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Financial Reporting and Regulatory Update

Second Quarter 2019

ASU Effective Dates Checklist

Public Business Entities (PBEs)

Accounting Standards Update (ASU)

Effective dates for
Dec. 31 year-end PBEs

Early adoption

Codification Improvements (ASU 2018-09)

Contains 30 improvements in all, including income taxes for certain quasi reorganizations, fair value option debt extinguishments, financial instruments, excess tax benefits, tax allocation methods, offsetting derivative assets and liabilities, transfer restrictions for fair value measurement, balance sheet offsetting for broker-dealers, and valuation for a stable value common collective trust fund.

Varies by issue (see pages 8 and 9 of the ASU)

March 31, 2018

Upon issuance, July 16, 2018

March 31, 2019
Permitted, including in an interim period

Revenue Recognition (ASU 2014-09)

For all entities, the transaction- and industry-specific recognition methods are eliminated and revenue is recognized by applying a defined principles-based approach.

Clarifying standards:

ASU 2015-14 – Deferral of Effective Date

ASU 2016-08 – Principal Versus Agent Considerations (Gross Versus Net Reporting)

ASU 2016-10 – Identifying Performance Obligations and Licensing

ASU 2016-11 – Rescission of Certain SEC Guidance in Topic 605 (Staff Announcements at March 3, 2016, EITF Meeting)

ASU 2016-12 – Narrow-Scope Improvements and Practical Expedients

ASU 2016-20 – Technical Corrections and Improvements

ASU 2017-14 – Rescission of SEC SAB Topics 8 and 13 and

bill-and-hold guidance; revision of SAB Topic 11.A and SEC guidance for certain vaccine manufacturers
 
March 31, 2018[1]
 

Permitted only as of annual periods

beginning after Dec. 15, 2016, including interims within
Derecognition and Partial Sales of Nonfinancial Assets (ASU 2017-05)
Primarily applies to the real estate industry but can impact other entities. Clarifies the scope of Subtopic 610-20 by defining an “in substance nonfinancial asset” and provides guidance on partial sales, such as when an entity retains an equity interest in the entity that owns the transferred nonfinancial assets.
March 31, 2018, consistent
with ASU 2014-09
Permitted only as of annual periods
beginning after Dec. 15, 2016, including interims within
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 asset 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.

March 31, 2019[2]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For ASU 2019-01, March 31, 2020, except for transition disclosure amendments which are consistent with ASU 2016-02
Permitted

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.
March 31, 2019 Permitted, including in an interim period

Financial Instruments With Down-Round Features (Part I) and Scope Exception for Certain Mandatorily Redeemable Financial Instruments (Part II)

(ASU 2017-11)

Part I – Simplifies the accounting for certain financial instruments with down-round features by eliminating the requirement to consider the down-round feature in the liability or equity classification determination.

For entities that present earnings per share (EPS), requires the effect of the down-round feature in a warrant or other freestanding equity-classified instrument to be presented as a dividend and an adjustment to EPS when it is triggered. Regardless of whether the entity presents EPS, requires the effect of the down-round feature in a convertible instrument such as debt or preferred stock to follow existing guidance for contingent beneficial conversion features and be presented as a discount to the convertible instrument with an offsetting credit to paid-in capital when it is triggered.

Part II – Changes the indefinite deferral available to private companies with mandatorily redeemable financial instruments and certain noncontrolling interests to a scope exception, which does not have an accounting effect.
March 31, 2019 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.
March 31, 2019 Permitted, including in an interim period

Additional Benchmark Interest Rate for Hedging (ASU 2018-16)

Expands the number of benchmark interest rates that can be used in accounting hedge designations to include the Overnight Index Swap (OIS) rate based on the Secured Overnight Financing Rate (SOFR) and stems from concerns about the sustainability of the London Interbank Offered Rate (LIBOR).

