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Financial Reporting and Regulatory Update

Second Quarter 2020

ASU effective dates for nonpublic business entities (non-PBEs)

Accounting Standards Update (ASU)

Effective dates for Dec. 31 year-end non-PBEs

Early adoption

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 SEC Staff Observer Comments (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 Staff Accounting Bulletin (SAB) Topic 13, “Revenue Recognition”
Dec. 31, 20191 Permitted only as of annual periods beginning after Dec. 15, 2016, including interim periods within

Codification Improvements (ASU 2018-09)

Contains 30 improvements in all, including income taxes for certain quasi reorganizations, fair value option debt extinguishments, financial instruments, excess tax benefits, tax allocation methods, offsetting derivative assets and liabilities, transfer restrictions for fair value measurement, balance sheet offsetting for broker-dealers, and valuation for a stable value common collective trust fund.

Varies by issue (see pages 8 and 9 of the ASU)

Upon issuance, July 16, 2018

Dec. 31, 2019

Dec. 31, 2020

Permitted, including in an interim period

Codification Improvements to Financial Instruments

(ASU 2020-03)

Clarifies and improves various financial instruments topics including: all entities (not just PBEs) are required to provide fair value option disclosures; applicability of portfolio exception in measuring fair value for nonfinancial items accounted for as derivatives; disclosure requirements in Topic 320 apply to disclosure requirements in Topic 942 for depository and lending institutions; adds cross-reference to line-of-credit or revolving-debt arrangements guidance to guidance in accounting for fees between debtor and creditor and third-party costs directly related to exchanges or modifications of debt instruments in Subtopic 470-50; and fair value measurement disclosure requirements do not apply to entities using the net asset value per share practical expedient.

(Also contains clarification and improvements to ASU 2016-13, which is included as clarifying standard.)

March 31, 2020 (regarding alignment of disclosure requirements for depository and lending institutions)

Dec. 31, 2020 (other improvements)

Permitted, including in an interim period

Optional Guidance in Accounting for Impacts of Reference Rate Reform

(ASU 2020-04)

Provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The optional guidance does not apply to contract modifications made and hedging relationships entered into or evaluated after Dec. 31, 2022, except for hedging relationships existing as of Dec. 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship.

March 31, 2020 

Not applicable 

Improvements to Recognition and Measurement of Financial Instruments

(ASU 2019-04)

Contains various improvements to ASU 2016-01, including scope, fair value measurement alternative, held-to-maturity debt securities fair value disclosures, and remeasurement of equity securities at historical exchange rates. (Also contains clarification and improvements to ASU 2016-13 and ASU 2017-12, which are included as clarifying standards.)

Dec. 31, 2020

Permitted, including in an interim period

Contributions Received and Made for Not-for-Profit Entities (ASU 2018-08)

Improves the guidance on contributions and exchange transactions. Although the ASU primarily affects not-for-profit entities, it applies to all entities, including business entities, that receive or make contributions of cash and other assets.

For contributions received, Dec. 31, 2019
 

For contributions made, Dec. 31, 2020

Permitted

Share-Based Consideration Payable to a Customer (ASU 2019-08)

Requires that an entity apply the guidance in Topic 718 to measure and classify share-based payment awards granted to a customer. The amount recorded as a reduction in the transaction price, and therefore revenue, should be based on the grant-date fair value of the share-based payment award.

March 31, 2020 (if ASU 2018-17 has been adopted)
 

Dec. 31, 2020 (if ASU 2018-17

has not been adopted)

Permitted, including in an interim period, but no earlier than the adoption of ASU 2018-17

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 earnings per share (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

Additional Benchmark Interest Rate for Hedging (ASU 2018-16)

Expands the number of benchmark interest rates that can be used in accounting hedge designations to include the Overnight Index Swap (OIS) rate based on the Secured Overnight Financing Rate (SOFR) and stems from concerns about the sustainability of the London Interbank Offered Rate (LIBOR).

