archive-com.com » COM » I » IASPLUS.COM

Total: 1447

Choose link from "Titles, links and description words view":

Or switch to "Titles and links view".
  • EITF Snapshot — November 2015
    A in the derivative contract assigns its rights and obligations to a new party Company B subject to the approval of the existing derivative counterparty Company C After the novation Company C and Company B are the legal counterparties since Company A no longer has any rights or obligations under the contract Derivative novations occur for various reasons including business mergers with the surviving entity novated as the new counterparty novations between legal entities of the same parent company and regulatory requirements that result in novations to central derivative clearing counterparties Summary At this meeting the EITF reaffirmed its consensus for exposure that a novation of a counterparty in a derivative contract does not in itself result in the dedesignation of the derivative from the hedge accounting relationship The Task Force decided that a change in a counterparty s creditworthiness is the critical term to consider and that an entity would assess this term when evaluating hedge effectiveness in each reporting period under current U S GAAP Task Force members noted that if the counterparty s creditworthiness is significantly different the derivative hedge may not meet the highly effective hedge threshold for hedge accounting Effective Date and Transition For public business entities the guidance related to the final consensus will be effective for fiscal years beginning after December 15 2016 including interim periods within those fiscal years For all other entities it will be effective for annual reporting periods beginning after December 15 2017 and interim periods beginning after December 15 2018 Early adoption is permitted A reporting entity will apply the guidance prospectively unless the entity elects to apply it retrospectively Next Steps FASB ratification is expected at the Board s December 2 2015 meeting after which a final ASU will be issued Issue 15 E Contingent Put and Call Options in Debt Instruments Status Final consensus Affects Entities that invest in or issue debt instruments containing contingent put or call options Background Debt instruments that contain embedded features including contingent put and call options are evaluated to determine whether the embedded features that are derivatives are not clearly and closely related to the host and therefore may be bifurcated and accounted for as derivative instruments with changes in fair value recorded through income The guidance on when contingent put and call options embedded in debt instruments must be bifurcated is unclear The guidance contains a four step decision sequence 2 related to determining whether a put or call option that accelerates the repayment of the debt contract s principal is clearly and closely related to the debt instrument Some believe that the result of the four step process is determinative Others believe that in addition to the four step process a contingent put or call option is not considered clearly and closely related 3 to the host contract unless exercise of the put or call is also only indexed to interest rates or credit risk and not some extraneous event or factor The four step decision sequence does not require that the exercise of the contingent put or call option be indexed only to an interest rate or credit risk and not some extraneous event or factor As a result it is unclear whether 1 the assessment of embedded features should be limited to the four step decision sequence or 2 an entity should apply the four step decision sequence and evaluate whether the exercise 4 of the contingent put or call option is indexed to only an interest rate or credit risk and not some extraneous event or factor Summary The Task Force reaffirmed its consensus for exposure that an entity would only apply the four step sequence when assessing whether a contingent put or call option embedded in a debt instrument may be bifurcated as an embedded derivative and recorded at fair value through earnings Thus a potential embedded derivative would not fail to be clearly and closely related solely because the exercise of the contingent put or call option is indexed to an extraneous event or factor Further the Task Force reaffirmed its decision that an entity may elect the fair value option for debt instruments with embedded puts and calls that as a result of this guidance would no longer need to be separate and may account for the contingent put or call as a derivative contract Effective Date and Transition For public business entities the guidance related to the final consensus will be effective for fiscal years beginning after December 15 2016 including interim periods within those fiscal years For all other entities it will be effective for annual reporting periods beginning after December 15 2017 and interim periods beginning after December 15 2018 Early adoption is permitted A reporting entity will apply the final consensus by using a modified retrospective transition approach Under this approach a reporting entity would be required to use the four step sequence to determine whether an embedded derivative is clearly and closely related to the debt host by taking into account the facts and circumstances that existed on the date it issued or acquired the instrument Next Steps FASB ratification is expected at the Board s December 2 2015 meeting after which a final ASU will be issued Issue 15 F Statement of Cash Flows Classification of Certain Cash Receipts and Cash Payments Status Consensus for exposure on certain subissues Affects Entities that prepare a statement of cash flows Background ASC 230 provides some guidance on cash payments and receipts that are classified as either financing or investing activities Cash flows associated with cash payments and receipts that do not qualify as financing or investment activities are classified in operating activities 5 However ASC 230 does not have consistent principles for evaluating the classification of cash payments and receipts in the statement of cash flows which has led to diversity in practice and in certain circumstances financial statement restatements The Task Force deliberated six subissues at its June 2015 meeting reaching tentative decisions on four of them

