FASB Standard Setter Update: 2019 Edition

FASB Standard Setter Update: 2019 Edition

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Table of Contents OVERVIEW ............................................................................................................................................................. 3

ACCOUNTING STANDARDS UPDATES (ASU) ........................................................................................................... 3

NEWLY EFFECTIVE FOR ALL ENTITIES IN 2019 ...................................................................................................................... 3 NEWLY EFFECTIVE ONLY FOR NONPUBLIC COMPANIES IN 2019 .............................................................................................. 4 SPECIAL EFFECTIVE DATES ............................................................................................................................................. 10 NEWLY EFFECTIVE FOR PUBLIC ENTITIES (2019 FISCAL YEARS) ............................................................................................. 11 EFFECTIVE FOR 2019 FISCAL YEARS FOR PBES ................................................................................................................... 12 EFFECTIVE FOR 2020 FISCAL YEARS FOR PBES ................................................................................................................... 14 SPECIAL EFFECTIVE DATES ............................................................................................................................................. 16 EFFECTIVE FOR 2021 FISCAL YEARS FOR PBES ................................................................................................................... 17

PROPOSED ASUS – EXPOSURE DRAFTS ................................................................................................................ 17

OTHER AGENDA ITEMS ........................................................................................................................................ 19

ACTIVE PROJECTS ......................................................................................................................................................... 19 RESEARCH PROJECTS ..................................................................................................................................................... 22

CONCLUSION ....................................................................................................................................................... 23

CONTRIBUTOR ..................................................................................................................................................... 23

APPENDIX A ......................................................................................................................................................... 24

APPENDIX B ......................................................................................................................................................... 25

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Overview This paper provides an overview of proposed and final standards issued by the Financial Accounting Standards Board (FASB) in 2018, along with standards effective for fiscal years beginning on or after December 15, 2018. The paper is organized by effective date and includes a brief overview of projects on FASB’s current agenda.

Accounting Standards Updates (ASU) The following are ASUs issued in 2018—or with effective dates for fiscal years beginning after December 15, 2018—for U.S. generally accepted accounting principles (GAAP) financial statements. Early adoption generally is permitted unless otherwise noted.

Effective dates are segregated between public business entities (PBE) and other entities, e.g., private companies, not-for-profit (NFP) organizations and pension plans. The revenue and lease standards are applicable to public entities,1 which may include certain NFP and pension plans.

Newly Effective for All Entities in 2019

Topic & Title Description & Implementation Guidance

Effective Date

PBEs Other Entities

Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965)

ASU 2017-06, Employee Benefit Plan Master Trust Reporting

Resource: Updates to EBP Master Trust Reporting & Disclosures

Clarifies presentation requirements for a plan’s interest in a master trust and changes in its interest; requires more detailed disclosures of the master trust’s investments and the plan’s interest in the investments while eliminating a redundancy relating to 401(h) account disclosures

Retrospective application to all periods presented, beginning in a reporting entity’s fiscal year of adoption

Fiscal years beginning after December 15, 2018, and interim periods therein

ASU 2017-15, Codification Improvements to Topic 995, U.S. Steamship Entities

Eliminates Topic 995, U.S. Steamship Entities, because its guidance is no longer relevant

Fiscal years and first interim periods beginning after December 15, 2018

1 A public entity is defined as any one of these: • A PBE • An NFP entity that has issued—or is a conduit bond obligor for—securities traded, listed or quoted on an exchange or over-the-counter market • An employee benefit plan that files or furnishes financial statements to the SEC

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Tax Cuts & Jobs Act (TCJA) Related

Topic & Title Description

Effective Date

PBEs Other Entities

Income Statement—Reporting Comprehensive Income (Topic 220)

ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

Resource: FASB Finalizes Tax Relief & Adds Flexibility

Entities have an option to reclassify the stranded tax effects in accumulated other comprehensive income; disclosure is required if not elected

Entities can adopt retrospectively or in the period of adoption

Under early adoption provisions, entities can align the timing of the stranded tax reclassification in their 2017 financial statements

Annual reporting periods beginning after December 15, 2018

ASU 2018-05, Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (SEC Update)

Updates SEC guidance related to ASU 2018-02 and the income tax accounting implications of the TCJA

Newly Effective Only for Nonpublic Companies in 2019

Revenue Recognition & Related Topics

Topic & Title Description & Implementation Guidance

Effective Date

Public Entity1 Other Entities

ASU 2014-09, Revenue from Contracts with Customers (Topic 606)

Resource: Revenue Recognition: An Updated Look at the Guidance

Eliminates most existing industry-specific guidance and creates a new five-step model. An entity would recognize revenue in the amount that reflects the consideration it expects to be entitled in exchange for goods or services when (or as) it transfers control to the customer. Extensive new disclosures required

