FASB 2020 Road Map

FASB 2020 Road Map

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

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

NEWLY EFFECTIVE ONLY FOR NONPUBLIC COMPANIES FOR 2019 FINANCIAL STATEMENTS .......................................................... 3 SPECIAL EFFECTIVE DATES ............................................................................................................................................... 8 EFFECTIVE FOR 2019 FISCAL YEARS FOR PBES ..................................................................................................................... 8 EFFECTIVE FOR 2020 FISCAL YEARS FOR PBES ................................................................................................................... 13 SPECIAL EFFECTIVE DATES ............................................................................................................................................. 16 EFFECTIVE FOR 2021 FISCAL YEARS FOR PBES .................................................................................................................. 17 EFFECTIVE FOR 2022 FISCAL YEARS FOR PBES .................................................................................................................. 17

PROPOSED ASUS – EXPOSURE DRAFTS ................................................................................................................ 18

INVITATION TO COMMENT (ITC) OUTSTANDING ................................................................................................ 21

OTHER AGENDA ITEMS ........................................................................................................................................ 22

ACTIVE PROJECTS ......................................................................................................................................................... 22 RESEARCH PROJECTS ..................................................................................................................................................... 24

CONCLUSION ....................................................................................................................................................... 25

CONTRIBUTOR ..................................................................................................................................................... 25

APPENDIX A ......................................................................................................................................................... 26

APPENDIX B ......................................................................................................................................................... 27

FASB 2020 Road Map

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Overview This paper provides an overview of proposed and final standards issued by FASB in 2019, 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) Early adoption generally is permitted unless otherwise noted.

Newly Effective Only for Nonpublic Companies for 2019 Financial Statements

Revenue Recognition (Accounting Standards Codification (ASC) 606) & Related Topics

Topic & Title Description & Implementation Guidance

Effective Date

PBEs Other Entities

ASU 2014-09, Revenue from Contracts with Customers

Resources: BKD Thoughtware® – Revenue Recognition

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

ASU 2016-08, Principal versus Agent Considerations

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; provides several illustrative examples to assist financial statement preparers in their decision process.

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.

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Revenue Recognition (Accounting Standards Codification (ASC) 606) & Related Topics

Topic & Title Description & Implementation Guidance

Effective Date

PBEs Other Entities

ASU 2016-20, Technical Corrections and Improvements

Resource: Final Updates to Revenue Rules

Minor changes intended to prevent misapplication of the revenue rules.

N.A. – Effective for 2018 fiscal years

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

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.

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.

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 public business entity (PBE) definition due to the inclusion of their financial statement in another SEC registrant’s filing would have additional time for the implementation of the new revenue and lease standards—most commonly equity method investees and acquisition targets of public companies.

N.A. N.A.

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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: BKD Thoughtware® – Financial Instruments Projects

Ready for New Classification & Measurement Rules for Financial Instruments?

FASB Tweaks Classification & Measurement Guidance

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 elimination of entry price use 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.

N.A. N.A.

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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 flows 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 periods beginning after December 15, 2019

Statement of Cash Flows (Topic 230)

ASU 2016-18, Restricted Cash

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 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 (Subtopic 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, and 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 received beginning after December 15, 2019, and interim periods beginning after December 15, 2020

Effective for 2019 Fiscal Years for PBEs

ACS 842 – Leases

Topic & Title Description

Effective Date

PBEs Other Entities

ASU 2016-02, Leases

Resources: Lease Accounting Resource Center

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 not-for-profits (NFP) and employee benefit plans for fiscal years beginning after December 15, 2018, including interim periods

(no change)

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

(as amended)

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.

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ACS 842 – Leases

Topic & Title Description

Effective Date

PBEs Other Entities

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

Effective PBEs, certain not-for-profits (NFP) and employee benefit plans for fiscal years beginning after December 15, 2018, including interim periods

(no change)

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

(as amended)

ASU 2018-10, Codification Improvements

Resource: Lease Update – Help on the Way

The amendments provide clarity on a number of technical items to prevent possible diversity in practice.

ASU 2019-01, Codification Improvements

Resource: New Lease Relief Finalized

Restores current specialized accounting:

Determining the fair value for lessors that are not manufacturers or dealers (financial institutions and captive finance companies)

Statement of cash flows – Sales-type and direct financing leases (depository and lending entities)

Clarifies interim disclosures under Topic 250, Accounting Changes and Error Corrections, are not required in the year of adoption of ASC 842.

