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Current Developments:

December 2016

US

Financial statement preparers and the SEC staff are gearing up for 2016 year-

end financial reporting. The staff indicated that it will continue to focus on non-GAAP

financial measures, internal control over financial reporting, and disclosures about

recently issued accounting standards.

Financial statement preparers are preparing to implement major new accounting standards

(i.e., revenue, lease accounting, and financial instruments), while the FASB is shifting its

standard-setting efforts to targeted and foundational issues, such as the accounting for income taxes

on intercompany transfers and determining the primary beneficiary for a variable interest entity.

Our publication summarizes these and other accounting and financial reporting

developments that potentially affect you and your company in the current period or near term.

© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Contents

Current Quarter Financial Reporting Matters .................................................................................... 22016 AICPA National Conference Highlights ......................................................................................................................... 2

SEC Staff Comment Letter Focus Areas ............................................................................................................................... 2

SEC Staff Updates Financial Reporting Manual ���������������������������������������������������������������������������������������������������������������������3

Other SEC Activities .............................................................................................................................................................. 3

CAQ SEC Regulations Committee Meetings ......................................................................................................................... 4

Updated Pension Mortality Tables ......................................................................................................................................... 4

2016 Financial Reporting Reminders ..................................................................................................................................... 5

Audit Committee Transparency Report ................................................................................................................................. 6

Upcoming Financial Reporting Matters ............................................................................................. 7Continuing the Discussion about Revenue ........................................................................................................................... 7

Adopting the Lease Accounting Standard .............................................................................................................................. 8

Getting Started on Financial Instruments .............................................................................................................................. 8

FASB Changes Accounting for Income Taxes on Intercompany Transfers ............................................................................ 9

FASB Makes Targeted Change to the Primary Beneficiary Analysis ...................................................................................... 9

FASB Clarifies Presentation of Restricted Cash in the Statement of Cash Flows .................................................................. 9

Other Changes for 2017 ........................................................................................................................................................ 9

Looking Ahead ................................................................................................................................... 11Proposed Scope Clarification for Share-Based Payment Modifications ............................................................................... 11

Proposed Targeted Improvements for Long-Duration Insurance Contract Accounting ........................................................ 11

Proposed Changes to Accounting for Purchased Callable Debt Securities .......................................................................... 11

Proposed Changes to Accounting for Financial Instruments with Down-Round Features ................................................... 12

Emerging Issues Task Force (EITF) Activities ...................................................................................................................... 12

Recommended Reading and CPE Opportunities ............................................................................. 13Current Expected Credit Losses (CECL) Implementation: Looking Forward ........................................................................ 13

The SALT-BEPS Connection—Country by Country and Master File Reporting .................................................................... 13

Good Cybersecurity Doesn’t Try to Prevent Every Attack .................................................................................................... 13

Moving from On Premise to Cloud ...................................................................................................................................... 13

Upcoming CPE Opportunities .............................................................................................................................................. 13

Appendix – Accounting Standards Effective Dates ......................................................................... 14Accounting Standards Affecting Public Companies in 2016 ................................................................................................ 14

Accounting Standards Affecting Public Companies in 2017 and Beyond ............................................................................. 15

Accounting Standards Affecting Private Companies in 2016 .............................................................................................. 17

Accounting Standards Affecting Private Companies in 2017 and Beyond ........................................................................... 18

Current Developments: US / December 2016 | 1© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

01 Current Quarter Financial Reporting Matters

2016 AICPA National Conference Highlights

The AICPA recently held its National Conference on Current SEC and PCAOB Developments, which featured speakers from regulators, standard setters, preparers, auditors, and others who discussed recent developments in accounting, auditing, and financial reporting.

Importance of high quality financial reporting

The Chief Accountant of the SEC’s Office of the Chief Accountant explained that the U.S. public capital markets function best when investors have the benefit of high quality financial information that is credible and reliable. He discussed the vital role that preparers, auditors, audit committee members, regulators, and others serve in meeting investor needs for reliable financial information.

Internal control over financial reporting (ICOFR)

Many speakers emphasized the importance of ICOFR in preparing high quality financial information, particularly as companies adopt new accounting standards. Additionally, speakers emphasized the importance of the different roles that preparers, auditors, and audit committees play to ensure strong ICOFR. See additional discussion in Internal control over financial reporting (ICOFR).

Non-GAAP financial measures

Regulators continue to focus attention on non-GAAP financial measures. The SEC released guidance earlier this year for preparers, and while the SEC staff has observed substantial progress, the staff and others said that there is still much progress that needs to be made related to the appropriateness of non-GAAP financial measures, their prominence, and effectiveness of disclosure controls and procedures. See additional discussion in Non-GAAP financial measures.

Implementing new accounting standards

Speakers dedicated significant time to implementation of new accounting standards. They focused on the new revenue requirements in Topic 606, particularly because of its significant effect on financial statements and the imminent adoption date. The new lease and credit loss standards also were discussed.

For More Information: Issues & Trends: 2016 AICPA National Conference on Current SEC and PCAOB Developments

SEC Staff Comment Letter Focus Areas

The SEC staff has frequently commented on certain matters in its recent filing reviews.

Non-GAAP financial measures

Comments about non-GAAP financial measures have increased since May when the SEC published additional Compliance & Disclosure Interpretations (C&DIs) that describe prohibited practices. Comment letters have focused on inconsistencies with those C&DIs, including:

• Presenting non-GAAP financial measures more prominentlythan GAAP measures.

• Providing potentially misleading financial measures, forexample:

– Excluding normal operating expenses;

– Computing the measures inconsistently between periods;

– Including gains, but excluding charges; and

– Tailoring individual accounting principles.

• Disclosing per share non-GAAP liquidity measures, whichare prohibited.

• Presenting earnings before interest and taxes; earningsbefore interest, taxes, depreciation, and amortization; orfree cash flow that is not reconciled to GAAP measures.

Current Developments: US / December 2016 | 2© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Current Quarter Financial Reporting Matters

In addition, the Division of Enforcement’s fraud task force has begun investigating for possible securities laws violations for certain registrants that have not followed the rules about equal or greater prominence.

The CAQ released new tools to help stakeholders, including audit committees, management, investors, and auditors, assess management’s presentation of non-GAAP measures. The tools include questions for stakeholders to consider when assessing the usefulness, appropriateness, and accuracy of non-GAAP measures presented.