Full or modified retrospective transition with several practical expedients

N.A. –Effective for 2018 fiscal years

Annual reporting periods beginning after December 15, 2018, and interim periods beginning after December 15, 2019

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Revenue Recognition & Related Topics

Topic & Title Description & Implementation Guidance

Effective Date

Public Entity1 Other Entities

ASU 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net)

Resource: Revenue Accounting Update for Principal Versus Agent Transactions

Clarifies the difference between principal and agency roles and how to identify the unit of account for the principal versus agent; new and amended illustrative examples to assist financial statement preparers in their decision process

N.A. –Effective for 2018 fiscal years

Annual reporting periods beginning after December 15, 2018, and interim periods beginning after December 15, 2019

ASU 2016-10, Identifying Performance Obligations and Licensing

Resource: Updated Revenue Guidance for Performance Obligations & Licenses

Clarifies how companies should identify performance obligations and account for licenses of intellectual property within the new revenue recognition standard

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

Resource: Additional Relief for Revenue Rules

Contains additional guidance to ease implementation—collectibility, sales tax presentation, noncash considerations measurement and transition expedients

ASU 2016-20, Technical Corrections and Improvements

Resource: Final Updates to Revenue Rules

Minor changes intended to prevent misapplication of the revenue rules

Liabilities—Extinguishments of Liabilities (Subtopic 405-20)

ASU 2016-04, Recognition of Breakage for Certain Prepaid Stored-Value Products

Resource: Breakage Rules Finalized for Prepaid Cards

Clarifies treatment of the liability existing between the card issuer and the consumer before redemption and eliminates current diversity in practice

Allows entities to derecognize the liability for outstanding balances when the likelihood of customer redemption becomes remote

Entities may apply the amendments using a modified or full retrospective approach

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Revenue Recognition & Related Topics

Topic & Title Description & Implementation Guidance

Effective Date

Public Entity1 Other Entities

Service Concession Arrangements (Topic 853)

ASU 2017-10, Determining the Customer of the Operation Services

Resource: Customer Clarification for Operating Entities of SCAs

Clarifies that for service concession arrangements (SCA) within the scope of Topic 853, the grantor is the operating entity’s customer in all cases

Special transition guidance applies depending on whether ASU 2014-09 has been adopted

N.A. –Effective for 2018 fiscal years

Annual reporting periods beginning after December 15, 2018, and interim periods beginning after December 15, 2019

ASU 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments (SEC Update)

Resource: SEC Grants More Time on Revenue & Lease Standards in Limited Situations

Entities that only meet the PBE definition due to the inclusion of their financial statement or information in another SEC registrant’s filing would have additional time for the implementation of the revenue (Accounting Standards Codification (ASC) 606) and lease standards (ASC 842)—most commonly equity method investees and acquisition targets of public companies

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ASU 2016-01 Classification & Measurement & Subsequent ASUs

Topic & Title Description & Implementation Guidance

Effective Date

PBEs Other Entities

Financial Instruments—Overall (Subtopic 825-10)

ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities

Resources: Financial Instruments Projects

Ready for New Classification & Measurement Rules for Financial Instruments?

Targeted improvements include: measurement of equity investments (except for consolidated and equity method investments) at fair value with changes in fair value recognized in net income, simplified impairment testing for equity investments without readily determinable fair value and required use of exit price rather than entry price for certain fair value disclosures by public entities

The amendments should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption

N.A. – Effective for 2018 fiscal years

Fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019

ASU 2018-03, Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities

Resource: Insurers Get Transition Relief on Classification & Measurement Rules

Clarifications on when and how to apply the measurement alternative to equity securities without a readily determinable fair value and presentation when the fair value option is elected

ASU 2018-04, Investments—Debt Securities (Topic 320) and Regulated Operations (Topic 980)

Rescinds various SEC guidance superseded by ASU 2016-01

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Topic & Title Description & Implementation Guidance

Effective Date

PBEs Other Entities

Statement of Cash Flows (Topic 230)

ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments

Resource: Update to Classification Requirements of Certain Cash Receipts & Payments

Clarifies presentation and classification requirements on seven cash flow transaction types. New guidance on when an entity should separate and classify cash receipts and cash payments into multiple cash flow classes versus aggregating them into one class based on predominance

Retrospective transition method to each period presented. If it is impracticable for some issues, the amendments for those issues would be applied prospectively as of the earliest date practicable

N.A. – Effective for 2018 fiscal years

Fiscal years beginning after December 15, 2018, and interim periods beginning after December 15, 2019

Income Taxes (Topic 740)

ASU 2016-16, Intra-Entity Transfers of Assets Other Than Inventory

Resource: Changes to Tax Accounting for Intra-Entity Asset Transfers

Requires companies to recognize the income tax consequences of an intra-entity asset transfer—other than inventory—when the transfer occurs. Aligns intra-entity sales transactions with the principle of comprehensive recognition of current and deferred income taxes in Topic 740