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

(no change)

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

(as amended)

ASU 2019-10, Effective Dates

Resource: FASB Finalizes New Effective Dates for Leases, CECL, Hedging & Insurance

Provides extra time for Leases, CECL and Hedging ASUs.

Effective upon issuance

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Topic & Title Description

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

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, 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

Effective Date

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

(as amended)

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.

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

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Topic & Title Description

Effective Date

PBEs Other Entities

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

Intangibles—Goodwill and Other (Topic 350), Business Combinations (Topic 805), and Not-for-Profit Entities (Topic 958)

ASU 2019-06, Extending the Private Company Accounting Alternatives on Goodwill and Certain Identifiable Intangible Assets to Not-for-Profit Entities

Resource: NFP Relief on Goodwill Accounting

Creates two accounting policy elections for NFPs that would permit:

Goodwill amortization over 10 years or less, on a straight-line basis

Impairment testing only upon a triggering event

Entity-level impairment assessment

Ability to subsume certain customer-related intangible assets and all noncompete agreements into goodwill.

Effective immediately

ASU 2019-07,Codification Updates to SEC Sections—Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization, and Miscellaneous Updates (SEC Updates)

Updates to conform FASB codifications with recent SEC updates.

Effective upon issuance

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Effective for 2020 Fiscal Years for PBEs

Financial Instruments—Credit Losses (Topic 326) – 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, not SRCs – fiscal years beginning after December 15, 2019, including interim periods

(as amended)

Fiscal years beginning after December 15, 2022, including interim periods

(as amended)

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

Excludes operating lease receivables from Subtopic 326-20.

Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments

ASU 2019-04, Codification Improvements

Resource: CECL Model to Include Reinsurance Receivables

Clarifies and improves areas of guidance related to the following three ASUs: ASU 2016-01, ASU 2016-13 and ASU 2017-12.

In general, adoption date and transition follow the respective ASU’s guidance. Special transition guidance is provided for entities that have early adopted any of the ASUs.

ASU 2019-05, Targeted Transition Relief

Resource: Limited CECL FVO Now Available

This narrowly focused transition relief would permit a one-time irrevocable election to apply the fair value option (FVO) to certain existing loans and would not apply to held-to-maturity debt securities. This change would help some companies avoid having two different accounting models for similar asset portfolios (CECL and fair value).

ASU 2019-10, Effective Dates

Resource: FASB Finalizes New Effective Dates for Leases, CECL, Hedging & Insurance

Provides extra time for implementation.

Effective upon issuance

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Financial Instruments—Credit Losses (Topic 326) – CECL

Topic & Title Description

Implementation Guidance

PBEs Other Entities

ASU 2019-11, Codification Improvements

Issued June 27, 2019

Resource: Latest Round of CECL Fixes Issued

This ASU covers the following issues:

Negative allowances on purchased credit-deteriorated assets

Transition relief for troubled debt restructurings

Minor technical corrections – Accrued interest receivable disclosure relief and the collateral maintenance practical expedient.

If ASU 2016-13 is not adopted, effective dates and transition are the same as ASU 2016-13.

If CECL is already adopted, these changes are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

Topic & Title Description

Effective Dates

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; the same one-step impairment test applies to all reporting units, including those with zero or negative carrying amounts.

Prospective application.

PBE SEC filers, not SRCs – any interim or annual goodwill impairment tests in fiscal years beginning after December 15, 2019

(as amended)

Interim or annual goodwill impairment testing in fiscal years beginning after December 15, 2022

(as amended)

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

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Topic & Title Description

Effective Dates

PBEs Other Entities

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

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

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

ASU 2019-02

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

The ASU 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.

The ASU addresses presentation, requires new disclosures about content that is either produced or licensed and addresses cash flow classification for license agreements.

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

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

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Topic & Title Description

Effective Dates

PBEs Other Entities

Not-for-Profit Entities (Topic 958)

ASU 2019-03

Updating the Definition of Collections

Resource: FASB Updates ‘Collection’ Definition

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

Prospective application.

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

Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606)

ASU 2019-08

Codification Improvements—Share-Based Consideration Payable to a Customer

Resource: Accounting Clarified for Share-Based Payments to Customers

Entities must apply ASC 718 to measure and classify customer share-based payments. The amount that would be recorded as a reduction in revenue would be the grant-date fair value (GDFV) of the share-based payment. The grant date is the date at which a supplier and customer reach a mutual understanding of the award’s key terms and conditions.