Registrants and their audit committees should review how they report non-GAAP measures to determine whether they are following the SEC’s rules and interpretations. Companies should have appropriate internal controls over how they develop and report non-GAAP financial measures to address compliance with the rules, disclosure transparency and consistency, and review and monitoring of the company’s preparation of non-GAAP measures.

For More Information: C&DIs, Defining Issues 16-20, and CAQ Press Release

Internal control over financial reporting (ICOFR)

The SEC staff also continues to comment on certain aspects of a registrant’s ICOFR, including:

• Inconsistency between conclusions, e.g., concluding thatdisclosure controls and procedures were ineffective butICOFR was effective, and vice versa;

• Description of control failures that were inadequate,including insufficient detail and description about (1) thenature of the material weaknesses and their effect onfinancial reporting and internal control and (2) management’sremediation plans;

• Material changes in ICOFR that were not disclosed; and

• Administrative or clerical deficiencies (e.g., failure to disclosewhich framework the company used, incorrect assessmentdate, missing reports and disclosures, nonconformingmanagement certifications or definitions, and disclosure ofchanges in internal controls that address the year-to-dateperiod instead of the required quarterly period).

Other SEC staff focus areas

The SEC staff also has frequently commented on:

• Management discussion and analysis;

• Fair value disclosure;

• Income tax disclosure;

• Intangible assets and goodwill;

• Revenue recognition; and

• Segment identification and disclosure.

SEC eliminates Tandy Representations from comment letters

The SEC staff recently announced that it no longer requires a company to include Tandy language in response to SEC filing review comment letters. The staff previously required a company to acknowledge in writing that the disclosure in its filed document is its responsibility, and to state that the company would not raise the SEC review process and acceleration of effectiveness as a defense in a legal proceeding. In its future comment letters, the SEC staff will remind the company and its management of their responsibility for the accuracy and adequacy of disclosures.

For More Information: SEC Staff Announcement

SEC Staff Updates Financial Reporting Manual

The staff of the SEC’s Division of Corporation Finance recently updated its Financial Reporting Manual, which provides general guidance about financial reporting topics. The revised manual includes:

• Guidance about pro forma financial information for asignificant acquisition after retrospective adoption of thenew revenue standard;

• Guidance about the new lease accounting standard to clarifythat reissuance of financial statements on Form S-3 doesnot change the date of initial application of the accountingstandard;

• Guidance about omitting the 10-year property-casualty lossreserve development tables after a company provides theclaims development tables required by the short-durationinsurance contracts standard;

• Updates for recent C&DIs about non-GAAP financial measures;

• Explanation of how losing smaller reporting company statusaffects accelerated filer determination and filing due dates;and

• Clarification about filing requirements after effectiveness ofForm 10.

For More Information: Financial Reporting Manual

Other SEC Activities

Recent C&DIs

The SEC staff recently issued C&DIs that:

• Allow a company to post an electronic version of its annualreport to its corporate Web site in lieu of mailing paper copiesor submitting it via EDGAR to satisfy the SEC’s solely for itsinformation submission requirement. As long as the reportremains accessible for at least one year after posting, theSEC staff will consider it to be available for its information.

• Address how a registrant may select and calculate aconsistently applied compensation measure to identify itsmedian employee for certain pay ratio disclosures.

Current Developments: US / December 2016 | 3© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Current Quarter Financial Reporting Matters

• Discuss the requirements of Form S-8.

• Clarify small offerings requirements under Regulations Aand D.

• Address Exchange Act guidance applicable to foreignprivate issuers.

• Discuss views related to Rule 144A for private re-sales ofsecurities to institutions.

• Update guidance for issuers that are part of theEuropean Union.

For More Information: C&DIs

Reforms about investments in money market funds are effective

New rules for money market funds became effective in October. These rules require institutional money market funds to use a floating net asset value (NAV) rather than a stable NAV, allow funds to temporarily suspend or gate redemptions, and require nongovernmental funds to impose liquidity fees in some instances.

The SEC rule clarifies that, under normal circumstances, an investment in a money market fund qualifies as a cash equivalent. This includes money market funds that use a floating NAV and those that can impose a fee or gate. However, companies that invest in money market funds may need to classify their investments in these funds as investments, rather than cash equivalents, if events give rise to credit and liquidity issues.

Because institutional money market funds must now report a floating NAV, companies that invest in them will need to recognize unrealized gains and losses related to changes in NAV either through earnings (e.g., for trading securities) or through other comprehensive income (e.g., for available-for-sale securities). However, the SEC expects the resulting unrealized gains and losses to be small under normal circumstances.

For More Information: SEC Money Market Reform Rule and KPMG’s SEC’s Money Market Reform Will Have Big Impact on Money Funds

Rules address intrastate and small offerings

The SEC recently adopted rules and amendments that:

• Update and modernize the existing intrastate offeringframework, which permits a company to raise money frominvestors within its state without concurrently registering theoffers and sales at the federal level.

• Increase from $1 million to $5 million the aggregate amountof securities that a company may offer and sell via an exemptoffering in a 12-month period. The exemption is available tocompanies that are not Exchange Act reporting companies,investment companies, or blank check companies.

For More Information: Final SEC Rule and SEC Fact Sheet

CAQ SEC Regulations Committee Meetings

The CAQ SEC Regulations Committee met in June and September 2016 and discussed reporting matters including:

• SEC staff’s continued focus on Non-GAAP financialmeasures. See discussion in Non-GAAP financial measures.

• Changes in ICOFR when preparing to adopt newaccounting standards. The Committee and the SEC staffdiscussed whether the requirement to disclose changesin ICOFR would apply to changes that took place before acompany adopted a new standard. The staff indicated that itis evaluating whether additional guidance is necessary.

• Revised financial statements when a registrant files aForm S-3 registration statement after retrospectivelyadopting the new revenue standard. Specifically, theCommittee discussed a provision in U.S. GAAP that allows acompany not to report all prior periods retrospectively if it isimpracticable to do so. A company may, but is not requiredto, consult with the SEC staff if the company concludes thatit is impracticable to revise a prior period.

• Different adoption dates of the new revenue standard byequity method investees and investors. The Committeehighlighted various scenarios in which an acquired businessor significant equity method investee would be deemed apublic business entity and thus may need to adopt the newrevenue standard before the registrant (acquirer/investor)adopts it – e.g., if the registrant is an emerging growthcompany. The SEC staff stated that it is evaluating thesescenarios and will consider whether guidance is necessary.