Entities should apply the amendments on a modified retrospective basis

N.A. – Effective for 2018 fiscal years

Annual reporting periods beginning after December 15, 2018, and interim reporting periods within fiscal years beginning after December 15, 2019

Statement of Cash Flows (Topic 230)

ASU 2016-18, Restricted Cash (a consensus of the FASB Emerging Issues Task Force)

Resource: Clarification to the Presentation & Disclosure of Restricted Cash

Requires entities to include restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts in the statement of cash flows. The ASU does not define restricted cash or restricted cash equivalents

Retrospective application to each period presented

N.A. – Effective for 2018 fiscal years

Fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019

Business Combinations (Topic 805)

ASU 2017-01, Clarifying the Definition of a Business

Resource: New Business Definition

Adds guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses

Prospective application

N.A. – Effective for 2018 fiscal years

Annual periods beginning after December 15, 2018, and interim periods beginning after December 15, 2019

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Topic & Title Description & Implementation Guidance

Effective Date

PBEs Other Entities

Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20)

ASU 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets

Resource: New Accounting Rules for Nonfinancial Asset Sales

Reduces complexity for all entities that sell or transfer nonfinancial assets by decreasing the number of derecognition models. Changes include:

• Entities would no longer have to consider if a business also is an in-substance nonfinancial asset

• Codified definition of an “in-substance nonfinancial asset” will improve consistency in applying the appropriate guidance

• Updating ASC 845, Nonmonetary Transactions, to exclude exchanges of a nonfinancial asset for a noncontrolling ownership interest

• An equity method investment would no longer meet the definition of an in-substance nonfinancial asset

Full or modified retrospective application permitted

N.A. – Effective for 2018 fiscal years

Annual periods beginning after December 15, 2018, and interim periods beginning after December 15, 2019

Compensation—Retirement Benefits (Topic 715)

ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

Employers are required to report the service cost component in the same line item as other compensation costs for employee services rendered during the period; other components of net benefit cost would be separately presented in the income statement from the service cost component and outside a subtotal of income from operations, if one is presented

Retrospective application

N.A. – Effective for 2018 fiscal years

Annual periods beginning after December 15, 2018, including interim periods after December 15, 2019

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Special Effective Dates

Topic & Title Description & Implementation Guidance

Effective Date

PBEs Other Entities

Not-for-Profit Entities (Topic 958)

ASU 2018-08, Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made

Resources: New Grant Versus Contract Guidance for NFPs

New NFP Guidance – Contribution or Exchange Transaction?

Clarify existing guidance to determine a contribution versus an exchange transaction. Organizations would evaluate if the resource provider is receiving commensurate value and whether contributions are conditional or unconditional

Resource Recipients

Contributions received beginning after June 15, 2018, including interim periods

Resource Providers

Contributions made beginning after December 15, 2018, including interim periods

Resource Recipients

Contributions received beginning after December 15, 2018, and interim periods beginning after December 15, 2019

Resource Providers

Contributions made beginning after December 15, 2019, and interim periods beginning after December 15, 2020

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Newly Effective for Public Entities1 (2019 Fiscal Years)

ASC 842 – Leases

Topic & Title Description

Effective Date

Public Entities1 Other Entities

ASU 2016-02, Leases

Resources: Lease Accounting

Leases: A Comprehensive Review

All leases with terms greater than 12 months will appear on the balance sheet as lease liabilities with a corresponding right-of-use asset

Modified retrospective approach with several optional practical expedients

Effective PBEs, certain NFPs and employee benefit plans for fiscal years beginning after December 15, 2018, including interim periods

(Special transition guidance is provided in subsquent ASUs for early adopters)

Fiscal years beginning after December 15, 2019, and interim periods beginning after December 15, 2020 ASU 2018-01, Land

Easement Practical Expedient for Transition to Topic 842

Resource: Land Easement Transition Relief Finalized

Creates an optional practical expedient. If elected, an entity would not apply ASC 842 to existing or expired land easements that are not currently accounted for under existing guidance in ASC 840. An entity would continue to apply its current accounting policy. Only new or modified land easements would be assessed under ASC 842 to determine whether it is or contains a lease

ASU 2018-11, Targeted Improvements

Resource: Additional Relief Finalized for Leases

New transition relief in two areas:

1. Comparative reporting for initial adoption 2. Separating lease and nonlease components

ASU 2018-10, Codification Improvements to Topic 842, Leases

Resource: Lease Update – Help on the Way

The amendments provide clarity on a number of technical items to prevent possible diversity in practice. The changes are not expected to have a significant effect on current accounting practice or create significant administrative costs for most entities