Dec. 31, 2020 (consistent with ASU 2017-12)

March 31, 2020, if ASU 2017-12 was early adopted

Permitted, including in an interim period, if ASU 2017-12 was early adopted

Nonemployee Stock Compensation Simplifications (ASU 2018-07)

Aligns the accounting guidance for nonemployee stock payments with the guidance for employee stock compensation in ASC Topic 718.

Dec. 31, 2020

Permitted, including in an interim period, but no earlier than the adoption of Topic 606

Fair Value Measurement Disclosure (ASU 2018-13)

Removes, modifies, or adds certain fair value measurement disclosures related to financial instrument transfers and Level 3 instruments, among others.

Dec. 31, 2020

Permitted

Updating the Definition of Collections (ASU 2019-03)

Improves the definition of collections. Requires additional disclosure. Although the ASU primarily affects not-for-profits, it applies to all entities that maintain collections.

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.

Clarifying standards:

ASU 2019-04 – Provides specific improvements and clarifications to the guidance in Topic 815. Among other areas, addresses partial-term fair value hedges of interest-rate risk, amortization and disclosure of fair value hedge basis adjustments, and consideration of hedged contractually specified interest rate under the hypothetical derivative method.

ASU 2019-10 – Deferral of effective dates.
Dec. 31, 2021 Permitted, including in an interim period

Certain Costs in Media and Entertainment Industry (ASU 2019-02)

Applies to broadcasters and entities that produce and distribute films and episodic television series. Aligns the accounting of episodic television series with films, and provides more relevant financial reporting information to users of financial statements.
Dec. 31, 2021 Permitted, including in an interim period

Defined Benefit Plan Disclosure for Sponsors (ASU 2018-14)

Removes and clarifies certain disclosures for sponsors of defined benefit plans. Adds disclosure for weighted-average interest credit rates for certain plans and the reasons for significant gains and losses in the benefit obligation.
Dec. 31, 2021 Permitted

Implementation Costs for Cloud Computing Arrangements (CCAs) (ASU 2018-15)

Aligns accounting for implementation costs of CCAs with or without a license (that is, regardless of whether the CCA is a service contract) by capitalizing implementation costs during the application development stage and amortizing the costs over the term of the arrangement.
Dec. 31, 2021 Permitted, including in an interim period

Variable Interest Entity (VIE) Model – Targeted Improvements for Related Parties (ASU 2018-17)

Provides a private company accounting alternative not to apply VIE consolidation guidance to any arrangement with legal entities that are under common control if neither the parent nor the legal entity is a PBE (thus expanding the alternative for common control leasing arrangements to all common control arrangements). Also, revises the analysis for determining whether a decision-making fee paid by a VIE is a variable interest such that indirect interests in a VIE held through related parties in common control arrangements would be considered on a proportional basis (instead of as the equivalent to a direct interest).
Dec. 31, 2021 Permitted, including in an interim period

Collaborative Arrangements (Topic 808) (ASU 2018-18)

Requires that Topic 606 be applied to collaborative arrangements when the arrangement participant is a customer and aligns the unit-of-account guidance in Topic 808 with Topic 606. Revenue in the scope of Topic 606 should be presented separately from revenue outside its scope.
Dec. 31, 2021 Permitted, including in an interim period

Simplifying Accounting for Income Taxes (ASU 2019-12)

Simplifies the accounting for income taxes by removing certain exceptions in Topic 740. Improves consistent application of other areas of guidance within Topic 740 by clarifying and amending existing guidance.
Dec. 31, 2022 Permitted, including in an interim period

Interaction Between Accounting for Equity Securities, Equity Method Investments, and Certain Derivative Instruments

(ASU 2020-01)

Clarifies the interaction of the accounting for equity securities under Topic 321 and investments accounted for under the equity method of accounting in Topic 323 and the accounting for certain forward contract and purchased options accounted for under Topic 815.
Dec. 31, 2022 Permitted, including in an interim period

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. Replaces Topic 840 with Topic 842.