• Updates for the new revenue standard. The SEC staff isconsidering whether and how the new revenue standardaffects various rules, regulations, and staff positions,including SAB Topic 13, Revenue Recognition.

For More Information: KPMG Observations on SEC Related Matters for June and September 2016

Updated Pension Mortality Tables

The Society of Actuaries (SOA) recently issued the 2016 Mortality Improvement Scale, which accompanies its most recent Mortality Table. The updated scale reflects a decrease in the rate of improvement in U.S. life expectancies compared with the 2015 Mortality Improvement Scale. The SOA indicated that applying the new scale to a typical benefit plan would reduce companies’ benefit obligations by up to 2%. Companies should consider the SOA’s new data for U.S.-based defined benefit pension and other postretirement benefit plans when making their mortality assumptions for year-end 2016 financial reporting.

For More Information: Mortality Improvement Scale

Current Developments: US / December 2016 | 4© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Current Quarter Financial Reporting Matters

2016 Financial Reporting Reminders

In the first quarter of 2016, calendar year-end public companies were required to adopt new standards, including those that modified consolidation guidance and changed the presentation of debt issuance costs, as well as several other narrowly scoped standards. In addition, U.S. GAAP requires all companies to perform a going concern analysis for annual financial statements beginning with their year-end 2016 financial statements. The Appendix – Accounting Standards Effective Dates lists the accounting standards that public and private companies each need to adopt in 2016 and in the future.

Companies should also consider the implications of Brexit and disclosures about recently issued but not-yet-adopted accounting standards (i.e., SAB 74 disclosures) when preparing their 2016 financial statements.

New consolidation guidance

The new consolidation guidance:

• Changes how a company evaluates whether limitedpartnerships (and similar legal entities) are variable interestentities (VIEs);

• Eliminates the presumption that the general partner of alimited partnership that is not a VIE should consolidate thatpartnership; and

• Changes the analysis for determining when fees paid to adecision maker (or service provider) represent a variableinterest in a VIE and how interests of related parties affectthe primary beneficiary determination.

• Companies generally need to reconsider and re-documenttheir consolidation conclusions because the bases for thoseconclusions are likely to change, even if the conclusionsdo not.

For More Information: ASU 2015-02, Defining Issues 15-6, and Webcast

Presentation of debt issuance costs

Companies are now required to present debt issuance costs as a reduction from the related debt liability, similar to the presentation of debt discounts. Companies will continue to amortize these costs to interest expense using the effective interest method. However, the SEC staff would not object if a company presents debt issuance costs associated with a line-of-credit arrangement as an asset, regardless of whether there are outstanding borrowings under that arrangement.

For More Information: ASU 2015-03, ASU 2015-15, Defining Issues 15-14, and Podcast

Going concern

U.S GAAP now requires management to assess, at each interim and annual reporting period, whether substantial doubt exists about the company’s ability to continue as a going concern. Substantial doubt exists if it is probable

that the company will be unable to meet its obligations as they become due within one year after the date the financial statements are issued or available to be issued (assessment date). Management needs to consider known (and reasonably knowable) events and conditions at the assessment date. If management determines that there is substantial doubt about the company’s ability to continue as a going concern, the company must disclose certain information even if management has plans that allow it to overcome substantial doubt.

Despite the fact that the auditing standards require a one-year assessment from the balance sheet date rather than from the financial statement issuance date, and the accounting standard defines substantial doubt, the new accounting standard substantially aligns the accounting requirements with current auditing requirements.

The Auditing Standards Board (ASB) is in final deliberations about a private company auditing standard, which would address the auditors’ responsibilities related to going concern. Among other things, the proposal would:

a. Require the auditor to evaluate going concernuncertainties by referencing the accounting frameworkused by the company (e.g., if a company has adopted thenew going concern accounting standard, the auditor wouldevaluate the existence of substantial doubt using thedefinition in the new accounting standard); and

b. Provide guidance related to interim financial information.

The ASB expects the proposed auditing standard to become effective for audits of financial statements for periods ending on or after December 15, 2017, and for interim periods beginning thereafter.

For More Information: ASU 2014-15 and Defining Issues 14-40

Brexit financial reporting implications

The British citizen vote to leave the European Union (i.e., Brexit) created political and economic uncertainty about the restructuring of the framework of the United Kingdom’s engagement with the European Union. Companies should consider the potential effects of the Brexit decision on asset valuations, inventory values, profitability of executory contracts, deferred tax asset recognition, recoverability of receivables, hedge effectiveness testing, going concern assessments, and covenant compliance. Companies also should consider the effects on their short- and long-term business strategies and commitments.

SEC registrants should consider these factors and uncertainties when preparing their disclosures about material changes in risk factors; risks and uncertainties; and known trends, demands, commitments, events, or uncertainties that are reasonably likely to have a material effect on liquidity or capital resources.

For More Information: Brexit: Financial Reporting Implications

Current Developments: US / December 2016 | 5© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Current Quarter Financial Reporting Matters

Recently issued but not-yet-adopted accounting standards

The SEC staff recently announced that when the effect of adopting a new accounting standard is not known or reasonably estimable, a registrant should consider additional qualitative financial statement disclosures to assist users in determining the significance that adoption will have on the financial statements. The SEC staff expects disclosures to:

• Describe the effect of the accounting policies that theregistrant expects to apply, if determined, and

• Compare those accounting policies with the currentaccounting policies.

The SEC staff also indicated that a registrant should describe:

• Its progress in implementing the new standards, and

• Significant implementation matters that it still needs toaddress.

The SEC staff intends for registrants to apply the announcement to 2016 year-end financial statements. In particular, the SEC staff announcement applies to the new standards on revenue, lease accounting, and financial instruments.

For More Information: Defining Issues 16-32

Audit Committee Transparency Report

The CAQ and Audit Analytics recently released a report that shows improvement and greater transparency in audit committee disclosures. Key findings about S&P 500 companies include:

• Thirty-one percent presented enhanced discussion aboutthe audit committee’s considerations in recommending theappointment of the audit firm, up from 25% in 2015 and 13%in 2014;

• Seventeen percent explicitly stated the role that auditcommittees play in negotiating audit fees, up from 16% in2015 and 8% in 2014; and

• Thirty-four percent disclosed the criteria that auditcommittees used to evaluate and supervise the audit firm,up from 24% in 2015 and 8% in 2014.