ASU 2018-20, Narrow-Scope Improvements for Lessors

Resource: Sales and Property Tax Lessor Relief Finalized

Creates an accounting policy election for lessors—similar to ASU 2016-12—to exclude amounts collected from customers for all sales taxes—and other similar taxes—from the transaction price

Clarifies that a lessor is required to exclude lessor costs paid directly by a lessee to third parties on the lessor’s behalf from the lease measurement. However, all lessee reimbursed costs—including property taxes—must be reported as revenue with a related expense

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Effective for 2019 Fiscal Years for PBEs

Topic & Title Description

Implementation Guidance

PBEs Other Entities

Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20)

ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities

Resource: Relief for Early Calls on Debt

Shortens the amortization period to the earliest call date for certain callable debt securities

Modified retrospective application

Fiscal years beginning after December 15, 2018, including interim periods

Fiscal years beginning after December 15, 2019, and interim periods beginning after December 15, 2020

Earnings Per Share (Topic 260)

ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception

Resource: Down-Round Treatment Simplified

A financial instrument with a down-round feature would no longer be classified as a liability solely because of that feature’s existence. The ASU relies on existing guidance for subsequent measurement, depending on whether the instrument is classified as equity or a liability. A small number of instruments with down-round features will continue to be classified as a liability; bifurcation would no longer be required, and accounting would be governed by existing complicated guidance on beneficial conversion features

Full or modified retrospective application

Fiscal years beginning after December 15, 2018, and interim periods therein

Fiscal years beginning after December 15, 2019, and interim periods beginning after December 15, 2020

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Topic & Title Description

Implementation Guidance

PBEs Other Entities

Derivatives and Hedging (Topic 815)

ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities

Resource: A Deep Dive into Hedging

Comprehensive changes to ease an entity’s ability to qualify and stay qualified for hedge accounting treatment and improve alignment with its risk strategy; includes new disclosures to highlight hedge accounting’s effect on individual income statement line items

Modified retrospective application for the elimination of hedging ineffectiveness. Prospective application of presentation and disclosure requirements

Fiscal years beginning after December 15, 2018, including interim periods

Fiscal years beginning after December 15, 2019, and interim periods beginning after December 15, 2020

Compensation—Stock Compensation (Topic 718)

ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting

Resource:

Simplified Accounting for Nonemployee Share-Based Payments

Expands Topic 718’s scope to include share-based payment transactions for acquiring goods and services from nonemployees. An entity would apply Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost

Fiscal years beginning after December 15, 2018, including interim periods

Fiscal years beginning after December 15, 2019, and interim periods beginning after December 15, 2020

Derivatives and Hedging (Topic 815)

ASU 2018-16, Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes

Resource:

SOFR Approved as a Hedging Benchmark Rate

Adds an additional benchmark rate for fair value hedging of fixed-rate securities—the overnight index swap rate based on the SOFR

Prospective application for qualifying new or redesignated hedging relationships entered into on or after the adoption date

Special transition guidance applies depending on whether ASU 2017-12 has been adopted

Fiscal years beginning after December 15, 2018, including interim periods

Fiscal years beginning after December 15, 2019, and interim periods beginning after December 15, 2020

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Effective for 2020 Fiscal Years for PBEs

Financial Instruments—Credit Losses (Topic 326) – Current Expected Credit Loss (CECL)

Topic & Title Description

Implementation Guidance

PBEs Other Entities

ASU 2016-13, Measurement of Credit Losses on Financial Instruments

Resources: Financial Instruments Projects CECL Resource Center A Comprehensive Look at the CECL Model

Applies to all entities holding financial assets not accounted for at fair value through net income. At inception and each reporting date, entities will recognize an allowance for lifetime expected credit losses

Modified retrospective application

Early adoption for fiscal years beginning after December 15, 2018

PBE SEC filers – fiscal years beginning after December 15, 2019, including interim periods

All other PBEs – fiscal years beginning after December 15, 2020, including interim periods

Fiscal years beginning after December 15, 2021, including interim periods

(as amended by ASU 2018-19)

ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses

1. Changes effective date for all other entities (non-PBEs) to fiscal years beginning after December 15, 2021, including interim periods

2. Excludes operating lease receivables from the scope of Subtopic 326-20

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Topic & Title Description

Implementation Guidance

PBEs Other Entities

Intangibles—Goodwill and Other (Topic 350)

ASU 2017-04, Simplifying the Test for Goodwill Impairment

Resources: Goodwill Impairment Test Simplified

Considerations for Early Adoption of Goodwill Impairment

Removes Step 2 from the impairment test and modifies the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value (FV) to the condition that exists when a reporting unit’s carrying amount exceeds its FV; the same one-step impairment test applies to all reporting units, including those with zero or negative carrying amounts

Prospective application

PBE SEC filers – any interim or annual goodwill impairment tests in fiscal years beginning after December 15, 2019

All other PBEs – interim or annual goodwill impairment tests in fiscal years beginning after December 15, 2020