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

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

Special Effective Dates

Topic & Title Description

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, 2021, 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

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

ASU 2018-14, 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 retrospective basis to all periods presented.

Fiscal years ending after December 15, 2020

Fiscal years ending after December 15, 2021

Income Taxes (Topic 740)

ASU 2019-12, Simplifying the Accounting for Income Taxes

Resource: Simpler Income Tax Accounting Finalized

Includes several narrow-focused simplifications. The proposal does not create new accounting requirements but instead eliminates existing confusing guidance.

Early adoption is permitted upon issuance, if all simplification issues are applied.

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

Effective for 2022 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.

SEC filers, not SRCs – fiscal years beginning after December 15, 2021, including interim periods

(as amended)

Fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2022

(as amended)

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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

Derivatives and Hedging (Topic 815)

Codification Improvements to Hedge Accounting

Issued November 12, 2019

Resource: More Changes Proposed to Hedge Accounting

Additional clarifications on the following issues:

Change in hedged risk in a cash flow hedge

Contractually specified components in cash flow hedges of nonfinancial forecasted transactions

Foreign currency-denominated debt instruments as hedging instrument and hedged item (dual hedge)

“Prepayable” definition in the shortcut method.

Comment period ends January 13, 2020

Codification Improvements Issued November 12, 2019

This proposal makes conforming amendments, clarifications to guidance, simplifications to wording or guidance structure and other minor improvements that should eliminate future requests for narrow and incremental items. FASB does not expect significant changes to current accounting practice or significant administrative costs for most entities.

Comment period ends December 26, 2019

Debt (Topic 470) and Derivatives and Hedging (Topic 815)

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity

Issued July 31, 2019

Resource: Can FASB Simplify Evaluation of Debt vs. Equity Classification?

The proposal would reduce the number of accounting models available for convertible debt securities from five to two, which would result in fewer embedded conversion features being separately recognized from the host contract. The proposal would amend guidance for the derivatives scope exception for contracts in an entity’s own equity as follows:

Allow an entity to qualitatively screen out any contingent events that are considered to have a remote likelihood of occurring and disregard these events in the assessment of the derivatives scope exception, and

Remove three conditions required to qualify for the settlement guidance related to settlement in unregistered shares, collateral requirements and shareholder rights

Comment period closes October 14, 2019

FASB met on December 11 to review feedback. A final ASU is planned by the second quarter of 2020.

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Topic & Title Description Status

Proposed ASUs

Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)

Clarifying the Interactions between Topic 321, Topic 323, and Topic 815

Issued July 30, 2019

Resource: Proposed Clarifications to Equity Investment Accounting

The proposal addresses two issues:

Accounting for certain equity securities upon the application or discontinuation of the equity method of accounting

Scope considerations for forward contracts and purchased options on certain securities

Comment period closed August 29, 2019

Final ASU expected in the first quarter of 2020.

Reference Rate Reform (Topic 848)

Facilitation of the Effects of Reference Rate Reform on Financial Reporting

Issued September 5, 2019

Resource: FASB Proposes Accounting Relief for LIBOR Transition

FASB is proposing optional guidance for a limited time to ease the potential burden in accounting for—or recognizing the effects of—reference rate reform on financial reporting.

Comment period closes October 7, 2019

Final ASU expected in the first quarter of 2020.

Debt (Topic 470)

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

Issued September 12, 2019

Resource: FASB Tries Again on Debt Classification Rules

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

FASB will meet in early 2020 to discuss feedback.

Comment period closes October 28, 2019

Thirty-five comment letters received. Several health care respondents that use remarketing agreements objected.

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Topic & Title Description Status

Proposed ASUs

Disclosures (Various Topics)

Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative

Issued May 6, 2019

Resource: FASB Proposes Disclosure Updates in Response to SEC Request

Additions to generally accepted accounting principles (GAAP) that were previously included in SEC guidance include changes to interim reporting, earnings per share, debt, consolidation, derivative and repo disclosures, foreign exchange, real estate investment trusts and oil and gas industry-specific disclosure.

FASB has not yet met to discuss feedback.

Comment period closed June 28, 2019

Income Taxes (Topic 740)

Disclosure Framework—Changes to the Disclosure Requirements for Income Taxes

Issued March 25, 2019

Resource: FASB Re-Examines Tax Disclosures

The proposal adds three disclosures for all entities and additional disclosures only for PBEs.

FASB has not yet met to discuss feedback.

Comment period closed May 31, 2019

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 (R&D) arrangements would be superseded.