The report also includes examples of leading disclosure practices, which evidence that audit committees continue to tailor their disclosures to reflect a company’s facts and circumstances rather than relying on generic disclosures.

For More Information: Audit Committee Transparency Report and Companion Video

Current Developments: US / December 2016 | 6© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

02 Upcoming Financial Reporting Matters

Continuing the Discussion about Revenue

The FASB Transition Resource Group for Revenue Recognition (TRG) recently held its final scheduled meeting. None of the topics discussed will result in standard setting but the discussion provided helpful considerations about a number of implementation questions. The TRG observed that:

• Sales- or usage-based royalties for intellectual property (IP)that include a minimum guarantee will require judgment todetermine the pattern of revenue recognition.

• The amortization period for incremental costs of obtaininga contract will extend beyond the initial contract term whenthere is a history of renewals, unless the commission paidon renewals is commensurate with the commission on theinitial contract.

• Nonrefundable up-front payments to customers should becapitalized and amortized as a reduction of revenue over aperiod longer than the contract period in certain situations.

• Over time revenue recognition is required for manymanufacturers of customized tangible products and otherentities when specific criteria are met, even if thosemanufacturers or entities currently recognize revenue whenthe products are delivered.

Separately, before year-end, the FASB is expected to issue another standard with technical corrections and improvements related to the new revenue standard. The technical corrections will:

• Allow companies to determine a contract loss on long-termconstruction- and production-type contracts at either thecontract level or the performance obligation level.

• Clarify that the new revenue guidance would not be requiredfor contracts within the scope of the insurance CodificationTopic or for loan guarantee fees, but would be required forfixed-odds wagering contracts.

• Reinstate previously superseded guidance (outside theRevenue Topic) about accruing advertising costs whenrevenue transactions created those obligations (e.g., co-opadvertising).

• Clarify guidance related to impairment testing for costs toobtain a customer and fulfillment costs.

The FASB also decided to provide additional optional exemptions from the requirement to disclose quantitative information about transaction price allocated to remaining performance obligations. Certain variable consideration that is not estimated under the new standard will not need to be disclosed. However, additional qualitative disclosures are required if a company elects not to provide the quantitative disclosures.

While redeliberating the technical corrections, the FASB decided to retain the current guidance about capitalizing pre-production costs related to long-term supply arrangements. The FASB had previously proposed to supersede this guidance on adoption of the new standard but became concerned about unintended consequences. The FASB staff plans to conduct outreach to decide whether it should propose additional changes.

For 2016 year-end financial statements, public companies should consider whether their disclosures about adopting the new revenue standard provide enough information to assist financial statement users in assessing the effect that the standard will have. See Recently issued but not-yet-adopted accounting standards�

For More Information: Revenue: Issues In-Depth, Defining Issues 16-36, and Defining Issues 16-33

Current Developments: US / December 2016 | 7© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Upcoming Financial Reporting Matters

Adopting the Lease Accounting Standard

The new lease accounting standard is not effective for public companies until fiscal years beginning after December 15, 2018 (i.e., 2019 for calendar year-end public companies), and one year later for all other entities. However, companies should consider whether to early adopt the new standard.

Considerations for early adopting the new lease accounting standard include:

• Lessees and lessors may want to adopt the new leaseaccounting and revenue standards concurrently to minimizethe extent of systems and process changes, and providefinancial statement users with more comparable year-over-year information.

• Lessors may be particularly interested in concurrentlyadopting the leases and revenue standards because keyaspects of the two models are substantially aligned (e.g.,the guidance about separating contract components andallocating consideration to those components, identifyingcosts that are eligible for capitalization, and contractmodifications). Early adoption may permit companies tobenefit from the synergies between the revenue and leaseguidance sooner, and avoid complexities that could arisefrom continuing to apply a lessor model not aligned with therevenue guidance.

• Lessees may want to take advantage of the revised guidanceand transition provisions for sale-leaseback transactions andbuild-to-suit leasing arrangements sooner rather than later.

SEC registrants, particularly lessees, also need to consider the requirement to disclose the expected effect of the new lease accounting standard on their financial statements. In most cases, a boilerplate disclosure that a company is ‘evaluating the effects of the new standard’ without providing more detailed information will not be sufficient because current operating lease disclosures contain significant information about the magnitude of a company’s operating leases that will need to be recognized on the balance sheet when a registrant adopts the new standard. See Recently issued but not-yet-adopted accounting standards�

For More Information: Leases: A Step Closer to Understanding

Getting Started on Financial Instruments

The FASB’s overhaul of accounting for credit impairment will significantly affect financial institutions and other companies that originate or invest in financial assets such as loans, receivables, and debt securities measured at amortized cost. The new current expected credit loss model will require companies to recognize an estimate of credit losses expected to occur over the remaining life of the financial assets.

The credit loss standard is not effective until 2020 for public business entities. However, companies most affected by the

standard (such as banks and other financial institutions) need to promptly begin analyzing its implications. To get started, companies should:

• Gain an understanding of the new standard;

• Identify the functional areas within the company that shouldparticipate in the planning and implementation of the newstandard;

• Draft a timeline of implementation activities and milestones;

• Begin discussing expectations with regulators, including theeffect on regulatory capital;

• Consider what current data and processes may beleveraged; and

• Consider what additional data they may need to collect todevelop historical loss information used to prepare the newestimate of credit loss.

Companies may need to collect more data, and significantly change their systems, processes, and internal controls to comply with the requirements of the new standard.

In addition, companies that invest in equity securities should begin to analyze their portfolio to understand the potential effects of the recognition and measurement standard. While the changes made by the new standard affect only certain limited areas, the changes may have a significant effect on those areas. For example, the measurement alternative for equity securities without a readily determinable fair value introduces a new concept into U.S. GAAP, cost basis adjusted for observable transaction prices. The new measurement alternative will likely be the source of the most significant changes to processes and controls.

While the recognition and measurement standard and the new credit loss standard are not effective until 2018 and 2020, respectively, public business entities should consider whether they have made appropriate disclosures related to these standards in their 2016 year-end financial statements. See Recently issued but not-yet-adopted accounting standards�

The FASB has proposed targeted improvements to hedge accounting that would provide additional opportunities for a company to align its hedge accounting with its risk management activities, and potentially reduce the cost and effort required to apply hedge accounting. The FASB is redeliberating the proposed changes based on the feedback received.