Interim or annual goodwill impairment tests in fiscal years beginning after December 15, 2021

Fair Value Measurement (Topic 820)

ASU 2018-13, Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement

Resource: FASB Updates Fair Value Disclosures

Eliminates some disclosures and strengthens remaining disclosures

An entity can early adopt any removed or modified disclosures and delay adoption of the new disclosures until their effective date in 2020

Annual and interim reporting periods beginning after December 15, 2019

Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40)

ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract; Disclosures for Implementation Costs Incurred for Internal-Use Software and Cloud Computing Arrangements

Resource: New Cloud Computing Accounting Guidance

Aligns cost capitalization guidance for hosting arrangements that are service contracts, hosting arrangements that include a software license and the costs incurred to develop or obtain internal-use software

Prospective or retrospective transition permitted

Fiscal years beginning after December 15, 2019, and interim periods therein

Fiscal years beginning after December 15, 2020, and interim periods beginning after December 15, 2021

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Topic & Title Description

Implementation Guidance

PBEs Other Entities

Collaborative Arrangements (Topic 808)

ASU 2018-18, Clarifying the Interaction between Topic 808 and Topic 606

Resource: New Collaborative Arrangement Guidance

Clarifies when transactions between participants in a collaborative arrangement are within the scope of revenue guidance, ASC 606

The ASU should be applied retrospectively to the date of initial application of ASC 606

Fiscal years beginning after December 15, 2019, including interim periods

Fiscal years beginning after December 15, 2020, and interim periods beginning after December 15, 2021

Special Effective Dates

Topic & Title Description & Implementation Guidance

Effective Date

Entities Other Than Private Companies

Other Entities

Consolidation (Topic 810)

ASU 2018-17, Targeted Improvements to Related Party Guidance for Variable Interest Entities

Resource: Consolidation Relief for Related Parties

New accounting policy election so a private company would not have to apply variable interest entity (VIE) guidance to legal entities under common control—including common control leasing arrangements—if both parties are not PBEs. If elected, additional disclosures are required

Indirect interests held through related parties in common control arrangements should be considered on a proportional basis when determining whether fees paid to decision makers are variable interests

Retrospective application with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented

Fiscal years beginning after December 15, 2019, including interim periods

Fiscal years beginning after December 15, 2020, and interim periods beginning after December 15, 2021

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Effective for 2021 Fiscal Years for PBEs

Topic & Title Description & Implementation Guidance

Effective Date

PBEs Other Entities

Financial Services—Insurance (Topic 944)

ASU 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts

Resource: New Guidance for Long-Duration Insurance Contracts

The new guidance:

1. Requires an annual assumptions update for liability measurement

2. Standardizes liability discount rate

3. Improves measurement of market risk benefits

4. Simplifies amortization of deferred acquisition costs on a more level basis

5. Requires significant new disclosures

Special transition guidance for various elements

Fiscal years beginning after December 15, 2020, including interim periods

Fiscal years beginning after December 15, 2021, and interim periods beginning after December 15, 2022

Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20)

ASU 2018-14, Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans

Resource: Changes to Defined Benefit Plan Disclosures

Adds two new disclosures and removes five existing disclosures

To be applied on a retrospective basis to all periods presented

Fiscal years ending after December 15, 2020

Fiscal years ending after December 15, 2021

Proposed ASUs – Exposure Drafts The following chart includes proposed updates not included in other sections of this document, where FASB has not issued a final pronouncement as of this publication’s date. FASB will determine the effective dates of the proposed amendments—if issued as a final ASU—after it considers feedback on the amendments.

Topic & Title Description Status

Proposed ASUs

Codification Improvements—Financial Instruments

Issued November 2018

Clarify and improve areas of guidance related to the following three recently issued standards: ASU 2016-13, ASU 2017-12 and ASU 2016-01

Comment period ends December 19, 2018

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Topic & Title Description Status

Proposed ASUs

Entertainment—Films—Other Assets—Film Costs (Subtopic 926-20) and Entertainment—Broadcasters—Intangibles—Goodwill and Other (Subtopic 920-350)

Improvements to Accounting for Costs of Films and License Agreements for Program Materials

Issued November 2018

The proposal aligns the accounting for production costs of an episodic television series with the accounting for production costs of films by removing the content distinction for capitalization. Entities would be required to reassess estimates of the use of a film for a film in a film group and account for any changes prospectively

Comment period ended December 7, 2018

Not-for-Profit Entities (Topic 958)

Updating the Definition of Collections

Issued June 2018

Resource: FASB Proposed a New ‘Collection’ Definition

The amendments would align FASB’s collection definition with the definition used by one of the industry’s governing bodies—the American Alliance of Museums

Redeliberating

Codification Improvements

Issued October 2017

Annual update for technical corrections, clarifications and other minor improvements. The changes clarify the codification or correct unintended application of guidance that is not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities

