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Financial Reporting and Regulatory Update

Fourth Quarter 2017

ASU Effective Dates Checklist

Accounting Standards Update (ASU)

Effective Dates for Dec. 31 Year-End Non-PBEs

Early Adoption

Fair Value Disclosures for Investments in Entities That Calculate Net Asset Value (NAV) per Share (ASU 2015-07)

Applies to entities that elect to measure the fair value of an investment using the NAV per share (or its equivalent) practical expedient.

March 31, 2017 Permitted

Equity Method (ASU 2016-07)

Removes the requirement to retroactively adopt the equity method upon an increase in 1) the level of ownership interest or 2) the degree of influence of an investment.

March 31, 2017 Permitted

Technical Corrections and Improvements (ASU 2016-19)

Various corrections to existing accounting guidance, including six that may result in a change in practice for the following:

  • Accounting for internal-use software licensed from third parties in the scope of Subtopic 350-40 (relates to ASU 2015-05)
  • Technical correction for Federal Housing Administration (FHA) or Veterans Benefits Administration (VA) insured loans that do not have to be fully insured by those programs to recognize profit using the full accrual method
  • Disclosure is required when a fair value valuation approach (that is, market, cost, or income) or valuation technique (such as present value or option pricing models) changes
  • Subtopic 405-40 (joint and several liability arrangement obligations) is clarified that for an obligation amount to be considered fixed, the entire obligation amount – and not the entity’s portion of the obligation – must be fixed at the reporting date
  • Subtopic 860-20 (sales of financial assets) is revised to align implementation and recognition guidance and to clarify considerations in determining whether a transferor once again has effective control over transferred financial assets (relates to ASU 2014-11)
  • Technical correction for Subtopic 860-50 (servicing assets and liabilities) to add existing guidance (from AICPA Statement of Position 01-6) on accounting for the sale of servicing rights when the transferor retains loans
March 31, 2017 [4] Permitted for amendments that require transition guidance

Development Stage Entities – Amendment to Variable Interest Entities (VIE) Guidance (ASU 2014-10)

Removes from the consolidation guidance, an exception provided to development stage entities for determining whether the entity is a VIE.

Dec. 31, 2017 [5] Permitted for financial statements not previously issued or made available for issuance

Amendments to the Consolidation Analysis (ASU 2015-02)

Applies to the consolidation of legal entities such as limited partnerships, limited liability corporations, and securitization structures.

Dec. 31, 2017 Permitted, including in an interim period

Measurement Date of Defined Benefit Obligation – Practical Expedient (ASU 2015-04)

Applies to entities that have both defined benefit plans and fiscal year-ends that do not fall on a month-end.

Dec. 31, 2017 Permitted

Disclosures for Short-Duration Insurance Contracts (ASU 2015-09)

Applies to entities that write short-duration insurance policies.

Dec. 31, 2017 Permitted

Measurement of Inventory (ASU 2015-11)

Requires inventory that is measured using first-in, first-out (FIFO) or average cost methods to be measured at the lower of cost and net realizable value. The concept of market is eliminated for these two methods as well as two market valuation techniques: replacement cost and net realizable value less an approximately normal profit margin.

Dec. 31, 2017 Permitted as of the beginning of an interim or annual period

Business Combinations – Simplifying Measurement-Period Adjustments (ASU 2015-16)

Eliminates retroactive revisions to financial statements as a result of measurement-period adjustments, but requires disclosure of measurement period adjustments recorded in the current period.

Dec. 31, 2017 Permitted for financial statements not issued or made available for issuance

VIE Consolidation Model for Related Party Interests (ASU 2016-17)

Applies to the variable interest entity (VIE) consolidation analysis for single decisionmakers evaluating certain interests held by related parties under common control.

Dec. 31, 2017 Permitted, including in an interim period

Not-for-Profit Entities – Partnerships Consolidating a For-Profit Limited Partnership (ASU 2017-02)

Applies to not-for-profit entities that are either general or limited partnerships with investments in a for-profit limited partnership or similar entity.

Dec. 31, 2017 Permitted

Share-Based Payment Modification Accounting (ASU 2017-09)

Requires modification accounting when an award’s fair value, vesting provisions, or classification changes subsequent to a modification of the award.

