Issues Task Force (EITF) standards that reduce complexity, visit the EITF page.
For more information on Private Company Council (PCC) standards that reduce complexity, visit the PCC page.