Comment period ended December 4, 2017

Consolidation (Topic 812)

Reorganization

Issued September 2017

Changes would affect the guidance’s organization and clarify certain items. Guidance currently in Topic 810 would be split. The new topic (Topic 812) would include VIEs and voting interest entities. “Consolidation of Entities Controlled by Contract” would be moved to Topic 958. Subtopic 810-30 for research and development arrangements would be superseded

FASB does not anticipate changes in practice or outcomes from the reorganization

Redeliberating

Inventory (Topic 330)

Disclosure Framework—Changes to the Disclosure Requirements for Inventory

Issued January 2017

Resource: Proposed Changes to Inventory Disclosure Requirements

Adds disaggregation and other quantitative and qualitative disclosures for inventory

Redeliberating

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Topic & Title Description Status

Proposed ASUs

Debt (Topic 470)

Simplifying the Classification of Debt in a Classified Balance Sheet (Current versus Noncurrent)

Issued January 2017

Resource: Proposal Simplifies Debt Classification

Introduces a principle for determining debt classification. An entity would classify an instrument as noncurrent if either of the following criteria is met as of the balance sheet date:

The liability is contractually due to be settled more than one year—or operating cycle, if longer—after the balance sheet date

The entity has a contractual right to defer settlement of the liability for at least one year—or operating cycle, if longer—after the balance sheet date

Final Standard expected first quarter 2019

Income Taxes (Topic 740)

Disclosure Framework—Changes to the Disclosure Requirements for Income Taxes

Issued July 2016

Resource: Proposed Changes to Income Tax Disclosures

Project delayed and modified due to the extensive changes in the TCJA issued in December 2017

To be re-exposed first quarter 2019

Government Assistance (Topic 832)

Disclosures by Business Entities about Government Assistance

Issued November 2015

Resource: Proposed Improvements to Disclosures About Government Assistance

Adds explicit disclosure guidance about foreign and domestic government assistance arrangements

Final Standard expected first quarter 2019

Accounting Concepts

Conceptual Framework: Presentation

Issued August 2016

The proposal would provide FASB with a framework for developing standards that summarize and communicate information on financial statements in a way that best meets the objective of financial reporting. This will become FASB’s basis when creating presentation requirements in future standards

Redeliberations

Other Agenda Items

Active Projects In addition to proposed ASUs, FASB’s technical plan includes the following active projects not discussed in the earlier sections and excludes technical corrections or codification improvements and taxonomy updates.

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Framework Projects

Conceptual Framework: Elements

Initial deliberations

Added to agenda May 2017

The project’s objective is to develop an improved conceptual framework that provides a foundation for developing future principles-based accounting standards that are internally consistent and leads to improved financial reporting

Conceptual Framework: Measurement

Initial deliberations

Added to agenda June 2014

FASB will develop concepts related to measurement

Recognition & Measurement Projects

Identifiable Intangible Assets and Subsequent Accounting for Goodwill

Drafting proposed ASU

Added to agenda June 2014

The staff is currently drafting a proposed ASU to extend the amendments in ASU 2014-02 and 2014-18 to NFP entities Exposure draft expected in fourth quarter 2018

Distinguishing Liabilities from Equity (Including Convertible Debt)

Initial deliberations

Added to agenda September 2017

The project’s objective is to improve understandability and reduce complexity (without loss of information for users). The project would focus on indexation and settlement (in the context of the derivative scope exception), convertible debt, disclosures and earnings per share

Improving the Accounting for Asset Acquisitions and Business Combinations

Initial deliberations

Added to agenda October 2014

This project will address differences in the accounting for acquisitions of assets and businesses, focusing on transaction costs, in-process research and development and contingent consideration. The project will consider whether certain exceptions in business combinations guidance should be extended to acquisitions of assets

Hedging—Last-of-Layer Method

Initial deliberations

Added to agenda March 2018

The objective of this project is to address issues related to accounting for basis adjustments and multiple-layer hedging strategies within the last-of-layer method

Recognition under Topic 805 for an Assumed Liability in a Revenue Contract

Drafting proposed ASU

Added to agenda August 2018

The issuance of ASC 606 has raised questions about what definition should be applied in the recognition of a contract liability under ASC 805 for an assumed liability in a revenue contract for a business combination that occurs after the adoption of ASC 606

Exposure draft expected in first quarter 2019

Facilitation of the Effects of the LIBOR to SOFR Transition on Financial Reporting

Initial deliberations

Added to agenda August 2018

The objective of this project is to facilitate the effects on financial reporting of the marketwide transition away from the London Interbank Offered Rate (LIBOR) to the SOFR or other alternative reference rates

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Codification Improvements—Financial Instruments—Credit Losses (Vintage Disclosures: Gross Writeoffs and Gross Recoveries)