    Original URL path: http://www.iasplus.com/en-us/publications/us/eitf-snapshot/2015/nov (2016-02-10)
    Open archived version from archive


  • Heads Up — IASB completes its project on accounting for financial instruments under IFRS 9
    significantly since initial recognition It is also required for contract assets and trade receivables that do not contain a significant financing component in accordance with IFRS 15 5 Further entities can elect an accounting policy of always recognizing full lifetime expected losses for contract assets trade receivables and lease receivables Editor s Note IFRS 9 2014 highlights that 12 month expected credit losses are neither of the following The cash shortfalls that are predicted over the next 12 months The lifetime expected credit losses that an entity will incur on financial instruments that it predicts will default in the next 12 months Entities would be required to measure such assets by using lifetime expected credit losses which take into account the probability of default not just a most likely outcome Both the impairment model in IFRS 9 and the FASB s tentative impairment model are based on expected credit losses However the FASB s tentative approach would require entities to recognize current expected credit losses for all assets not just those for which there has been a significant increase in credit risk since initial recognition The IASB rejected such an approach in part because of constituent concerns that it does not reflect the economic link between initial pricing and the initial expectations of credit losses when an entity prices a financial instrument part of the contractual yield compensates the entity for the credit losses initially expected The assessment of whether there has been a significant increase in credit risk is based on an increased probability of default since initial recognition The standard permits entities to use various approaches to assess whether credit risk has increased significantly In addition the guidance includes a rebuttable presumption that the credit risk has increased significantly when contractual payments are more than 30 days past due If a significant increase in credit risk reverses in a subsequent reporting period i e the cumulative credit risk is not significantly higher than the credit risk at initial recognition the expected credit losses on the financial instrument revert to being measured at an amount equal to the 12 month expected credit losses Purchased or Originated Credit Impaired Financial Assets Purchased or originated credit impaired financial assets e g distressed debt are treated differently For these assets an entity recognizes only the cumulative change in lifetime expected losses since initial recognition as a loss allowance Changes in lifetime expected losses since initial recognition are recognized in profit or loss Thus any favorable change in lifetime expected credit losses since initial recognition of a purchased or originated credit impaired financial asset is recognized as an impairment gain in profit or loss regardless of whether a corresponding impairment loss was recorded for the asset in prior periods Editor s Note Under the FASB s tentative approach the allowance for purchased credit impaired PCI financial assets is an amount equal to the current expected credit losses Interest income recognition is based on purchase price plus the initial allowance accreting to the contractual cash flows Method for Estimating Expected Credit Losses The measurement of expected credit losses reflects an unbiased and probability weighted amount that entities would determine by evaluating the range of possible outcomes When measuring expected credit losses entities should also consider the time value of money as well as reasonable and supportable information about past events current conditions and forecasts of future economic conditions The standard defines expected credit losses as the weighted average of credit losses with the respective risks of a default occurring as the weights Although an entity is not required to take every possible scenario into account when measuring expected credit losses it must at a minimum consider the possibility that a credit loss occurs and the possibility that no credit loss occurs even if the possibility of a credit loss occurring is very low An entity may use practical expedients when estimating expected credit losses if they are consistent with the principles in the standard e g the entity may calculate expected credit losses on trade receivables by using a provision matrix that applies a fixed provision rate depending on the number of days in which the trade receivables are outstanding To reflect the time value of money entities should discount expected losses to present value as of the reporting date generally by using the asset s effective interest rate or an approximation thereof as determined at initial recognition However a credit adjusted effective interest rate should be used for expected credit losses of purchased or originated credit impaired financial assets In contrast to the effective interest rate which is based on expected cash flows without adjustment for expected credit losses the credit adjusted effective interest rate takes into account the expected credit losses of the financial asset Editor s Note For an individual financial asset the measurement of expected credit losses must include a probability weighted assessment of credit losses even if credit losses are unlikely and the most probable outcome is that the entity will collect the full contractual cash flows and will not incur any credit losses The requirements in IFRS 9 essentially prohibit entities from estimating expected credit losses solely on the basis of the most likely outcome Modifications and Write Offs If a renegotiation or other modification of the contractual cash flows of a financial asset results in derecognition under IFRS 9 the revised instrument is treated as a new instrument If a renegotiation or other modification of the contractual cash flows of a financial asset does not result in derecognition the entity should recalculate the gross carrying amount of the financial asset i e amortized cost amount before adjusting for any loss allowance by discounting the new expected contractual cash flows post modification at the original effective interest rate and recognizing