For More Information: Issues In-Depth 16-4, Q&As on Recognition and Measurement, Defining Issues 16-23, Proposed ASU, and Defining Issues 16-31

Current Developments: US / December 2016 | 8© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Upcoming Financial Reporting Matters

FASB Changes Accounting for Income Taxes on Intercompany Transfers

The FASB recently issued a standard that requires the seller and buyer to recognize at the transaction date the current and deferred income tax consequences of intercompany asset transfers (except transfers of inventory). Under current U.S. GAAP, the seller and buyer defer the consolidated tax consequences of an intercompany asset transfer from the period of the transfer to a future period when the asset is transferred out of the consolidated group, or otherwise affects consolidated earnings.

This standard will cause volatility in companies’ effective tax rates, particularly for those that transfer intangible assets to foreign subsidiaries.

For public business entities, the new standard is effective for annual and interim periods in fiscal years beginning after December 15, 2017. For all other entities, it is effective for annual periods in fiscal years beginning after December 15, 2018, and interim periods in fiscal years beginning after December 15, 2019. An entity may early adopt the standard but only at the beginning of an annual period for which it has not issued or made available for issuance financial statements (interim or annual).

For More Information: ASU 2016-16 and Defining Issues 16-34

FASB Makes Targeted Change to the Primary Beneficiary Analysis

To determine whether it is the primary beneficiary, a new standard requires a single decision maker or service provider to consider indirect interests held through related parties under common control proportionately (rather than in their entirety as under current U.S. GAAP).

For public business entities, the new standard is effective for annual and interim periods in fiscal years beginning after December 15, 2016. For all other entities, it is effective for annual periods in fiscal years beginning after December 15, 2016, and interim periods in fiscal years beginning after December 15, 2017. Entities can adopt the new standard on issuance, including in an interim period. However, if an entity adopts in an interim period other than the first interim period, it should compute and reflect the cumulative effect of the accounting change as of the beginning of the fiscal year that includes that interim period.

In addition, the FASB recently discussed whether to add a potential scope exception to applying VIE guidance to entities under common control for private entities only. Private companies could see significant relief from the complexities of the VIE guidance if the FASB were to provide the scope exception. In addition, the Board is considering whether to remove the related party tie-breaker test to determine which related party is more closely associated with the VIE and other targeted simplifications. The FASB staff will perform outreach to gather feedback on these potential changes.

For More Information: ASU 2016-17 and Defining Issues 16-35

FASB Clarifies Presentation of Restricted Cash in the Statement of Cash Flows

The FASB recently issued a standard that requires companies to include cash (and cash equivalents) that have restrictions on withdrawal or use in total cash (and cash equivalents) on the statement of cash flows. The standard does not define restricted cash or restricted cash equivalents, but companies will need to disclose the nature of the restrictions.

The clarification is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2017. For all other entities, it is effective for fiscal years beginning after December 15, 2018, and interim periods in fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. If a company early adopts the amendments in an interim period, it should reflect adjustments as of the beginning of the fiscal year that includes that interim period.

For More Information: ASU 2016-18 and Defining Issues 16-32

Other Changes for 2017

In the first quarter of 2017, calendar year-end public companies will need to adopt several standards intended to simplify or clarify accounting requirements.

• Simplifying the measurement of inventory (ASU 2015-11)changes inventory measurement from the lower of cost ormarket to lower of cost or net realizable value. The guidanceapplies to only inventory measured using first-in, first-out(FIFO) or average cost.

• Presentation of deferred taxes as noncurrent (ASU 2015-17)requires companies to offset all deferred tax assets and liabilities(and valuation allowances) for each tax-paying jurisdiction within each tax-paying component and present the net deferred tax as a single noncurrent amount.

• Effects of derivative contract novations on existinghedge accounting relationships (ASU 2016-05) clarifiesthat a change in one of the parties to a derivative contract(through novation) that is part of a hedge accountingrelationship does not, by itself, require de-designation of thatrelationship if all other hedge accounting criteria continue tobe met.

• Contingent put and call options in debt instruments(ASU 2016-06) clarifies that determining whether theeconomic characteristics of a put or call are clearly andclosely related to its debt host requires only an assessmentof the four-step decision sequence outlined in FASB ASCparagraph 815-15-25-24. Additionally, companies are notrequired to assess separately whether the contingency itselfis clearly and closely related.

Current Developments: US / December 2016| 9© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Upcoming Financial Reporting Matters

• Simplifying the transition to the equity method ofaccounting (ASU 2016-07) eliminates the requirement foran investor to retroactively apply the equity method when itsincrease in ownership interest (or degree of influence) in aninvestee triggers equity method accounting.

• Improvements to employee share-based paymentaccounting (ASU 2016-09) simplifies the accounting forshare-based payment transactions. Under the new standard,all companies:

– Will record all excess tax benefits and tax deficiencies asan income tax benefit or expense in the income statement (i.e., the standard eliminates the APIC pool), and classify excess tax benefits as an operating activity in the statement of cash flows;

– May elect an accounting policy to either estimate the number of forfeitures (current U.S. GAAP) or account for forfeitures when they occur;

– Can withhold up to the maximum individual statutory tax rate without classifying the awards as a liability; and

– Will classify the cash paid to satisfy the statutory income tax withholding obligation as a financing activity in the statement of cash flows.

The standard also provides additional practical expedients for nonpublic entities.

The Appendix – Accounting Standards Effective Dates provides a complete list of the FASB standards that companies need to adopt in the future.

Current Developments: US / December 2016 | 10© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

03 Looking Ahead

Proposed Scope Clarification for Share-Based Payment Modifications

The FASB recently proposed a clarification that would require a company to apply modification accounting unless three characteristics of a share-based payment award are the same immediately before and after a modification:

• Total fair value of the award;

• Vesting conditions; and

• Classification of the award (e.g., equity or liability).

The FASB proposed the clarification because the current definition of modification in U.S. GAAP is broad, which has led companies to apply the term inconsistently.

Under the proposal, a company would still be required to:

• Apply modification accounting to changes in awards made inresponse to new accounting standards, laws, or regulations;and

• Disclose significant changes in the terms or conditionsof a share-based payment award, even if it did not applymodification accounting.

The comment period ends January 6.

For More Information: Proposed ASU and Defining Issues 16-38

Proposed Targeted Improvements for Long-Duration Insurance Contract Accounting

The FASB recently proposed to change how insurance entities recognize, measure, present, and disclose long-duration insurance contracts. The changes would apply to only those insurance entities within the scope of U.S. GAAP guidance about accounting for insurance contracts, and would exclude holders of insurance contracts and non-insurance entities.