Drafting proposed ASU

Added to agenda September 2018

ASU 2016-13, as written, requires disclosure of the amortized cost basis by receivable type or security class, credit-quality indicator and year of origination. An example in the ASU illustrates gross write-offs and recoveries by origination year; however, the ASU did not explicitly require this level of detail. These proposed changes will make this a required disclosure

Exposure draft expected in fourth quarter 2018

Codification Improvements—Hedge Accounting

Initial deliberations

Added to agenda September 2018

Improvements related to the use of the word prepayable under the shortcut method guidance, which differs from its usage in ASU 2017-12 related to fair value hedges of interest rate risk, the last-of-layer method and the application of the transition guidance that allows an entity to transfer financial instruments from the held-to-maturity category to the available-for-sale category

Financial Instruments—Credit Losses—Targeted Transition Relief

Drafting proposed ASU

Added to agenda November 2018

Recoveries – An entity should be required to include recoveries in determining the allowance for credit losses

Negative Allowances – An entity should be permitted to record a negative allowance on financial assets as long as the negative allowance does not exceed the aggregate amount of previous or expected write-offs of the financial asset(s)

Vintage Disclosures: Line-of-Credit (LOC) Arrangements That Convert to Term Loans – An entity should be required to disclose amounts of LOC arrangements that are converted to term loans by origination year when an additional credit decision after the original credit decision was made by the entity

Contractual Extensions – An entity should be required to evaluate extension or renewal options that are included in the original or modified contract and are not unconditionally cancellable by the entity in determining the contractual term of a financial asset or assets

Exposure draft expected in first quarter 2019

Codification Improvements— Share-Based Consideration Payable to a Customer

Drafting proposed ASU

Added to agenda November 2018

Clarify the accounting for share-based payments that are made as consideration payable to a customer; such payments would be measured and classified using the guidance in Topic 718

Exposure draft expected in first quarter 2019

Codification Improvements—Lessors

Drafting proposed ASU

Added to agenda December 2018

Resource: Last-Minute Lease Fixes Coming

A 15-day exposure draft is expected shortly and a final ASU is planned for issuance in the first quarter of 2019 that will address two issues:

• Fair value for lessors that are not manufacturers or dealers

• Statement of cash flows – Sales-type and direct financing leases

Exposure draft expected in first quarter 2019

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Practical Expedient to Measuring Grand-Date Fair Value of Equity- Classified Share-Based Awards

Initial deliberations

Added to agenda December 2018

The Private Company Council will consider a practical expedient to measure grant-date fair value of equity share-based payments that would allow a private company to use the strike price (as the input for fair value) of the underlying share when measuring grant-date fair value of an equity-classified award

Presentation & Disclosure Projects

Segment Reporting

Initial deliberations

Added to agenda September 2017

Improve segment aggregation criteria and disclosures

Financial Performance Reporting—Disaggregation of Performance Information

Initial deliberations

Added to agenda September 2017

Improve the decision usefulness of the income statement through the disaggregation of performance information. FASB will focus on disaggregating functional lines into natural components

Disclosures—Interim Reporting

Initial deliberations

Added to agenda July 2018

FASB staff is developing principles for interim disclosure and performing research and outreach

Research Projects In addition to the topics above, FASB has these research projects on its agenda:

Disclosure Improvements in Response to SEC Release on Disclosure Update and Simplification – As part of an SEC initiative, the SEC referred certain existing SEC disclosure requirements that overlap with, but require information incremental to, GAAP to FASB for potential incorporation into GAAP. The objective of this project is to determine whether to include the referred disclosures in GAAP

Disclosure Review – Intangibles, Share-Based Payment and Foreign Currency – The objective of these projects is to review current disclosure requirements to improve the financial information in notes to financial statements about intangibles, share-based payment and foreign currency

Financial Performance Reporting – This project’s objective is to consider whether to require a measure of operations and whether and how to define a measure of operations for both NFP and business entities

Hedge Accounting Phase 2 – The objective of this project is to obtain stakeholders’ feedback that could bring further alignment of hedge accounting with risk management activities beyond the targeted improvements made to the hedge accounting model in ASU 2017-12

Income Taxes–Backwards Tracing – GAAP generally prohibits backwards tracing, which is the process of recognizing the effects of changes in deferred tax amounts in the current year in the same line item in which the deferred tax amounts were originally recorded, e.g., other comprehensive income, in prior years. The project’s objective is to consider whether changes should be made to the prohibition on backwards tracing or consider alternatives to backwards tracing

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Inventory and Cost of Sales – The project’s objective is to improve the accounting for inventory and cost of sales and services, including:

• The objective of inventory costing in Topic 330, Inventory • Multiple inventory costing methods—including industry-specific cost capitalization guidance—and

impairment models • Areas in which there is a lack of guidance

Measurement Alternative and Observable Transactions Identified After the Reporting Date