any resulting modification gain or loss in profit or loss When a financial instrument is not treated as a new instrument the entity assesses from the date of renegotiation or other modification whether the instrument s credit risk has increased significantly since initial recognition by comparing the risk of default as of the reporting date under modified terms with the risk of default as of initial recognition under original unmodified terms IFRS 9 requires entities to write off all or a portion of a financial asset by directly reducing the gross carrying amount when they have no reasonable expectation of recovery Presentation of Interest Revenue While interest revenue is presented as a separate line item the method used to calculate it will vary depending on whether the financial asset is deemed to be credit impaired A financial asset is considered to be credit impaired when its expected future cash flows are significantly affected by the occurrence of one or more events For a financial asset other than a purchased or originated credit impaired financial asset an entity should calculate interest revenue as follows If the financial asset has not become credit impaired since initial recognition the entity applies the effective interest rate method to the gross carrying amount gross method If the financial asset has subsequently become credit impaired the entity applies the effective interest rate to the amortized cost balance which is the gross carrying amount adjusted for any loss allowance net method An entity using the net method should revert to the gross method if 1 the credit risk of the financial instrument subsequently improves to the extent that the financial asset is no longer credit impaired and 2 the improvement is objectively related to an event that occurred after the net method was applied When recognizing revenue related to purchased or originated credit impaired financial assets an entity applies the credit adjusted effective interest rate to the amortized cost carrying amount The credit adjusted effective interest rate is the rate used to discount the cash flows expected at initial recognition to the amortized cost at initial recognition it takes into account the expected credit losses as well as the contractual terms of the instrument Editor s Note The net method is required when the financial asset becomes credit impaired This triggering event differs from the one specified in the standard s guidance on measuring expected credit losses which requires an entity to change its measurement from 12 month expected credit losses to lifetime expected credit losses when the credit risk of the financial asset has significantly deteriorated Disclosures The new expected loss impairment model is accompanied by extensive disclosure requirements that are added to IFRS 7 6 The required disclosures are designed to enable users of financial statements to understand the effect of credit risk on the amount timing and uncertainty of future cash flows Transition for the Expected Loss Impairment Model The amendments are applicable retrospectively in accordance with IAS 8 7 except as follows When initially applying IFRS 9 2014 an entity should compare the credit risk of a financial instrument at initial recognition or for loan commitments and financial guarantee contracts the credit risk as of the date on which the entity became a party to the irrevocable commitment with the credit risk as of the date on which the entity initially applies the standard If determining whether the credit risk has increased significantly since initial recognition would involve undue cost or effort when IFRS 9 2014 is first applied the entity should recognize a loss allowance equal to lifetime expected credit losses as of each reporting date until the financial instrument is derecognized However if the financial instrument s credit risk is low as of a reporting date the credit risk may be assumed not to have increased significantly since initial recognition Amended Classification and Measurement Guidance New FVTOCI Category The 2014 amendments to IFRS 9 add a new FVTOCI category to the standard s existing classification and measurement guidance The amended guidance provides that unless a financial asset qualifies for the fair value option and that option is elected the asset should be accounted for at FVTOCI if both of the following criteria are met The financial asset satisfies the requirements of the contractual cash flow characteristics test The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets For assets in the FVTOCI category interest revenue foreign exchange gains and losses and impairment gains and losses are recognized in profit or loss and any other fair value changes are recognized in OCI Any cumulative gain or loss recorded in OCI is reclassified as profit or loss on derecognition or potentially earlier if the asset is reclassified because of a change in business model Editor s Note The FVTOCI category for debt instruments is not the same as the available for sale category under IAS 39 or U S GAAP Unlike the available for sale criteria the criteria for measuring at FVTOCI are based on the asset s cash flow characteristics and the entity s business model Further impairment of assets in the FVTOCI category is recognized and measured on the basis of expected credit losses in a manner consistent with the measurement of assets at amortized cost Clarification of Existing Guidance on the Business Model Assessment The 2014 amendments to IFRS 9 clarify the standard s existing guidance on assessing whether the entity s business model objective for financial assets is to collect the assets contractual cash flows i e one of the two criteria for measuring a financial asset at amortized cost When sales of financial assets other than those conducted in response to credit deterioration are more than infrequent and more than insignificant in value either individually or in aggregate the entity needs to assess whether and if so how such sales are consistent with an objective of collecting contractual cash flows The sales may be consistent with that objective if they are made close to the maturity of the financial assets and the proceeds from the sales approximate the collection of the remaining contractual cash flows Editor s Note Entities that report under IFRS 9 will need to assess their business models for holding financial