The primary improvements that the proposal addresses relate to:

• Liability for future policy benefits. Updating cash flowassumptions at the same time every year, unless experiencerequires more frequent updates, and updating quarterlythe high-quality, fixed-income instrument yield used for thediscount rate.

• Market-risk benefits. Accounting for certain options andguarantees embedded in variable products.

• Deferred acquisition costs. Simplifying the amortizationprocess.

• Disclosures. Improving the effectiveness of disclosuresabout the liability for future policy benefits, policyholderaccount balances, market-risk benefits, deferred acquisitioncosts, and separate account assets and liabilities.

For More Information: Proposed ASU and Issues & Trends In Insurance 16-6

Proposed Changes to Accounting for Purchased Callable Debt Securities

The FASB recently proposed to shorten the amortization period for premiums on purchased callable debt securities to the earliest call date. The proposal would not change the accounting for discounts on purchased callable debt securities (i.e., the purchaser would continue to amortize the discount to maturity).

The proposed approach would more closely align:

• The amortization period of premiums and discountsto expectations incorporated in market pricing on theunderlying securities because market participants generallyprice securities to the call date when the coupon is abovecurrent market rates (i.e., trading at a premium); and

• Interest income recorded on a bond at a premium or adiscount with the economics of the underlying instrument.

For More Information: Proposed ASU

Current Developments: US / December 2016 | 11© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Looking Ahead

Proposed Changes to Accounting for Financial Instruments with Down-Round Features

A recent FASB proposal would require companies to disregard down-round features when determining whether to account for certain equity-linked financial instruments as liabilities or equity. Down-round features likewise would not affect ongoing measurement of financial instruments (when liability-classified) and would only be accounted for when they are triggered. A down-round feature is a provision in an equity-linked instrument that reduces the strike price if the company issues additional shares or other equity-linked instruments for less than the current strike price of the equity-linked instrument.

The comment period ends February 6.

For More Information: Proposed ASU and Defining Issues 16-40

Emerging Issues Task Force (EITF) Activities

The EITF has two open issues on its agenda:

• Employee benefit plan master trust reporting. At theNovember 2016 meeting, the EITF reached a final consensuson eight issues that would affect presentation anddisclosures in the financial statements of employee benefitplans with investments held in master trusts.

• Service concession arrangements. At the September2016 meeting, the EITF reached a consensus-for-exposurethat would clarify that the grantor in a service concessionarrangement is the operating entity’s customer for operatingand maintenance services. Identifying the customer affectsthe recognition of revenue and various aspects of theaccounting for these arrangements. The comment periodends January 6.

For More Information: Proposed ASUs about Employee Benefit Plan Master Trust Reporting and Service Concession Arrangements, Defining Issues 16-37, Defining Issues 16-32, and Webcast

Current Developments: US / December 2016 | 12© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

04 Recommended Reading and CPE Opportunities

Current Expected Credit Losses (CECL) Implementation: Looking Forward

Bloomberg BNA featured an article by Christopher Boyles, Managing Director in KPMG’s Credit Risk Service Network; Michael Ohlweiler, Partner in KPMG’s Banking Practice; and Reza van Roosmalen, Managing Director in KPMG’s Accounting Advisory Services practice, about the final CECL accounting standard, and what financial services organizations must do to comply. The new standard—which requires institutions to forecast, recognize, and disclose expected credit losses earlier than the existing model—may dramatically change credit allowance methodology and have a significant effect across the business. Whether the transition is smooth or rocky will depend on whether organizations are committed to planning and evaluating their options now, and whether they are taking key steps to prepare for the change before the standard takes effect.

Read the article.

The SALT-BEPS Connection—Country by Country and Master File Reporting

In an article published by the Journal of Multistate Taxation and Incentives, authors Ian Novos and Shirley Sicilian highlight how state and local tax and some of the transfer pricing aspects of the Organisation for Economic Co-Operation and Development’s project on Base Erosion and Profit Shifting (BEPS) – in particular, two recommendations for transfer pricing documentation – might interact. The information should be of interest to finance and tax executives and board members.

Read the article.

Good Cybersecurity Doesn’t Try to Prevent Every Attack

In an article published by the Harvard Business Review, KPMG Cyber Leader Greg Bell writes that a strong risk management strategy is a stronger strategy against cyber

threats than trying to build an impenetrable wall. Bell opines that it is far more important to focus on identifying and protecting a company’s strategically important cyber assets and figuring out in advance how to mitigate damage when attacks occur.

Read the article.

Moving from On Premise to Cloud

In CloudTechInsights, Josh Scheumann, Director, KPMG’s Advisory Management Consulting Enterprise Solutions, writes that the term Cloud started becoming a buzzword seven years ago, when software vendors began more strongly pushing Internet-based computing and hosted software solutions as alternatives to on premise (internally housed) applications. “The demand is reaching new heights,” he writes. “Industry experts predict 2017 will be the strongest yet for Cloud solution implementations and the adoption of more and more hosted versus on premise options.”

Read the article.

Upcoming CPE Opportunities

KPMG Executive Education provides a wide range of accounting and finance continuing professional education (CPE) programs in a variety of formats, including public seminars, customized on-site instructor-led classes, Web-based self-study programs, and live Webcasts.

For more information, contact the KPMG Executive Education Team at us-kpmglearning@kpmg.com or 201-505-6062.

Current Developments: US / December 2016 | 13© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Appendix – Accounting Standards Effective Dates

Accounting Standards Affecting Public Companies in 2016

Calendar year-end public companies will apply these accounting standards for the first time in 2016.

