Annual Accounting and Auditing Workshop. Kurt Oestriecher

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СКАЧАТЬ of FASB ASU No. 2017-04, an entity can assume that an excess of the carrying amount of an entity over the fair value of the entity is an impairment ofIntangible assets.Goodwill.Treasury stock.Equity method investees.

FASB No. ASU 2017-05, Other Income–Gains and Losses from Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets

      Why was this ASU issued?

      This update is a clarification of the scope of FASB ASC 610-20, Other Income and to add guidance for partial sales of nonfinancial assets, FASB ASC 610-20, issued as part of FASB ASU No. 2014-09, Revenue from Contracts with Customers) (Topic 606).

      When issued, FASB ASU No. 2014-09 addressed not only revenue from customers, but also provided guidance for recognizing a gain or loss from the transfer of nonfinancial assets in contracts with noncustomers. Stakeholders were uncertain about what types of transactions should be within the scope of FASB ASC 610-20 because the term in substance nonfinancial asset was not defined. Stakeholders also noted that other aspects of the scope of FASB ASC 610-20 were confusing and complex. For example, stakeholders were unclear about why a transfer of a nonfinancial asset to another entity in exchange for a noncontrolling interest in that entity was excluded from the scope of FASB ASC 610-20 (and, instead, was within the scope of FASB ASC 845, Nonmonetary Transactions), while a transfer of a nonfinancial asset for any other form of noncash consideration was within the scope of FASB ASC 610-20.

      In addition, stakeholders also indicated that they were uncertain about how an entity should account for partial sales of nonfinancial assets once the amendments in FASB ASU No. 2014-09 become effective.

      Who is affected by this ASU?

      The amendments in this update affect the following:

      1 An entity that enters into a contract to transfer to a noncustomer a nonfinancial asset, a group of nonfinancial assets, or an ownership interest in a consolidated subsidiary that is not a business or not-for-profit activity.

      2 An entity that historically had transactions within the scope of the real estate-specific derecognition guidance.

      3 An entity that contributes nonfinancial assets that are not a business or a not-for-profit activity to a joint venture or other noncontrolled investee

The amendments in this update differ from current GAAP primarily for the real estate industry but may affect other industries such as power and utilities, alternative energy, life sciences, and shipping.

      What are the main provisions of this ASU?

      The amendments in this update clarify that a financial asset is within the scope of FASB ASC 610-20 if it meets the definition of an in substance nonfinancial asset. The amendments define the term in substance nonfinancial asset, in part, as a financial asset promised to a counterparty in a contract if substantially all of the fair value of the assets (recognized and unrecognized) that are promised to the counterparty in the contract is concentrated in nonfinancial assets. If substantially all of the fair value of the assets that are promised to the counterparty in a contract is concentrated in nonfinancial assets, then all of the financial assets promised to the counterparty are in substance nonfinancial assets within the scope of FASB ASC 610-20.

      The amendments in this update also clarify that an entity should identify each distinct nonfinancial asset or in substance nonfinancial asset promised to counterparty and derecognize each asset when counterparty obtains control of it. In addition, an entity should allocate consideration to each distinct asset by applying the guidance in FASB ASC 606 on allocating the transaction price to performance obligations.

      The amendments in this update simplify GAAP by eliminating several accounting differences between transactions involving assets and transactions involving businesses. For example, an entity currently may measure a retained noncontrolling interest in a nonfinancial asset at carryover basis in many transactions related to the following:

       A partial sale of real estate

       A contribution of a nonfinancial asset to form a joint venture

       A transfer of a nonfinancial asset within the scope of FASB ASC 845

       A transfer of a nonfinancial asset to an equity method investee.

      An entity is also required to initially measure a retained noncontrolling interest in a nonfinancial asset at fair value consistent with a how a retained noncontrolling interest in a business is measured. If an entity transfers ownership interests in a consolidated subsidiary that is within the scope of FASB ASC 610-20 and continues to have a controlling financial interest in that subsidiary, the amendments require the entity to account for the transaction as an equity transaction. This is consistent with how changes in ownership interests in a consolidated subsidiary that is a business are recorded when a parent retains a controlling financial interest in the business.

      When will this ASU be effective?

      The amendments in this update are effective at the same time as the amendments in FASB ASU No. 2014-09. and an entity is required to apply the amendments in this update at the same time that it applies the amendments in FASB ASU No. 2014-09.

FASB No. ASU 2017-07, Compensation– Retirement Benefits (Topic 715): Improving the Presentation of Net Period Pension Cost and Net Periodic Postretirement Benefit Cost

      Why was this ASU issued?

      Many stakeholders observed that the presentation of defined benefit cost on a net basis combines elements that are heterogeneous. As such, these stakeholders stated that the current presentation requirement is less transparent, reduces the decision usefulness of the financial information, and requires users to incur greater costs in analyzing financial statements. Thus, the amendments of this update improve the presentation of net periodic pension cost and net periodic postretirement benefit cost as well as the reporting of net benefit cost in the financial statements.

      Who is affected by this ASU?

      The amendments in this update apply to all employers, including not-for-profit entities, that offer to their employees defined benefit pension plans, other postretirement benefit plans, or other types of benefits accounted for under FASB ASC 715.

      What are the main provisions of this ASU?

      The amendments in this update require that an employer disaggregate the service cost component from the other components of net benefit cost and also provides explicit guidance on how to present the service cost component and the other components of net benefit cost in the income statement.

      Specifically, an employer is required to report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. If a separate line item or items are used to present the other components of net benefit cost, that line item or items must be appropriately described. If a separate line item or items are not used, the line item or items used in the income statement to СКАЧАТЬ