assets For some entities such as nonfinancial corporations the assessment may be relatively simple since their financial assets may be limited to trade receivables and bank deposits for which the amortized cost criteria are likely to be met For entities that engage in a broader range of activities involving financial assets e g lenders investors in debt securities held for treasury activities insurance entities and traders it will take more effort to understand the business model and consider the motivations that would lead to disposals of financial assets New Guidance on the Contractual Cash Flow Characteristics Assessment The 2014 amendments to IFRS 9 introduce new guidance on how the contractual cash flows characteristics assessment applies in certain cases Some debt instruments may contain a modified time value element For example a variable interest rate may be resettable monthly to a one year interest rate rather than a one month rate In assessing whether such an instrument meets the SPPI test an entity assesses how different the undiscounted contractual cash flows could be from the undiscounted cash flows that would arise if the time value of money element was not modified i e a comparison to the benchmark cash flows for an unmodified instrument If the undiscounted contractual cash flows could be significantly different from the undiscounted benchmark cash flows under reasonably possible scenarios the debt instrument fails to satisfy the contractual cash flow characteristics test and must therefore be accounted for at FVTPL When a debt instrument contains a prepayment feature the asset meets the cash flow characteristics criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal outstanding which may include additional compensation for the early termination of the contract When the financial asset is acquired or originated at a premium or discount to the contractual par amount and the fair value of the prepayment feature at initial recognition is insignificant the asset meets the contractual cash flow characteristics test if the prepayment amount substantially represents the contractual par amount and accrued but unpaid contractual interest which may include reasonable additional compensation Transition for Amended Classification and Measurement Guidance The amendments to the classification and measurement guidance apply retrospectively in accordance with IAS 8 subject to certain exceptions For example if it is impracticable for an entity to assess a modified time value of money element on the basis of the facts and circumstances at initial recognition of the financial asset the entity should perform the contractual cash flow characteristics test without taking that modified element into account A ppendix A Comparison of Classification and Measurement Models The table below compares the classification and measurement models under current U S GAAP and the FASB s tentative approach respectively with the classification and measurement guidance in IFRS 9 2014 Subject Current U S GAAP and the FASB s Tentative Approach IFRS 9 2014 Classification and measurement categories for financial assets other than equity investments Under ASC 320 entities use one of the following three categories to classify and measure investments in securities Trading fair value through net income FVTNI Available for sale FVTOCI Held to maturity amortized cost Under ASC 310 entities use one of the following two categories to classify and measure loans Held for investment amortized cost Held for sale lower of cost or fair value The FASB has tentatively decided not to change these requirements Three categories Amortized cost FVTOCI FVTPL Classification and measurement categories for equity investments Under existing U S GAAP marketable equity securities other than equity method investments those for which the investor has significant influence over the investee are classified as either held for trading FVTNI or available for sale FVTOCI For available for sale equity securities any amounts in accumulated OCI are recycled to net income upon sale or an other than temporary impairment Investments in nonmarketable equity securities other than equity method investments are measured at cost less impairment unless the fair value option has been elected The FASB has tentatively decided to require entities to carry all investments in equity securities that do not qualify for the equity method at FVTNI For equity investments that do not have a readily determinable fair value the FASB has tentatively decided to provide a practicability exception to fair value measurement under which the investment would be measured at cost less impairment plus or minus observable price changes This exception would not be available to investment companies and broker dealers Equity investments other than equity method investments are accounted for at FVTPL with an option to irrevocably designate equity investments that are not held for trading at FVTOCI at initial recognition For FVTOCI equity investments any amounts in accumulated OCI are not transferred to profit or loss even if the investment is sold or impaired In limited circumstances cost may be an appropriate estimate of fair value Classification and measurement categories for financial liabilities Nonderivative financial liabilities primarily an entity s own debt are accounted for at amortized cost unless an entity elects to use the fair value option Derivative financial liabilities and short sale obligations are measured at fair value The FASB is not changing the accounting for financial liabilities except for the presentation of certain fair value changes for fair value option liabilities see below Financial liabilities are carried at amortized cost except for derivative and trading liabilities and those designated under the fair value option see below Method for classifying financial assets For securities the classification depends on whether the entity holds the security for trading or has the intent and ability to hold it to maturity For loans the classification depends on whether the loan is held to maturity or for the foreseeable future The FASB has tentatively decided not to change these requirements The classification is based on both the entity s business model for managing the financial assets and the contractual cash flow characteristics of the financial asset Criteria for carrying

