Download 3pm - FASB Update for Private Companies - Tim Pike

FASB UPDATE FOR
PRIVATE COMPANIES
Timothy Pike, CPA, CFE
Howard & Co, LLP
Agenda
RECENTLY ISSUED OR EFFECTIVE
STANDARDS
FASB UPDATE &
UPCOMING ACCOUNTING UPDATES
Recent Issued or Effective
Accounting Standard Updates
2011-04 Fair Value Measurement

Amendments to Achieve Common Fair Value
Disclosure Requirements in US GAAP and
IFRS (Topic 820)

Effective for annual periods beginning
after 12/15/11 (prospectively)

Primarily to converge wording
2011-03 Transfers & Servicing

Reconsideration of Effective Control for
Repurchase Agreements (Topic 860)

Agreements that both entitle and obligate a
transferor to repurchase or redeem financial
assets before their maturity

Adjusts rules to determine when these are
financings instead of sales
2011-03 Continued
Current Rules: Maintaining effective
control over a financial asset
New Rules: The transferor has the ability
to repurchase or redeem financial asset
Effective for the first interim or annual
period beginning on or after 12/15/11 (no
early adoption)
2011-02 Receivables

A Creditor’s Determination of Whether a
Restructuring Is a Troubled Debt Restructuring
(Topic 310)

Effects all creditors that restructure
receivables

Effective annual periods ending on or after
December 15, 2012 (early adoption
permitted)
2011-02 Continued
Troubled Debt Evaluation must Conclude:
◦ The restructuring constitutes a concession
◦ The debtor is experiencing financial difficulties

Certain items excluded (e.g. changes in
lease agreements or pension plans)
2011-01 Receivables

Deferral of the effective date related to
disclosures about troubled debt
restructurings

ASU 2010-20
2010-29 Business Combinations

Disclosure of Supplementary Pro Forma
Information for Business Combinations (Topic
805)

Pro Forma information should be reflected
retrospectively (all periods presented)

Effective for Periods Beginning After
12/15/10
2010-28 Intangibles, Goodwill…

When to Perform Step 2 of the Goodwill
Impairment Test for Reporting Units with Zero
or Negative Carrying Amounts (Topic 350)

Effective periods beginning after 12/15/11,
but may early adopt one year earlier
2010-28 Continued

If the reporting unit value is zero or
negative and Step 1 is passed, you must
perform Step 2

Effective for years (& interim periods)
beginning after 12/15/11, but may early
implement up to 12/15/10
2010-27 Other Expenses

Fees Paid to the Federal Government by
Pharmaceutical Manufacturers (Topic 720)

Effective calendar years beginning after
12/31/10, when the fee becomes effective
2010-26 Financial Services - Insurance

Accounting for Costs Associated with Acquiring
or Renewing Insurance Contracts (Topic 944)

Effective for periods beginning after
12/15/11

Details expenses that can/should be
capitalized and those expensed as incurred
2010-25 Plan Accounting

Reporting Loans to Participants by Defined
Contribution Pension Plans (Topic 962)

Carried at Fair Value?

Notes Receivable

Effective years ending after 12/15/10, early
adoption allowed
2010-24 Health Care Entities

Presentation of Insurance Claims and Related
Insurance Recoveries (Topic 954)

Accounting for medical malpractice claims
and similar contingent liabilities and the
related anticipated insurance recoveries

Effective years beginning after 12/15/10, early
application permitted (cumulative effect
adjustment to opening retained earnings)
2010-23 Health Care Entities

Measuring Charity Care for Disclosure (Topic
954)

Requires the use of cost (not revenue) to be
used to measure and disclose charity care

Effective for fiscal years beginning after
12/15/10. Apply retrospectively, early
adoption permitted
2010-22 Accounting for Various Topics
SEC Update
2010-21 Technical Amendments
SEC Update
2010-20 Receivables

Disclosures about the Credit Quality of
Financing Receivables and the Allowances for
Credit Losses (Topic 310)

Clarity to evaluate an entity’s credit risk
exposure and adequacy of credit loss
allowances

Effective periods ending after 12/15/11
2010-19 Foreign Currency

Multiple Foreign Currency Exchange Rates
(Topic 830)

SEC UPDATE
2010-18 Receivable

Effect of a Loan Modification When the Loan is
Part of a Pool That is Accounted for as a Single
Asset (Topic 310)

Maintain loan pools

Effective prospectively; first period ending
on or after 7/15/10. (Early application
permitted)
2010-17 Milestone Method

Milestone Method of Revenue Recognition
(Topic 605)

Research and Development Transactions

Periods beginning on or after June 15,
2010
2010-16 Entertainment - Casinos

Accruals for Casino Jackpot Liabilities (Topic 924)

Jackpots not required to be paid are not
accrued

Effective periods
beginning on or
after 12/15/10
FASB UPDATE &
UPCOMING
ACCOUNTING UPDATES
Upcoming Considerations

New FASB Chair
Leslie Seidman
◦ Board member since 2003
◦ Managed her own firm
Private & Nonprofit Standards

Blue ribbon panel recommendations

Currently in phase 2

Supported by FASB Chair*
2 Significant Projects
Revenue
Leases
Recognition
Revenue Recognition

Provide one source/location for revenue
recognition

Improve definitions and industry
variations

Many questions still remain
Leases

Eliminate off-balance sheet accounting

Provide for a single method of accounting

Eliminates “technicalities” of the brightline tests

Reflect an exposure to risk and benefit
with the use of leased assets
Leases, Continued

More timely information

Simplified approach for short-term leases

Does not change current definition of a
lease contract
Leases, continued

Accounting:
◦ Change the timing and location of expenses
(in the financials)
◦ Lease assets & liabilities recognized at present
value of payments to be made over the
contract term and carried at amortized cost
◦ Continual reassessment
FASB Projects