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

At the last meeting in June 2018, FASB instructed the staff to develop nonauthoritative educational material.

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.

FASB last discussed this topic in June 2017. The complexity of the retail inventory method has delayed further progress.

Redeliberating

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Topic & Title Description Status

Proposed ASUs

Government Assistance (Topic 832)

Disclosures by Business Entities about Government Assistance

Issued November 2015

Resource: Proposed Improvements to Disclosures About Government Assistance

Redeliberations narrowed the proposed scope and eliminated some of the proposed disclosures. Scope is limited to grants of assets, tax assistance, low-interest-rate loans, loan guarantees and forgiveness of liabilities.

FASB last discussed this topic in February 2019 and approved additional research and field testing.

Further research underway

Topic & Title Description Status

Concept Statements

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.

FASB last discussed this topic in May 2017.

Redeliberating

No fourth quarter 2019 updates

Invitation to Comment (ITC) Outstanding An ITC is a document in which FASB does not express any preliminary views, and the project may or may not result in amendments to existing standards. Responses to ITCs help FASB understand whether it needs to consider amendments to the guidance to address the cost and benefit of information about goodwill and intangible assets and, if so, what amendments to consider.

Topic & Title Description Status

ITC

Business Combinations (Topic 805)

Identifiable Intangible Assets and Subsequent Accounting for Goodwill

Issued July 9, 2019

Resource: New Accounting Proposed for Assumed Liabilities in a Business Combination

This ITC includes the following sections:

Whether to change the subsequent accounting for goodwill

Whether to modify the recognition of intangible assets in a business combination

Whether to add or change disclosures about goodwill and intangible assets

Comparability and scope

Other topics for consideration

Comment period closed October 7, 2019

FASB held two roundtable discussions in November 2019 to solicit additional feedback.

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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.

Recognition & Measurement Projects

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 R&D 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.

FASB met in October 2019 and discussed multiple layers and fair value hedge basis adjustment issues.

Codification Improvements—Financial Instruments—Credit Losses (Vintage Disclosures: Gross Write-Offs and Gross Recoveries)

On hold

Added to agenda September 2018

At an April 2019 meeting, FASB decided not to move ahead with this project at this time. FASB may reconsider additional standard setting after CECL’s effective date.

Practical Expedient to Measure GDFV of Equity-Classified Share-Based Awards (PCC)

Initial deliberations

Added to agenda December 2018

Private companies have long questioned the permitted methods for valuing share-based awards, which may be less appropriate for private company awards compared to public company awards. The Private Company Council (PCC) is considering a practical expedient that would measure the award’s GDFV by determining the fair value of the services received as a proxy for the fair value of the equity-classified awards being granted.

An exposure draft was approved in December 2019 with a comment period to end on May 15, 2020.

Revenue Recognition—Contract Modifications of Licenses of Intellectual Property

Initial deliberations

Added to agenda June 2019

The Emerging Issues Task Force (EITF) will address two issues:

Accounting for contract modifications where the contract term for existing rights is extended, while also adding rights

Accounting for the revocation of licensing rights (including conversion of term software licenses to software as a service arrangements)

At a November 2019 meeting, the EITF was unable to reach a consensus-for-exposure on either issue. Additional research is to be performed.

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Accounting for Warrant Modifications

Initial deliberations

Added to EITF agenda September 2019

The project’s objective is to reduce the diversity that exists in practice in the issuers’ accounting for modifications of equity-classified warrants, i.e., equity-classified freestanding call options, outside the scope of Topic 718, Compensation—Stock Compensation, or Topic 815, Derivatives and Hedging.

FASB has limited the project’s scope to equity-classified freestanding call options that remain equity-classified after the modifications.

Initial Recognition and Measurement of Nonmonetary Assets in a Joint Venture

Initial deliberations

Added to agenda September 2019

The project will address the accounting for nonmonetary assets, including businesses, contributed to a joint venture in a standalone joint venture’s financial statements.

Presentation & Disclosure Projects

Segment Reporting

Initial deliberations

Added to agenda September 2017

FASB staff began an extended outreach in June 2018 that considered alternatives to improve the aggregation criteria and the reportable segments process. FASB was not persuaded that the alternatives provided cost-beneficial solutions.

FASB reviewed outreach results on December 11, 2019. Further research will continue in 2020.

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.

FASB met in December 2019 and concluded the internal view approach was not a viable path forward. The project was kept on the active agenda, pending results from the segment reporting project and International Accounting Standards Board research work.