    Original URL path: http://www.iasplus.com/en-us/publications/us/heads-up/2014/ifrs9 (2016-02-10)
    Open archived version from archive

  • Heads Up — FASB amends guidance on classification and measurement of financial instruments
    a DTA related to AFS securities in combination with the entity s other DTAs Editor s Note When a financial instrument is measured at fair value the tax basis of that instrument is not usually affected This causes a temporary difference between the tax basis and financial reporting basis of an investment thereby creating a DTA or DTL pursuant to ASC 740 Historically some entities have evaluated the need for a valuation allowance on DTAs associated with AFS debt securities separately from other DTAs The revised guidance clarifies that such separate evaluation is not permitted Disclosure Requirements Summarized below are some of the ASU s notable changes related to disclosures Amendments to Disclosures in ASC 825 For financial instruments not recognized at fair value in the statement of financial position the ASU specifies that Entities that do not meet the definition of a public business entity PBE are no longer required to provide the disclosures 4 in ASC 825 10 50 about fair value PBEs are no longer required to disclose the information in ASC 825 10 50 10 b and c related to 1 the methods and significant assumptions they used to estimate fair value or 2 a description of the changes in the methods and significant assumptions they used to estimate fair value However the ASU retains the current requirements in U S GAAP for PBEs to provide fair value information about 1 financial instruments not recognized at fair value in the statement of financial position either in the body of the financial statement or in accompanying notes and 2 the level of the fair value measurement hierarchy in which financial instruments are classified i e Level 1 Level 2 or Level 3 Editor s Note The option permitting entities to omit ASC 825 10 50 fair value disclosures if it is not practicable to estimate fair value has been eliminated The ASU also clarifies U S GAAP by eliminating the guidance in ASC 825 that had been interpreted to permit an entry price notion for estimating the fair value of loans for disclosure purposes The amendments instead require a PBE to disclose the fair value in accordance with the exit price notion in ASC 820 of financial assets and financial liabilities measured at amortized cost except for 1 receivables and payables due within one year or less 2 equity investments for which the practicability exception is applied and 3 deposit liabilities with no defined or contractual maturities Editor s Note Practitioners may have interpreted the current illustrative guidance in ASC 825 10 55 3 to allow entities to disclose the fair value of loans on the basis of an entry price notion The ASU s requirement to disclose fair value on the basis of an exit price notion may represent a major shift for some entities that have continued to disclose the fair value of loans on the basis of entry price The new guidance was intended to achieve greater consistency and comparability related to fair value measurements for financial statement users The ASU also requires all entities to disclose either on the balance sheet or in the notes to the financial statements all financial assets and financial liabilities grouped by 1 measurement category i e amortized cost or fair value net income or OCI and 2 form of financial asset i e securities and loans receivables Equity Investments Without Readily Determinable Fair Values The new guidance requires entities that have elected the practicability exception to fair value measurement discussed above to disclose 1 the carrying amount of investments without readily determinable fair values 2 the amount of the adjustment either upward or downward made to the carrying amount due to observable price changes 3 any impairment charge during the reporting period and 4 additional information to help users understand the information the entity considered in determining the quantitative information disclosed in items 1 through 3 Effective Date and Early Adoption For PBEs the new standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15 2017 For all other entities including not for profit entities and employee benefit plans within the scope of ASC 960 through ASC 965 on plan accounting the effective date is in line with the recommendation of the private company decision making framework that is the guidance is effective for fiscal years beginning one year after the effective date for PBEs i e December 15 2018 and interim reporting periods within fiscal years beginning two years after the PBE effective date i e December 15 2019 Early adoption is permitted for all entities whose financial statements have not yet been issued or have not been made available for issuance with respect to the following changes made to ASC 825 For financial liabilities measured under the fair value option fair value changes resulting from a change in instrument specific credit risk would be presented separately in other comprehensive income The fair value disclosure requirements for financial instruments not recognized at fair value would be eliminated for non PBEs Early adoption of other provisions is not permitted for PBEs Non PBEs are permitted to early adopt the new standard when it becomes effective for PBEs i e fiscal years beginning after December 15 2017 including interim periods therein To adopt the amendments entities will be required to make a cumulative effect adjustment to beginning retained earnings as of the beginning of the fiscal year in which the guidance is effective with the exception of the following Guidance including disclosure requirements on equity securities without readily determinable fair values will be applied prospectively to all equity investments that exist as of the date of adoption Guidance consistent with ASC 820 on using the exit price notion to measure the fair value of financial instruments for disclosure purposes will be applied prospectively If information is no longer comparable as a result of adopting the guidance entities will be required to disclose that fact Appendix Comparison of Classification and Measurement Models

