Finance Elevated virtual conference

Learn from tech experts at J&J, Microsoft, AT&T, Pitney Bowes and more, June 8, 10, 15 & 17.

Financial Reporting and Regulatory Update

First Quarter 2021

ASU effective dates checklist

Nonpublic business entities (non-PBEs)

Accounting Standards Update (ASU)

Effective dates for Dec.31 year-end non-PBEs

Early adoption

Accounting Alternative for Evaluating Triggering Events

(ASU 2021-03)

Provides accounting alternative to perform goodwill impairment triggering event evaluation as of the end of the reporting period, whether reporting period is an interim or annual period. An entity that elects this alternative is not required to monitor for goodwill impairment triggering events during the reporting period but, instead, should evaluate the facts and circumstances as of the end of each reporting period to determine whether a triggering event exists and, if so, whether it is more likely than not that goodwill is impaired.

Dec. 31, 2020

Permitted only as of annual periods beginning after Dec. 15, 2019, including interim periods within that have not been issued or made available for issuance as of March 30, 2021

Premium Amortization on Purchased Callable Debt (ASU 2017-08)

Shortens the amortization period for premiums on purchased callable debt securities to the earliest call date, instead of to the maturity date.

Clarifying standards:

ASU 2020-08 – Clarifies that an entity should reevaluate whether a callable debt security that has multiple call dates is within the scope of paragraph 310-20-35-33 for each reporting period.

Dec. 31, 2020

 

 

 

 

For ASU 2020-08, Dec. 31, 2021

Permitted, including in an interim period

For ASU 2020-08,

permitted only as of annual periods

beginning after Dec. 15, 2020, including interim periods within

Clarifying Reference Rate Reform

(ASU 2021-01)

Clarifies that certain optional expedients and exceptions in Topic 848 (reference rate reform) for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. If an entity elects certain provisions in Topic 848, those provisions apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. Clarifies that the provisions in Topic 848 optionally apply to all entities that designate receive-variable rate, pay-variable-rate cross-currency interest-rate swaps as hedging instruments in net investment hedges that are modified as a result of reference rate reform.

Upon issuance on Jan. 7, 2021

Not applicable 

Practical Expedient for Applying Topic 606 by Franchisors

(ASU 2021-02)

Provides a targeted practical expedient to Topic 606 (revenue from contracts with customers) for nonpublic business entities that meet the definition of a franchisor. Allows nonpublic franchisors the option to account for certain preopening services as a distinct performance obligation separate from the franchise license. If elected, a franchisor may also make accounting policy election to account for all preopening services as a single performance obligation; otherwise, it would need to apply the guidance in Topic 606 to determine whether the preopening services are distinct from one another.

Dec. 31, 2021

Permitted, including in an interim period

Hedging Activities (ASU 2017-12)

Expands the nonfinancial and financial risk components that can qualify for hedge accounting and simplifies financial reporting for hedging activities.

Clarifying standards:

ASU 2019-04 – Provides specific improvements and clarifications to the guidance in Topic 815. Among other areas, addresses partial-term fair value hedges of interest-rate risk, amortization and disclosure of fair value hedge basis adjustments, and consideration of hedged contractually specified interest rate under the hypothetical derivative method.

ASU 2019-10 – Deferral of effective dates.

Dec. 31, 2021

Permitted, including in an interim period

Certain Costs in Media and Entertainment Industry (ASU 2019-02)

Applies to broadcasters and entities that produce and distribute films and episodic television series. Aligns the accounting of episodic television series with films, and provides more relevant financial reporting information to users of financial statements.

Dec. 31, 2021

Permitted, including in an interim period

Defined Benefit Plan Disclosure for Sponsors (ASU 2018-14)

Removes and clarifies certain disclosures for sponsors of defined benefit plans. Adds disclosure for weighted-average interest credit rates for certain plans, and the reasons for significant gains and losses in the benefit obligation.

Dec. 31, 2021

Permitted

Implementation Costs for Cloud Computing Arrangements (CCAs) (ASU 2018-15)

Aligns accounting for implementation costs of CCAs with or without a license (that is, regardless of whether the CCA is a service contract) by capitalizing implementation costs during the application development stage and amortizing the costs over the term of the arrangement.

Dec. 31, 2021

Permitted, including in an interim period

Variable Interest Entity (VIE) Model – Targeted Improvements for Related Parties (ASU 2018-17)

Provides a private company accounting alternative not to apply VIE consolidation guidance to any arrangement with legal entities that are under common control if neither the parent nor the legal entity is a PBE (thus expanding the alternative for common control leasing arrangements to all common control arrangements). Also, revises the analysis for determining whether a decision-making fee paid by a VIE is a variable interest such that indirect interests in a VIE held through related parties in common control arrangements would be considered on a proportional basis (instead of as the equivalent to a direct interest).

Dec. 31, 2021

Permitted, including in an interim period

Collaborative Arrangements (Topic 808) (ASU 2018-18)

Requires that Topic 606 be applied to collaborative arrangements when the arrangement participant is a customer and aligns the unit-of-account guidance in Topic 808 with Topic 606. Revenue in the scope of Topic 606 should be presented separately from revenue outside its scope.

Dec. 31, 2021

Permitted, including in an interim period

Simplifying Accounting for Income Taxes (ASU 2019-12)

Simplifies the accounting for income taxes by removing certain exceptions in Topic 740. Improves consistent application of other areas of guidance within Topic 740 by clarifying and amending existing guidance.