Disclosures—Interim Reporting

Initial deliberations

Added to agenda July 2018

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

FASB met in September 2019 to review project approaches. FASB approved a high-level principle similar to the recently removed SEC guidance. Further research and outreach are underway.

NFP Accounting—Gift-in-Kind

Initial deliberations

Added to agenda August 2018

In August, FASB decided to narrow proposed updates to presentation and disclosure rather than trying to change valuation and measurement guidance. Project scope will include all gifts-in-kind rather than limiting to pharmaceutical products.

An exposure draft is planned for the first quarter of 2020.

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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 lead to improved financial reporting.

Conceptual Framework—Measurement

Initial deliberations

Added to agenda June 2014

FASB will develop concepts related to measurement.

Research Projects 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.

Inventory and Cost of Sales – The project’s objective is to improve the accounting, 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

Recognition and Measurement of Revenue Contracts with Customers Under Topic 805 – In February 2019, FASB issued an ITC on this topic. After reviewing the feedback, FASB concluded in June 2019 there was no clear path forward and voted to move this project back to research status.

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 the board’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.

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Conclusion FASB’s output has slowed in 2019 as companies digest the major, previously issued standards—revenue recognition, leases and CECL. FASB responded to criticism on the pace and scale of recent accounting changes and has updated its effective date philosophy to provide extra time for smaller public companies and all other entities to catch up. With the delay in the lease effective date for leases for smaller companies, FASB will be reviewing recommendations for additional relief and simplification. Potential topics include disclosure, the incremental borrowing rate practical expedient, the short-term lease exception, embedded leases, finance versus operating leases, related party guidance and lessee allocation of variable lease payments.

Companies are encouraged to plan for the numerous effects on company operations, compliance and financial systems and results that upcoming GAAP changes could cause. 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

* Effective on issuance ** As amended by ASU 2019-09 or ASU 2019-10 *** Includes NFP conduit bond holders and employee benefit plans that are SEC filers

December 15, 2018

ASC 842 Leases ***

2017-06 Plan Accounting

2017-08 Premium

Amortization

2017-11 Down Rounds

2017-12 Hedging

2018-02 Tax Impacts

2018-07 Nonemployee Share-Based

Payments

2018-08 Contributions

Provided

2018-16 SOFR

2019-06 NFP Goodwill*

2019-07 SEC Updates*

December 15, 2019

CECL (SEC filers, not

SRCs)**

2017-04 Goodwill

(SEC filers, non-SRCs)**

2018-13 FV

Measurement

2018-15 Cloud

Computing

2018-17 Related Parties

VIE

2018-18 Collaborative Arrangements

2019-01 Leases (Restoration of

specialized lessor rules

only)

2019-02 Film, TV Costs

2019-03 Collections

2019-08 Share-Based Customer

Payments

December 15, 2020

2018-14 Defined Benefit Plan Disclosures

2019-12 Income Taxes

December 15, 2021

2018-12 Insurance

(SEC filers, not SRCs)**

December 15, 2022

CECL (SRCs)**

2017-04 Goodwill (SRCs)**

December 15, 2023

2018-12 Insurance (SRCs)**

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

Reporting Periods Beginning After

* Effective on issuance

** As amended by ASU 2019-09 or ASU 2019-10

December 15, 2018

ASC 606 Revenue

2016-01 Financial

Instruments

2016-04 Breakage

2016-15 Statement of Cash Flows

2016-16 Taxes: Intra-

Entity Transfers

2016-18 Restricted

Cash

2017-01 Business

Definition

2017-05 Nonfinancial Asset Sales

2017-06 Plan

Accounting

2017-07 Retirement

Benefits

2017-10 Service

Concessions

2018-02 Tax Impacts

2018-08 Contributions

Received

2019-06 NFP Goodwill*

December 15, 2019

2017-08 Premium

Amortization

2017-11 Down Rounds

2018-07 Nonemployee Share-Based

Payments

2018-08 Contributions

Provided

2018-13 FV

Measurement

2018-16 SOFR

2019-03 Collections

December 15, 2020

ASC 842 Leases**

2017-12 Hedging**

2018-15 Cloud

Computing

2018-17 Related

Parties VIE

2018-18 Collaborative Arrangements

2019-02 Film, TV Costs

2019-08 Share-Based

Customer Payments

December 15, 2021

2018-14 Defined

Benefit Plan Disclosures

2019-12 Income Taxes

December 15, 2022

CECL**

2017-04 Goodwill**

December 15, 2023

2018-12 Insurance**