Measurement and Other Topics Related to Revenue Contracts Under Topic 805 – The project will solicit input in the form of a Discussion Paper including an Invitation to Comment about measurement and other topics related to the Emerging Issues Task Force’s consensus-for-exposure that an entity would be required to use the Topic 606 performance obligation definition to determine whether an assumed contract liability from a revenue contract with a customer represents a liability assumed that is recognized in a business combination at the acquisition date

Simplification to Accounting for Income Taxes – The project’s objective is to make narrow-scope targeted improvements to reduce unnecessary complexity while maintaining or improving the usefulness of financial information for financial statement users

Targeted Improvements to the Statement for Cash Flows – The project’s objective is to reduce existing diversity in practice in how certain cash receipts and cash payments are presented in the statement of cash flows under Topic 230, Statement of Cash Flows, and other topics

VIE Related-Party Guidance – The objective of this project is to determine the frequency for which the VIE related-party guidance in Topic 810 is applied to arrangements where related parties are under common control after considering the effect of FASB’s decisions to (1) provide a private company accounting alternative to allow private companies to not apply VIE guidance in certain circumstances and (2) amend the VIE guidance to require that indirect interests held through related parties in common control arrangements be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests

Conclusion FASB addressed many topics in 2018. Companies are encouraged to plan for the numerous effects on company operations, compliance and financial systems and results that could be caused by upcoming GAAP changes. Contact your BKD trusted advisor for further discussion.

Contributor Anne Coughlan Director 317.383.4000 acoughlan@bkd.com

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Appendix A – Effective Dates for Final Standards for PBEs Reporting Periods Beginning After

*See special effective dates

December 15, 2018

ASC 842Leases (pg. 11)

ASU 2017-06 Plan Accounting

(pg. 3)

ASU 2017-08 Premium

Amortization (pg. 12)

ASU 2017-11 Down Rounds

(pg. 12)

ASU 2017-12 Hedging (pg. 13)

ASU 2017-15 Steamships

(pg.3)

ASU 2018-02 Tax Effects

(pg. 4)

ASU 2018-07 Nonemployee Share-Based

Payments (pg. 13)

ASU 2018-08* Contributions

(pg. 10)

ASU 2018-16 SOFR

(pg. 13)

December 15, 2019

CECL SEC Filers (pg. 14)

ASU 2017-04 Goodwill SEC filers (pg. 15)

ASU 2018-13 FV Measurement

Disclosure (pg. 15)

ASU 2018-15 Cloud Computing

(pg. 15)

ASU 2018-17 Consolidation

Related Parties (pg. 16)

ASU 2018-18 Collaborative Arrangements

(pg. 16)

December 15, 2020

CECL non-SEC Filers

(pg. 14)

ASU 2017-04 Goodwill

non-SEC filers (pg. 15)

ASU 2018-12 Insurance (pg. 17)

ASU 2018-14 Defined Benefit Plan Disclosures

(pg. 17)

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Appendix B – Effective Dates for Final Standards for Non-PBEs

Reporting Periods Beginning After

December 15, 2018

ASC 606 Revenue

(pg. 4)

ASU 2016-01 Financial

Instruments (pg. 7)

ASU 2016-15 Statement of Cash

Flows (pg. 8)

ASU 2016-16 Taxes: Intra-Entity Transfers (pg. 8)

ASU 2016-18 Restricted Cash

(pg. 8)

ASU 2017-01 Business

Definition (pg. 8)

ASU 2017-05 Nonfinancial Asset

Sales (pg. 9)

ASU 2017-06 Plan Accounting

(pg. 3)

ASU 2017-07 Retirement

Benefits (pg. 9)

ASU 2017-15 Steamships

(pg. 3)

ASU 2018-02 Tax Effects

(pg. 4)

ASU 2018-08 Contributions

(pg. 10)

December 15, 2019

ASC 842 Leases (pg. 11)

ASU 2017-08 Premium

Amortization (pg. 12)

ASU 2017-11 Down Rounds

(pg. 12)

ASU 2017-12 Hedging (pg. 13)

ASU 2018-07 Nonemployee Shared-Based

Payments (pg. 13)

ASU 2018-13 FV Measurement

(pg. 15)

ASU 2018-16 SOFR

(pg. 13)

December 15, 2020

ASU 2018-15 Cloud Computing

(pg. 15)

ASU 2018-17 Related Parties VIE

(pg. 16)

ASU 2018-18 Collaborative Arrangements

(pg. 16)

December 15, 2021

ASU 2016-13 CECL

(pg. 14)

ASU 2017-04 Goodwill (pg. 15)

ASU 2018-12 Insurance (pg. 17)

ASU 2018-14 Defined Benefit Plan Disclosures

(pg. 17)