March 31, 2018 Permitted, including in an interim period

Classification of Deferred Taxes (ASU 2015-17)

Simplifies classification of deferred taxes in a classified balance sheet. Classification as noncurrent only is required.

Dec. 31, 2018 Permitted as of the beginning of an interim or annual period

Derivative Novations (ASU 2016-05)

Applies when there is a change in the counterparty to a derivative instrument that has been designated as a hedging instrument.

Dec. 31, 2018 Permitted, including in an interim period

Contingent Puts and Calls on Debt Instruments (ASU 2016-06)

Applies to debt instruments (or hybrid financial instruments that are determined to have a debt host) with embedded put or call options. When those options are contingently exercisable, there is no requirement that an entity must assess whether the event that triggers the ability to exercise the options is related to interest rates or credit risks.

Dec. 31, 2018 Permitted, including in an interim period

Share-Based Payments (ASU 2016-09)

Applies to share-based payment awards issued to employees and offers simplification in several areas including income taxes, forfeitures, minimum statutory tax withholding requirements, cash flow presentation, and practical expedients for nonpublic entities to use intrinsic value measurement for liability-classified awards and to estimate expected term for certain awards.

Dec. 31, 2018 Permitted, including in an interim period

Not-for-Profit Entities – Financial Statements (ASU 2016-14)

Represents major changes to not-for-profit financial statement presentation standards; focuses on improving the current net asset classification requirements and information presented in financial statements and notes to assess liquidity, financial performance, and cash flows.

Dec. 31, 2018 Permitted

Certain Deferred Taxes for Steamship Entities (ASU 2017-15)

Requires steamship entities to recognize any remaining deferred taxes on certain statutory reserve deposits in accordance with Topic 740.

March 31, 2019 Permitted, including in an interim period

Revenue Recognition (ASU 2014-09)

For all entities, the transaction- and industry-specific recognition methods are eliminated and revenue is recognized by applying a defined principles-based approach.

Clarifying standards:

ASU 2015-14 – Deferral of Effective Date

ASU 2016-08 – Principal Versus Agent Considerations (Gross Versus Net Reporting)

ASU 2016-10 – Identifying Performance Obligations and Licensing

ASU 2016-11 – Rescission of Certain SEC Guidance in Topic 605 (Staff Announcements at March 3, 2016, EITF Meeting)

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

ASU 2016-20 – Technical Corrections and Improvements

ASU 2017-14 – Rescission of SEC SAB Topics 8 and 13 and bill-and-hold guidance; revision of SAB Topic 11.A and SEC guidance for certain vaccine manufacturers

Dec. 31, 2019 Permitted only as of annual periods beginning after Dec. 15, 2016, including interims within

Derecognition and Partial Sales of Nonfinancial Assets (ASU 2017-05)

Primarily applies to the real estate industry but can affect other entities. Clarifies the scope of Subtopic 610-20 by defining an “in substance nonfinancial asset,” and provides guidance on partial sales, such as when an entity retains an equity interest in the entity that owns the transferred nonfinancial assets.

Dec. 31, 2019 consistent with ASU 2014-09 Permitted only as of annual periods beginning after Dec. 15, 2016, including interims within

Service Concession Arrangements for Operators of Public Infrastructure (ASU 2017-10)

In all service concession arrangements between a public sector entity and the operator of the public sector entity’s infrastructure, the public sector entity (or the grantor) should be identified as the customer.

Dec. 31, 2019 (if ASU 2014-09 has not yet been adopted) Permitted, including in an interim period

Recognition and Measurement (ASU 2016-01)

Applies to the classification and measurement of financial instruments. Removes the available for sale category for equities.

Dec. 31, 2019 Not permitted, except for two provisions

Breakage for Prepaid Cards (ASU 2016-04)

Applies to prepaid stored-value products that are redeemable for monetary values of goods or services but also may be redeemable for cash, such as certain prepaid gift cards, prepaid telecommunication cards, and traveler’s checks.

Dec. 31, 2019 Permitted, including in an interim period

Statement of Cash Flows: Certain Clarifications (ASU 2016-15)

Provides guidance on how eight specific cash flows should be classified in the statement of cash flows, including debt prepayment or extinguishment costs, settlement of zerocoupon bonds, contingent consideration payments, insurance settlement proceeds, company-owned life insurance (COLI) policy settlements and premiums, equity method investee distributions, beneficial interests in securitization transactions, and predominance principle for receipts and payments.

