Annual Accounting and Auditing Workshop. Kurt Oestriecher

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       Any disclosure related to measurement uncertainty is to communicate information about the uncertainty in measurement as of the reporting date (as opposed to the date of issuance of the financial statements).

      The following disclosures requirements were added; however, they are not required for nonpublic entities:

       The changes in unrealized gains and losses for the period included in other comprehensive income for recurring level 3 fair value measurements held at the end of the reporting period

       The range and weighted average of significant unobservable inputs used to develop level 3 fair value measurements (For certain unobservable inputs, an entity may disclose other quantitative information in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop the level 3 fair value measurements.)

      In addition to the preceding modifications, the code was updated to include the phrase “at a minimum” for all required disclosures related to fair value.

      When will this ASU be effective?

      This ASU is effective for all entities for fiscal and interim periods beginning after December 15, 2019. The amendments should be applied retrospectively with the exception of the disclosure requirements that were added. Those requirements should be applied on the prospective basis.

      Knowledge check

      1 Which disclosure related to fair value were added as result of FASB ASU No. 2018-13?Change in unrealized gains and losses included in other comprehensive income for recurring level 3 fair value adjustments.Change in realized gains and losses included in other comprehensive income for recurring level 3 fair value adjustments.Change in unrealized gains and losses including in net income for recurring level 3 fair value adjustments.Change in unrealized gains and losses included in other comprehensive income for non-recurring level 3 fair value adjustments.

FASB ASU No. 2018-17, Consolidation Topic 810: Targeted Improvements to Related Party Guidance for Variable Interest Entities– Decision-Making Fees

      Why was this ASU issued?

      The process to determine when the payment of decision-making fees was streamlined to reduce the number of entities that are required to consolidate Variable Interest Entities (VIEs) when decision-making fees are paid.

      Who is affected by this ASU?

      The issue related to decision-making fees affects all private companies not making the election to not recognize VIE’s and public companies who must determine if the payment of decision-making fees creates the need to consolidate a VIE.

      What are the main provisions of this ASU?

      Decision-making fees

      Indirect interests held through related parties in common control arrangements should be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. Currently, such relationships must be evaluated in its entirety instead of on a proportional basis. This change will reduce the number of entities that are required to consolidate VIEs due to the payment and receipt of decision-making fees.

When will this ASU be effective?

      For entities other than private companies, this update is effective for fiscal years beginning after December 15, 2019, and interim periods within those years.

      For private companies, this update is effective for fiscal years beginning after December 15, 2020, and interim periods for fiscal years beginning after December 15, 2021.

      Early adoption is permitted.

      Transition

      All entities are required to apply the amendments in this Update retrospectively with a cumulative effect adjustment to retained earnings at the beginning of the earliest period presented.

FASB ASU No 2019-03, Not-for-Profit Entities Topic 958: Updating the Definition of Collections

      Why was this ASU issued?

      The definition in the Master Glossary of the Accounting Standards Codification did not align with the definition used in the American Alliance of Museums’ Code of Ethics for Museums. This standard aligns those definitions

      Who is affected by this ASU?

      Even though this standard aligns the codification definition with the definition in the museums’ code, this standard will apply to all entities, including business entities, that maintain collections. This standard will have the greatest impact on not-for-profit entities, because these are the types of entities that typically have collections as an asset.

      What are the main provisions of this ASU?

      A collection-holding entity must disclose its policy for the use of proceeds from when collection items are deaccessioned (that is, removed from a collection). If a collection-holding entity has a policy that allows proceeds from deaccessioned collection items to be used for direct care, it should disclose its definition of direct care.

      Current GAAP defines collections as

      Works of art, historical treasures, or similar assets that meet all of the following criteria:

       They are held for public exhibition, education, or research in furtherance of public services rather than financial gain.

       They are protected, kept unencumbered, cared for, and preserved.

       They are subject to an organization policy that requires the proceeds from sales of collection items be used to acquire other items for collection

      This update will modify the last condition to allow the proceeds to support the direct care of existing collections in addition to the above policy. Note that the effect of this definition change will allow more assets that are donated to be considered a collection. GAAP does not require the recognition of revenue or capitalization of a collection.

What is the effective date of this ASU?

      This amendment is effective for annual financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early application is permitted. The amendments in ASU 2019-03 should be applied on a prospective basis.

      Knowledge check

      1 Which of the following is not a criterion for a work or art or historical treasure to be classified as a collection?The asset is held for public education.The asset is preserved.The asset is held by an entity designated СКАЧАТЬ