This week’s blog covers two big proposals from FASB that just came out. The first proposal relates to the movement away from LIBOR. As LIBOR has come under scrutiny there has been a movement to replace LIBOR as a reference rate. However, changing the reference rate can cause significant issues for hedging and other relationships. As a result, FASB is proposing a gentler approach to reference rate reform that will help those impacted by LIBOR’s replacement. The second proposal addresses the never-ending drama related to balance sheet classification of debt. While it sounds like an easy area, the movement to a principles-based approach has identified some impacts that may be unexpected. As such, FASB is reproposing the standard to gather feedback. Both standards will impact many entities so we wanted to get them out there in a timely manner!
This blog addresses two proposed ASUs that will delay effective dates for private companies. Now that private companies have started to implement revenue recognition, we know that it takes more effort for private companies to go through the adoption process. In addition, private companies struggle with the back to back nature of these major changes and have to triage each standard. As a result, the FASB is proposing delaying the CECL, hedging and leases standard for private companies. During this process, the Board also updated its framework for effective dates for private companies. In addition, to the three standards, FASB issued a separate exposure draft delaying the effective date of long-duration contracts for all entities.
The FASB has issued a Staff Q&A that addresses two few frequently asked questions about the application of the limited discretion indicator and the accounting for cost-sharing provisions when implementing ASU 2018-08, Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made. The Q&A addresses cost sharing provisions as well as budgets and its impact on whether these stipulations would qualify as conditions for contribution accounting.