March 31, 2019 (consistent

with ASU 2017-12)
Permitted, including in an interim period, if ASU 2017-12 was early adopted

Certain Deferred Taxes for Steamship Entities (ASU 2017-15)

Requires steamship entities to recognize any remaining deferred taxes on certain statutory reserve deposits in accordance with Topic 740.
March 31, 2018 Permitted, including in an interim period

Tax Reform – Reclassification of Stranded Tax Effects in AOCI (ASU 2018-02)

An entity may elect to reclassify stranded tax effects in AOCI specifically affected by the Tax Cuts and Jobs Act from AOCI to retained earnings, instead of recognizing those effects in earnings.
March 31, 2019 Permitted, including in an interim period

Nonemployee Stock Compensation Simplifications (ASU 2018-07)

Aligns the accounting guidance for nonemployee stock payments with the guidance for employee stock compensation in ASC Topic 718.
March 31, 2019 Permitted, including in an interim period, but no earlier than the adoption of Topic 606
Contributions Received and Made for Not-for-Profit Entities (ASU 2018-08)
Improves the guidance on contributions and exchange transactions. Although the ASU primarily effects not-for-profit entities, it applies to all entities, including business entities, that receive or make contributions of cash and other assets.
March 31, 2019 (see the ASU for noncalendar yea-end effective dates because they vary for contributions received and contributions made.) 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.
For SEC filers, tests performed on or after Jan. 1, 2020
For PBEs that are not SEC filers, tests performed on or after Jan. 1, 2021
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 current expected credit loss (CECL) model for financial assets, including trade receivables, debt securities, and loan receivables.

Clarifying standards:

ASU 2018-19 – Clarifies 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.

For SEC filers, March 31, 2020

For PBEs that are not SEC filers, March 31, 2021

 

 

 

 

 

For ASU 2019-04 and ASU 2019-05, 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
Fair Value Measurement Disclosure
(ASU 2018-13)
Removes, modifies, or adds certain fair value measurement disclosures related to financial instrument transfers and Level 3 instruments, among others.
March 31, 2020 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.
March 31, 2020 Permitted, including in an interim period
Variable Interest Entity (VIE) Model – Targeted Improvements for Related Parties
(ASU 2018-17)
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).
March 31, 2020 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 separate from revenue outside its scope.
March 31, 2020 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.
March 31, 2020 Permitted, including in an interim period

Improvements to Recognition and Measurement of Financial Instruments (ASU 2019-04)

Contains various improvements to ASU 2016-01, including scope, fair value measurement alternative, held-to-maturity debt securities fair value disclosures, and remeasurement of equity securities at historical exchange rates. (Also contains clarification and improvements to ASU 2016-13 and ASU 2017-12, which are included as clarifying standards.)
March 31, 2020 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, 2020 Permitted

Updating the Definition of Collections

(ASU 2019-03)

Improves the definition of collections. Requires additional disclosure. Although the ASU primarily affects not-for-profits, it applies to all entities that maintain collections.
March 31, 2021 Permitted

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.
March 31, 2021 Permitted
 
[1] As codified in ASU 2017-13, in an SEC staff announcement at the July 20, 2017, EITF meeting specifically related to PBEs that qualify as a PBE solely due to a requirement to include or the inclusion of its financial statements or financial information in another entity’s SEC filing (“certain PBEs”), the SEC stated that it will allow certain PBEs to elect to apply the non-PBE effective dates for the revenue recognition and lease accounting standards only. For certain PBEs, the revenue recognition guidance is effective for Dec. 31, 2019, annual financial statements for calendar year-end entities.
[2] As codified in ASU 2017-13, in an SEC staff announcement at the July 20, 2017, EITF meeting specifically related to PBEs that qualify as a PBE solely due to a requirement to include or the inclusion of its financial statements or financial information in another entity’s SEC filing (“certain PBEs”), the SEC stated that it will allow certain PBEs to elect to apply the non-PBE effective dates for the revenue recognition and lease accounting standards only. For certain PBEs, the lease accounting standard is effective for Dec. 31, 2020, annual financial statements for calendar year-end entities.