Topic Effective Date for Public Companies For More InformationAccounting for Share-based Payments with Certain Performance Targets

Annual and interim periods in fiscal years beginning after 12/15/2015

ASU 2014-12

Defining Issues 14-15

Podcast

Consolidated Collateralized Financing Entity Assets and Liabilities

Annual and interim periods in fiscal years beginning after 12/15/2015

ASU 2014-13

Defining Issues 14-27

Podcast

Hybrid Financial Instruments

Annual and interim periods in fiscal years beginning after 12/15/2015

ASU 2014-16

ASU 2016-11

Defining Issues 14-44

Podcast

Eliminating the Concept of Extraordinary Items

Annual and interim periods in fiscal years beginning after 12/15/2015

ASU 2015-01

Defining Issues 15-2

Podcast

Consolidation Annual and interim periods in fiscal years beginning after 12/15/2015

ASU 2015-02

Defining Issues 15-6

Webcast

Presentation of Debt Issuance Costs

Annual and interim periods in fiscal years beginning after 12/15/2015

ASU 2015-03

ASU 2015-15

Defining Issues 15-14

Podcast

Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets

Annual and interim periods in fiscal years beginning after 12/15/2015

ASU 2015-04

Defining Issues 15-17

Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement

Annual and interim periods in fiscal years beginning after 12/15/2015

ASU 2015-05

Defining Issues 15-15

Podcast

Current Developments: US / December 2016 | 14© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Appendix – Recent Accounting Standards

Topic Effective Date for Public Companies For More InformationEffects on Historical Earnings per Unit of Master Limited Partnership Dropdown Transactions

Annual and interim periods in fiscal years beginning after 12/15/2015

ASU 2015-06

Defining Issues 15-10

Podcast

Eliminating Certain Investments from the Fair Value Hierarchy Table

Annual and interim periods in fiscal years beginning after 12/15/2015

ASU 2015-07

Defining Issues 15-20

Podcast

Simplifying Measurement-Period Adjustments

Annual and interim periods in fiscal years beginning after 12/15/2015

ASU 2015-16

Defining Issues 15-43

Podcast

Going Concern Annual periods in fiscal years ending after 12/15/2016, and interim periods in fiscal years beginning after 12/15/2016

ASU 2014-15

Defining Issues 14-40

Webcast

Podcast

Disclosures about Short-Duration Insurance Contracts

Annual periods in fiscal years beginning after 12/15/2015, and interim periods in fiscal years beginning after 12/15/2016

ASU 2015-09

Issues & Trends In Insurance 15-4

Simplifications for Employee Benefit Plans

Fiscal years beginning after 12/15/2015 ASU 2015-12

Defining Issues 15-36

Podcast

Technical Corrections (December 2016)

Most amendments are effective upon issuance (December 2016). Certain amendments that require transition guidance are effective for annual and interim periods in fiscal years beginning after 12/15/2016

ASU 2016-19

Accounting Standards Affecting Public Companies in 2017 and Beyond

Calendar year-end public companies will apply these accounting standards for the first time in 2017 or later and may need to disclose their potential effects in 2016.

Topic Effective Date for Public Companies For More InformationSimplifying the Measurement of Inventory

Annual and interim periods in fiscal years beginning after 12/15/2016

ASU 2015-11

Defining Issues 15-33

Presentation of Deferred Taxes as Noncurrent

Annual and interim periods in fiscal years beginning after 12/15/2016

ASU 2015-17

Defining Issues 15-55

Podcast

Effects of Derivative Contract Novations on Existing Hedge Accounting Relationships

Annual and interim periods in fiscal years beginning after 12/15/2016

ASU 2016-05

Defining Issues 15-53

Podcast

Current Developments: US / December 2016 | 15© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Appendix – Recent Accounting Standards

Topic Effective Date for Public Companies For More InformationContingent Put and Call Options in Debt Instruments

Annual and interim periods in fiscal years beginning after 12/15/2016

ASU 2016-06

Defining Issues 15-53

Podcast

Simplifying the Transition to the Equity Method of Accounting

Annual and interim periods in fiscal years, beginning after 12/15/2016

ASU 2016-07

Defining Issues 16-9

Podcast

Improvements to Employee Share-Based Payment Accounting

Annual and interim periods in fiscal years beginning after 12/15/2016

ASU 2016-09

Defining Issues 16-11

Podcast

Change to VIE Primary Beneficiary Test

Annual and interim periods in fiscal years beginning after 12/15/2017

ASU 2016-17

Defining Issues 16-35

Revenue Recognition Annual and interim periods in fiscal years beginning after 12/15/2017

ASU 2014-09

ASU 2015-14

ASU 2016-08

ASU 2016-10

ASU 2016-11

ASU 2016-12

Recognition and Measurement of Financial Assets and Financial Liabilities

Annual and interim periods in fiscal years beginning after 12/15/2017

ASU 2016-01

Recognition of Breakage for Certain Prepaid Stored-value Products

Annual and interim periods in fiscal years beginning after 12/15/2017

ASU 2016-04

Defining Issues 15-53

Podcast

Statement of Cash Flows Classification of Certain Cash Receipts and Payments

Annual and interim periods in fiscal years beginning after 12/15/2017

ASU 2016-15

Defining Issues 16-22

Accounting for Income Taxes on Intercompany Transfers

Annual and interim periods in fiscal years beginning after 12/15/2017

ASU 2016-16

Defining Issues 16-34

Statement of Cash Flows Presentation of Restricted Cash

Annual and interim periods in fiscal years beginning after 12/15/2017

ASU 2016-18

Defining Issues 16-32

Leases Annual and interim periods in fiscal years beginning after 12/15/2018

ASU 2016-02

Measurement of Credit Losses on Financial Instruments

SEC filers: Annual and interim periods in fiscal years beginning after 12/15/2019

Not SEC filers: Annual and interim periods in fiscal years beginning after 12/15/2020

ASU 2016-13

Defining Issues 16-23

Current Developments: US / December 2016 | 16© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Appendix – Recent Accounting Standards

Accounting Standards Affecting Private Companies in 2016

Calendar year-end private companies will apply these accounting standards for the first time in 2016.