Dec. 31, 2019 Permitted, including in an interim period

Income Taxes for Intra-Entity Asset Transfers (ASU 2016-16)

Applies to the recognition of income taxes for intra-entity asset transfers.

Dec. 31, 2019 Permitted as of the beginning of an annual period for which financial statements have not been issued or made available for issuance

Statement of Cash Flows: Restricted Cash (ASU 2016-18)

Requires that restricted cash and cash equivalents be presented in total cash and cash equivalents in the statement of cash flows, and the nature of restrictions on restricted cash and cash equivalents be disclosed.

Dec. 31, 2019 Permitted, including in an interim period

Definition of a Business (ASU 2017-01)

Applies to the analysis of whether an asset or business is acquired (which determines whether goodwill is recognized), as well as asset derecognition and business deconsolidation transactions.

Dec. 31, 2019 Permitted for certain transactions

Benefit Plan Master Trust Reporting (ASU 2017-06)

Applies to disclosures of plans that have an interest in a master trust, which is a trust that a regulated financial institution serves as a trustee or custodian and in which assets of more than one plan sponsored by an employer or employers under common control are held.

Dec. 31, 2019 Permitted

Presentation of Net Periodic Pension and Postretirement Benefit Costs (ASU 2017-07)

Rather than reporting pension expense as a net amount, the service cost component will be presented consistent with similar compensation for the same employees, and the other components will be separately presented in the income statement.

Dec. 31, 2019 Permitted as of the beginning of an annual period, in the first interim period if interim financial statements are issued

Leases (ASU 2016-02)

Revises recognition and measurement for lease contracts by lessors and lessees; operating leases are recorded on the balance sheet for lessees.

Dec. 31, 2020 Permitted

Premium Amortization on Purchased Callable Debt (ASU 2017-08)

Shortens the amortization period for premiums on purchased callable debt securities to the earliest call date, instead of to the maturity date.

Dec. 31, 2020 Permitted, including in an interim period

Financial Instruments with Down-Round Features (Part I) and Scope Exception for Certain Mandatorily Redeemable Financial Instruments (Part II) (ASU 2017-11)

Part I – Simplifies the accounting for certain financial instruments with down-round features by eliminating the requirement to consider the down-round feature in the liability or equity classification determination. For entities that present EPS, requires the effect of the down-round feature in a warrant or other freestanding equity-classified instrument to be presented as a dividend and an adjustment to EPS when it is triggered. Regardless of whether the entity presents EPS, requires the effect of the down-round feature in a convertible instrument such as debt or preferred stock to follow existing guidance for contingent beneficial conversion features and be presented as a discount to the convertible instrument with an offsetting credit to paid-in-capital when it is triggered.

Part II – Changes the indefinite deferral available to private companies with mandatorily redeemable financial instruments and certain noncontrolling interests to a scope exception, which does not have an accounting effect.

Dec. 31, 2020 Permitted, including in an interim period

Hedging Activities (ASU 2017-12)

Expands the nonfinancial and financial risk components that can qualify for hedge accounting and simplifies financial reporting for hedging activities.

Dec. 31, 2020 Permitted, including in an interim period

Credit Losses (ASU 2016-13)

Replaces the incurred loss model with the current expected credit loss (CECL) model for financial assets, including trade receivables, debt securities, and loan receivables.

Dec. 31, 2021 Permitted as of the fiscal years beginning after Dec. 15, 2018, including interim periods within

Goodwill Impairment Testing (ASU 2017-04)

Removes step two – the requirement to perform a hypothetical purchase price allocation when the carrying value of a reporting unit exceeds its fair value – of the goodwill impairment test. Tests performed on or after

Jan. 1, 2022 Permitted for interim or annual goodwill impairment tests performed on testing dates on or after Jan. 1, 2017
 
[4] Most of the amendments were effective immediately. The change related to ASU 2014-11 was previously effective, and the change related to ASU 2015-05 is effective for Dec. 31, 2018, annual financial statements for calendar year-end entities. Other items requiring transition are effective for interim and annual reporting periods beginning after Dec. 15, 2016.
 
[5] The elimination of inception-to-date info and other disclosure requirements of Topic 915 was previously effective for annual periods beginning after Dec. 15, 2014, and interim reporting periods beginning after Dec. 15, 2015.