    Original URL path: http://www.iasplus.com/en-us/publications/us/heads-up/2016/issue-1 (2016-02-10)
    Open archived version from archive

  • IFRS in Focus — IASB issues amendments to IAS 12 to clarify the recognition of deferred tax assets for unrealised losses related to debt instruments measured at fair value
    navigation Home News Publications Standards Projects Resources My US GAAP Plus Topics Communications Toggle navigation Search site Publication Directory U S publications Global publications A closer look Deloitte IFRS podcasts Deloitte IFRS webcasts Deloitte Point of View Deloitte comment letters IAASB Deloitte comment letters IASB IFRIC IFRSF Deloitte comment letters Other Guides to pronouncements IFRS in Focus IFRS in your pocket IFRS industry insights IFRS on point IFRS project insights iGAAP Implementing IFRS 15 Model financial statements and checklists Other global publications Robert Bruce interviews Surveys Analysis and opinion Info IFRS in Focus IASB issues amendments to IAS 12 to clarify the recognition of deferred tax assets for unrealised losses related to debt instruments measured at fair value Published on Jan 20 2016 This newsletter outlines the recent amendments to IAS 12 Income Taxes issued by the IASB Download Related Topics Publication series IFRS in Focus Resources International Accounting Standards Board IASB Standards IAS 12 Income Taxes Related news Comment letter feedback on the IASB s proposal related to the different effective dates of IFRS 9 and the forthcoming insurance contracts standard Feb 08 2016 IASB publishes amendments to IAS 7 Jan 29 2016 January 2016 IASB meeting notes posted Jan 22 2016 IASB publishes amendments related to the recognition of deferred tax assets for unrealized losses Jan 19 2016 IASB issues new leasing standard Jan 13 2016 IASB announces IFRS 16 release date Jan 06 2016 All Related Related Publications Deloitte comment letter on proposed amendments to IFRS 4 Feb 08 2016 Accounting Roundup January 2016 Feb 02 2016 IFRS in Focus IASB issues amendments to IAS 7 Statement of Cash Flows requiring disclosure of changes in liabilities arising from financing activities Feb 01 2016 Deloitte comment letter on the IASB s annual improvements to IFRSs 2014 2016 cycle

    Original URL path: http://www.iasplus.com/en-us/publications/global/ifrs-in-focus/2016/ias-12-amendments (2016-02-10)
    Open archived version from archive