Clarifying standards:

ASU 2018-01 – Provides a practical expedient in transition to not evaluate existing or expired land easements under Topic 842 that were not previously accounted for as leases under Topic 840.

ASU 2018-10 – Provides 16 improvements and clarifications to the guidance in Topic 842.

ASU 2018-11 – Provides an optional transition method for adopting Topic 842 that will eliminate comparative period reporting under the new guidance in the adoption year. Provides a practical expedient for lessors to not separate nonlease components from the associated lease component in specified circumstances.

ASU 2018-20 – Provides improvements specific to lessors for evaluating sales taxes, recording reimbursed costs, and allocating variable payments to lease and nonlease components.

ASU 2019-01 – Provides improvements in determining fair value of underlying assets by lessors that are not manufacturers or dealers, presentation of the statement of cash flows for sales-type and direct financing leases, and transition disclosures.

ASU 2019-10 – Deferral of effective dates.

ASU 2020-05 – Deferral of effective dates.
Dec. 31, 2022 Permitted

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.

Clarifying standards:

ASU 2019-10 – Deferral of effective dates.
Tests performed on or after Jan. 1, 2023 Permitted for interim or annual goodwill impairment tests performed on testing dates on or after Jan. 1, 2017

Credit Losses (ASU 2016-13)

Replaces the incurred loss model with the CECL model for financial assets, including trade receivables, debt securities, and loan receivables.

Clarifying standards:

ASU 2018-19 – Clarifies the effective date for non-PBEs and that impairment of operating lease receivables is in the scope of ASC Topic 842, “Leases,” and not the CECL model.

ASU 2019-04 – Provides specific improvements and clarifications to the guidance in Topic 326. Addresses accrued interest, transfers between classifications or categories for loans and debt securities, recoveries, vintage disclosures, and contractual extensions and renewal options.

ASU 2019-05 – Targeted transition relief provides an option to irrevocably elect the fair value option, on an instrument-by-instrument basis, for certain financial assets (excluding held-to-maturity debt securities) previously measured at amortized cost.

ASU 2019-10 – Deferral of effective dates.

ASU 2019-11 – Provides specific improvements and clarifications to the guidance in Topic 326. Addresses expected recoveries for purchased financial assets with credit deterioration, transition relief for troubled debt restructurings, disclosures related to accrued interest receivables, financial assets secured by collateral maintenance provisions, and conforming cross-references to Subtopic 805-20.

ASU 2020-03 – Aligns contractual term to measure expected credit losses for a net investment in a lease to be consistent with the lease term determined under Topic 842. Clarifies that when an entity regains control of financial assets sold, an allowance for credit losses should be recorded.

Dec. 31, 2023

 

 

 

 

 

 

 

 

For ASU 2019-04, ASU 2019-05, ASU 2019-11, and ASU 2020-03, March 31, 2020, for entities that have adopted ASU 2016-13; otherwise, effective dates the same as ASU 2016-13
Permitted as of the fiscal years beginning after Dec. 15, 2018, including interim periods within

Long-Duration Insurance Contracts (ASU 2018-12)

Revises the accounting for life insurance and annuity contracts by eliminating the method of locking in liability assumptions and the premium deficiency test for traditional and limited-payment contracts, among other methodology changes. Requires additional disclosure.

Clarifying standards:

ASU 2019-09 – Deferral of effective dates.
Dec. 31, 2024 Permitted
1 ASU 2020-05 defers, for one year, the required effective date for certain entities that have not yet issued their financial statements (or made financial statements available for issuance) as of June 3, 2020. Those entities may elect to adopt the guidance for annual reporting periods beginning after Dec. 15, 2019, and for interim reporting periods within annual reporting periods beginning after Dec. 15, 2020.