Topic Effective Date for Private Companies For More InformationPCC Effective Date and Transition Guidance

On issuance (March 2016) ASU 2016-03

Defining Issues 16-8

Podcast

Accounting for Share-Based Payments with Certain Performance Targets

Annual and interim periods in fiscal years beginning after 12/15/2015

ASU 2014-12

Defining Issues 14-15

Podcast

Eliminating the Concept of Extraordinary Items

Annual and interim periods in fiscal years beginning after 12/15/2015

ASU 2015-01

Defining Issues 15-2

Podcast

Hybrid Financial Instruments

Annual periods in fiscal years beginning after 12/15/2015, and interim periods in fiscal years beginning after 12/15/2016

ASU 2014-16

ASU 2016-11

Defining Issues 14-44

Podcast

Presentation of Debt Issuance Costs

Annual periods in fiscal years beginning after 12/15/2015, and interim periods in fiscal years beginning after 12/15/2016

ASU 2015-03

Defining Issues 15-14

Podcast

Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement

Annual periods in fiscal years beginning after 12/15/2015, and interim periods in fiscal years beginning after 12/15/2016

ASU 2015-05

Defining Issues 15-15

Podcast

Consolidated Collateralized Financing Entity Assets and Liabilities

Annual periods in fiscal years ending after 12/15/2016, and interim periods in fiscal years beginning after 12/15/2016

ASU 2014-13

Defining Issues 14-27

Podcast

Going Concern Annual periods in fiscal years ending after 12/15/2016, and interim periods in fiscal years beginning after 12/15/2016

ASU 2014-15

Defining Issues 14-40

Webcast

Podcast

Technical Corrections (December 2016)

Most amendments are effective upon issuance (December 2016). Certain amendments that require transition guidance are effective for:

• Annual and interim periods in fiscal yearsbeginning after 12/15/2016 (for fair valuemeasurements).

• Annual periods in fiscal years beginningafter 12/15/2017, and interim periods infiscal years beginning after 12/15/2018 (forcloud computing arrangements).

ASU 2016-19

Current Developments: US / December 2016 | 17© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Appendix – Recent Accounting Standards

Accounting Standards Affecting Private Companies in 2017 and Beyond

Calendar year-end private companies will apply these accounting standards for the first time in 2017 or later.

Topic Effective Date for Private Companies For More InformationSimplifications for Employee Benefit Plans

Annual and interim periods in fiscal years beginning after 12/15/2016

ASU 2015-12

Defining Issues 15-36

Podcast

Eliminating Certain Investments from the Fair Value Hierarchy Table

Annual and interim periods in fiscal years beginning after 12/15/2016

ASU 2015-07

Defining Issues 15-20

Podcast

Simplifying the Transition to the Equity Method of Accounting

Annual and interim periods in fiscal years beginning after 12/15/2016

ASU 2016-07

Defining Issues 16-9

Podcast

Consolidation Annual periods in fiscal years beginning after 12/15/2016, and interim periods in fiscal years beginning after 12/15/2017

ASU 2015-02

Defining Issues 15-6

Webcast

Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets

Annual periods in fiscal years beginning after 12/15/2016, and interim periods in fiscal years beginning after 12/15/2017

ASU 2015-04

Defining Issues 15-17

Disclosures about Short-Duration Insurance Contracts

Annual periods in fiscal years beginning after 12/15/2016, and interim periods in fiscal years beginning after 12/15/2017

ASU 2015-09

Issues & Trends In Insurance 15-4

Simplifying the Measurement of Inventory

Annual periods in fiscal years beginning after 12/15/2016, and interim periods in fiscal years beginning after 12/15/2017

ASU 2015-11

Defining Issues 15-33

Simplifying Measurement-Period Adjustments

Annual periods in fiscal years beginning after 12/15/2016, and interim periods in fiscal years beginning after 12/15/2017

ASU 2015-16

Defining Issues 15-43

Podcast

Change to VIE Primary Beneficiary Test

Annual periods in fiscal years beginning after 12/15/2016, and interim periods in fiscal years beginning after 12/15/2017

ASU 2016-17

Defining Issues 16-35

Presentation of Deferred Taxes as Noncurrent

Annual periods in fiscal years beginning after 12/15/2017, and interim periods in fiscal years beginning after 12/15/2018

ASU 2015-17

Defining Issues 15-55

Podcast

Effects of Derivative Contract Novations on Existing Hedge Accounting Relationships

Annual periods in fiscal years beginning after 12/15/2017, and interim periods in fiscal years beginning after 12/15/2018

ASU 2016-05

Defining Issues 15-53

Podcast

Current Developments: US / December 2016 | 18© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Appendix – Recent Accounting Standards

Topic Effective Date for Private Companies For More InformationContingent Put and Call Options in Debt Instruments

Annual periods in fiscal years beginning after 12/15/2017, and interim periods in fiscal years beginning after 12/15/2018

ASU 2016-06

Defining Issues 15-53

Podcast

Improvements to Employee Share-Based Payment Accounting

Annual periods in fiscal years beginning after 12/15/2017, and interim periods in fiscal years beginning after 12/15/2018

ASU 2016-09

Defining Issues 16-11

Podcast

Revenue Recognition Annual periods in fiscal years beginning after 12/15/2018, and interim periods in fiscal years beginning after 12/15/2019

ASU 2014-09

ASU 2015-14

ASU 2016-08

ASU 2016-10

ASU 2016-11

ASU 2016-12

Recognition and Measurement of Financial Assets and Financial Liabilities

Annual periods in fiscal years beginning after 12/15/2018, and interim periods in fiscal years beginning after 12/15/2019

ASU 2016-01

Recognition of Breakage for Certain Prepaid Stored-value Products

Annual periods in fiscal years beginning after 12/15/2018, and interim periods in fiscal years beginning after 12/15/2019

ASU 2016-04

Defining Issues 15-53

Podcast

Statement of Cash Flows Classification of Certain Cash Receipts and Payments

Annual periods in fiscal years beginning after 12/15/2018, and interim periods in fiscal years beginning after 12/15/2019

ASU 2016-15

Defining Issues 16-22

Accounting for Income Taxes on Intercompany Transfers

Annual periods in fiscal years beginning after 12/15/2018, and interim periods in fiscal years beginning after 12/15/2019

ASU 2016-16

Defining Issues 16-34

Statement of Cash Flows Presentation of Restricted Cash

Annual periods in fiscal years beginning after 12/15/2018, and interim periods in fiscal years beginning after 12/15/2019

ASU 2016-18

Defining Issues 16-32

Leases Annual periods in fiscal years beginning after 12/15/2019, and interim periods in fiscal years beginning after 12/15/2020

ASU 2016-02

Measurement of Credit Losses on Financial Instruments

Annual periods in fiscal years beginning after 12/15/2020, and interim periods in fiscal years beginning after 12/15/2021

ASU 2016-13

Defining Issues 16-23

Current Developments: US / Decemberr 2016 | 19© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Contact us:

This is a publication of KPMG in the US Department of Professional Practice 212-909-5600

Contributing authors:

Angela B. Stormastorm@kpmg.com

Jennifer A. Yrumajyruma@kpmg.com

More information is available at: kpmg.com/us/FRN

© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual orentity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate asof the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriateprofessional advice after a thorough examination of the particular situation.

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