Dec. 31, 2022

Permitted, including in an interim period

Interaction Between Accounting for Equity Securities, Equity Method Investments, and Certain Derivative Instruments (ASU 2020-01)

Clarifies the interaction of the accounting for equity securities under Topic 321 and investments accounted for under the equity method of accounting in Topic 323 and the accounting for certain forward contract and purchased options accounted for under Topic 815.

Dec. 31, 2022

Permitted, including in an interim period

Leases

(ASU 2016-02)

Revises recognition and measurement for lease contracts by lessors and lessees; operating leases are recorded on the balance sheet for lessees. Replaces Topic 840 with Topic 842.

Clarifying standards:

ASU 2018-01 – Provides a practical expedient in transition to not evaluate existing or expired land easements under Topic 842 that were not previously accounted for as leases under Topic 840.

ASU 2018-10 – Provides 16 improvements and clarifications to the guidance in Topic 842.

ASU 2018-11 – Provides an optional transition method for adopting Topic 842 that will eliminate comparative period reporting under the new guidance in the adoption year. Provides a practical expedient for lessors to not separate nonlease components from the associated lease component in specified circumstances.

ASU 2018-20 – Provides improvements specific to lessors for evaluating sales taxes, recording reimbursed costs, and allocating variable payments to lease and nonlease components.

ASU 2019-01 – Provides improvements in determining fair value of underlying assets by lessors that are not manufacturers or dealers, presentation of the statement of cash flows for sales-type and direct financing leases, and transition disclosures.

ASU 2019-10 – Deferral of effective dates

ASU 2020-05 – Deferral of effective dates.

Dec. 31, 2021

Permitted

Contributed Nonfinancial Assets of Not-for-Profit Entities (ASU 2020-07)

Improves financial reporting for not-for-profit entities by providing specific presentation and disclosure requirements for contributed nonfinancial assets other than contributed services.

Dec. 31, 2022

Permitted for interim or annual goodwill impairment tests performed on testing dates on or after Jan. 1, 2017

Various Codification Improvements (ASU 2020-10)

Amendments improve codification by having all disclosure-related guidance available in the disclosure sections of the codification. Prior to this ASU, various disclosure requirements or options to present information on the face of the financial statements or as a note to the financial statements were not included in the appropriate disclosure sections of the codification. Contains various other minor amendments to codification that are not expected to have a significant effect on current accounting practice.

Dec. 31, 2022

Permitted

Goodwill Impairment Testing (ASU 2017-04)

Removes step two – the requirement to perform a hypothetical purchase price allocation when the carrying value of a reporting unit exceeds its fair value – of the goodwill impairment test.

Clarifying standards:

ASU 2019-10 – Deferral of effective dates.

Tests performed on or after Jan. 1, 2023

Permitted for interim or annual goodwill impairment tests performed on testing dates on or after Jan. 1, 2017

Credit Losses (ASU 2016-13)

Replaces the incurred loss model with the CECL model for financial assets, including trade receivables, debt securities, and loan receivables.

Clarifying standards:

ASU 2018-19 – Clarifies the effective date for non-PBEs and that impairment of operating lease receivables is in the scope of ASC Topic 842, “Leases,” and not the CECL model.

ASU 2019-04 – Provides specific improvements and clarifications to the guidance in Topic 326. Addresses accrued interest, transfers between classifications or categories for loans and debt securities, recoveries, vintage disclosures, and contractual extensions and renewal options.

ASU 2019-05 – Targeted transition relief provides an option to irrevocably elect the fair value option, on an instrument-by-instrument basis, for certain financial assets (excluding held-to-maturity debt securities) previously measured at amortized cost.

ASU 2019-10 – Deferral of effective dates.

ASU 2019-11 – Provides specific improvements and clarifications to the guidance in Topic 326. Addresses expected recoveries for purchased financial assets with credit deterioration, transition relief for troubled debt restructurings, disclosures related to accrued interest receivables, financial assets secured by collateral maintenance provisions, and conforming cross-references to Subtopic 805-20.

ASU 2020-03 – Aligns contractual term to measure expected credit losses for a net investment in a lease to be consistent with the lease term determined under Topic 842. Clarifies that when an entity regains control of financial assets sold, an allowance for credit losses should be recorded.

Dec. 31, 2023

 

 

 

 

 

 

 

 

For ASU 2019-04, ASU 2019-05, ASU 2019-11, and ASU 2020-03, March 31, 2020, for entities that have adopted ASU 2016-13; otherwise, effective dates the same as ASU 2016-13

Permitted as of the fiscal years beginning after Dec. 15, 2018, including interim periods within

Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06)

Clarifies the accounting for certain financial instruments with characteristics of liabilities and equity. The amendments reduce number of accounting models for convertible debt instruments and convertible preferred stock. The cash conversion and beneficial conversion feature models were removed. Limiting the accounting models will result in fewer embedded conversion features being separately recognized from the host contract. Improves disclosure requirements for convertible instruments and earnings-per-share guidance. Revises derivatives scope exception guidance to reduce form-over- substance-based accounting conclusions driven by remote contingent events.

March 31, 2024

Permitted as of the fiscal years beginning after Dec. 15, 2020, including interim periods within

Long-Duration Insurance Contracts (ASU 2018-12)

Revises the accounting for life insurance and annuity contracts by eliminating the method of locking in liability assumptions and the premium deficiency test for traditional and limited-payment contracts, among other methodology changes. Requires additional disclosure.

Clarifying standards:

ASU 2019-09 – Deferral of effective dates.

ASU 2020-11 – Deferral of effective dates.

Dec. 31, 2025

Permitted