  • Journal entry — CAQ SEC Regulations Committee releases highlights of October 21, 2015, joint meeting with SEC staff
    to the CF OCA s general mailbox at DCAOLetters sec gov Current financial reporting matters An update on Regulation A The committee and SEC staff discussed certain issues associated with retrospective adoption of the new revenue recognition guidance in ASC 606 1 including the impact on significance testing for equity method investees and the ratio of earnings to fixed charges The interaction between retrospective application and the requirements related to revising previously issued financial statements associated with certain SEC filings was also discussed As indicated in the highlights Item 11 b of Form S 3 requires retrospective revision of pre transition financial statements to reflect a change in accounting principle for which retrospective application was either required or elected if the Form S 3 also incorporates by reference interim financial statements prepared under the new principle The interaction between the guidance in ASU 2014 17 2 on pushdown accounting and the presentation and computation guidance in Regulation S X Rule 3 10 i 3 SAB Topic 6 K 4 and SAB Topic 1 J 5 Discussion of the guidance in Section 3420 of the SEC Financial Reporting Manual Distribution to Promoter Owners at or Prior to Closing of an IPO Current practice issues Shelf takedowns and greater than 50 percent significant completed and probable business acquisitions 1 FASB Accounting Standards Codification Topic 606 Revenue From Contracts With Customers 2 FASB Accounting Standards Update No 2014 17 Pushdown Accounting a consensus of the FASB Emerging Issues Task Force 3 SEC Regulation S X Rule 3 10 Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered 4 SEC Staff Accounting Bulletin Topic 6 K Accounting Series Release 302 Separate Financial Statements Required by Regulation S X 5 SEC Staff Accounting Bulletin Topic 1 J Application of Rule 3

    Original URL path: http://www.iasplus.com/en-us/publications/us/aje/2016/0122 (2016-02-10)
    Open archived version from archive

  • Journal entry — FAST Act makes changes to the JOBS Act and SEC disclosure requirements
    SEC for review for historical periods required by Regulation S X if the EGC reasonably believes that these historical periods will not be required to be included at the time of the contemplated offering This provision is intended to apply in situations in which the SEC review process is likely to extend through a financial statement staleness date Before the EGC distributes the preliminary prospectus to investors the registration statement must be amended if necessary to include all financial information required by Regulation S X as of the date of that amendment The SEC has 30 days from the enactment date to promulgate rules effecting this change However issuers may omit such financial information starting on the 31st day after enactment Form 10 K and Regulation S K Disclosure Changes The FAST Act amends certain disclosure requirements related to Form 10 K and Regulation S K For example the Act Allows all issuers to submit a summary page on Form 10 K if each item on the summary page contains a cross reference which can be in the form of a hyperlink to the material in the 10 K The SEC has 180 days from enactment to implement this provision Directs the SEC to simplify Regulation S K and eliminate duplicative overlapping or otherwise unnecessary requirements for all issuers The SEC has 180 days from enactment to implement this provision Requires the SEC to study the requirements of Regulation S K report to Congress and commence rulemaking on ways to 1 modernize and simplify Regulation S K in a manner that reduces all costs and burdens on issuers 2 emphasize a company by company approach that eliminates boilerplate language and static requirements and 3 evaluate methods of information delivery and presentation that discourage repetition and the disclosure of immaterial information The SEC has 360 days from enactment to submit the study findings and suggestions to Congress New Section 4 a 7 Exemption for Private Resales Private placement resales by persons other than the issuer such as holders of restricted securities or affiliates of the issuer were not eligible for Section 4 a 2 of the Securities Act of 1933 or Regulation D which exempt private placements by issuers New Section 4 a 7 of the Securities Act of 1933 provides a statutory exemption for private resales of restricted and control securities under certain conditions Securities acquired in reliance on Section 4 a 7 will be subject to transfer restrictions and covered securities will be exempt from certain blue sky laws This provision is effective immediately Incorporation by Reference for Smaller Reporting Companies The FAST Act allows smaller reporting companies entities that as of the last business day of their second fiscal quarter have a public float of less than 75 million to automatically update information in a Form S 1 resale prospectus by incorporating by reference any documents filed with the SEC after the Form S 1 registration statement becomes effective This method of updating information was previously available only

    Original URL path: http://www.iasplus.com/en-us/publications/us/aje/2015/1208 (2016-02-10)
    Open archived version from archive

  • Journal entry — SEC issues and requests comments on interim final rules implementing certain FAST Act provisions
    be extended to other registrants or forms Comments are due 30 days after the date of publication of the rules in the Federal Register The amendments Revise Form S 1 and Form F 1 to allow an emerging growth company EGC 3 to omit financial information from registration statements on Form S 1 or Form F 1 filed before an initial public offering or confidentially submitted to the SEC for review for historical periods required by Regulation S X if the EGC reasonably believes that it will not be required to include these historical periods at the time of the contemplated offering Before the EGC distributes a preliminary prospectus to investors however it must amend the registration statement if necessary to include all financial information required by Regulation S X as of the date of that amendment Revise Form S 1 and amend Regulation S K to permit a smaller reporting company SRC 4 to incorporate by reference into its registration statement any documents filed by the issuer subsequent to the effective date of the registration statement To do so an SRC will need to satisfy existing eligibility requirements for historical incorporation by reference on Form S 1 For example it must be current in filing 1 its annual report for the most recently completed fiscal year and 2 all reports and materials required to have been filed under the Securities Exchange Act of 1934 the Exchange Act during the 12 months immediately preceding the Form S 1 filing In addition any incorporated Exchange Act reports and other materials must be readily available and accessible on the SRC s Web site and the SRC must also disclose in its prospectus that such materials will be provided upon request For more information about the FAST Act s effects on securities laws and regulations see Deloitte s December 8 2015 journal entry Also the SEC staff recently issued compliance and disclosure interpretations related to the FAST Act See our January 12 2016 and December 18 2015 journal entries for more information 1 SEC Interim Final Temporary Rule Release No 33 1003 Simplification of Disclosure Requirements for Emerging Growth Companies and Forward Incorporation by Reference on Form S 1 for Smaller Reporting Companies 2 The rules and amendments implement Sections 71003 and 84001 of the FAST Act 3 The Securities Act of 1933 the Securities Act defines an EGC as an issuer with less than 1 billion in total annual gross revenues during its most recently completed fiscal year 4 The Securities Act defines a smaller reporting company as an issuer that had a public float of less than 75 million as of the last business day of its most recently completed second fiscal quarter or had annual revenues of less than 50 million during the most recently completed fiscal year for which audited financial statements are available Download Related Topics Publication series Accounting Journal Entries Resources U S Securities and Exchange Commission SEC Related news SEC staff publishes C DI on EDGAR

    Original URL path: http://www.iasplus.com/en-us/publications/us/aje/2016/0115 (2016-02-10)
    Open archived version from archive

  • Journal entry — SEC staff publishes C&DIs of FAST Act requirements that affect savings and loan holding companies
    TRG Snapshot U S comment letters XBRL Global publications Info Journal entry SEC staff publishes C DIs of FAST Act requirements that affect savings and loan holding companies Published on Jan 12 2016 On December 21 2015 the SEC s Division of Corporation Finance issued four Compliance and Disclosure Interpretations C DIs of requirements under the FAST Act 1 that apply to savings and loan holding companies The new C DIs discuss The FAST Act s effect on Sections 12 g and 15 g of the Securities Exchange Act of 1934 The FAST Act s effect on registrations as of a fiscal year end on or before December 4 2015 Termination of the registration of a class of equity security Suspension of reporting obligations The FAST Act C DIs are in addition to those issued on December 10 2015 that apply to emerging growth companies see Deloitte s December 18 2015 journal entry for more information 1 The Fixing America s Surface Transportation Act became law on December 4 2015 For a summary of the FAST Act s key provisions see Deloitte s December 8 2015 journal entry Download Related Topics Publication series Accounting Journal Entries Resources U S Securities and Exchange Commission SEC Related news SEC staff publishes C DI on EDGAR filings for issuers of asset backed securities Feb 09 2016 SEC updates EDGAR filer manual and technical specifications Feb 02 2016 SEC staff updates interactive data XBRL interpretations and FAQs Jan 26 2016 SEC adopts rules implementing FAST Act provisions Jan 14 2016 SEC publishes examination priorities for 2016 Jan 11 2016 SEC reports improvements in NRSRO compliance Dec 28 2015 All Related Related Publications Accounting Roundup January 2016 Feb 02 2016 Journal entry New revenue standard SEC staff remarks about transition resource group activities Feb 02

    Original URL path: http://www.iasplus.com/en-us/publications/us/aje/2016/0112 (2016-02-10)
    Open archived version from archive



  •