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  • IASB issues new leasing standard
    other nonfi nan cial assets and de pre ci ated ac cord ingly and the liability accrues interest The lease liability is initially measured at the present value of the lease payments payable over the lease term dis counted at the rate implicit in the lease if this rate can be readily de ter mined If the rate cannot be readily de ter mined the lessee s in cre men tal borrowing rate should be used Like IAS 17 IFRS 16 requires lessors to classify leases as operating or finance leases A lease is clas si fied as a finance lease if it transfers sub stan tially all the risks and rewards of ownership of an un der ly ing asset Otherwise the lease is clas si fied as an operating lease For finance leases a lessor recognizes finance income over the lease term on the basis of a pattern re flect ing a constant periodic rate of return on the net in vest ment A lessor recognizes operating lease payments as income on a straight line basis or if more rep re sen ta tive of the pattern in which benefit from use of the un der ly ing asset is di min ished another sys tem atic basis IFRS 16 is effective for annual reporting periods beginning on or after January 1 2019 Earlier ap pli ca tion is permitted if IFRS 15 Revenue From Contracts With Customers has also been applied Editor s Note The FASB is currently finalizing its new leases standard and is expected to issue it in February 2016 We expect the FASB s new standard on lease accounting will be effective for public business entities for annual periods beginning after December 15 2018 i e calendar periods beginning on January 1 2019 and interim periods therein For all other entities the standard would be effective for annual periods beginning after December 15 2019 i e calendar periods beginning on January 1 2020 and interim periods thereafter Early adoption would be permitted for all entities IFRS 16 Leases is available on the IASB s eIFRS Web site subscription required For more information see the press release project summary effects analysis and fact sheet on the IASB s Web site Also see the following Deloitte resources IFRS in Focus newsletter Summary of IAS 16 Leases Video interview with Hans Hooger vorst and Veronica Poole The Bruce column Bringing clarity to leases The new standard Overview of the project history Related Topics Resources International Accounting Standards Board IASB Projects Leases IFRS 16 Standards IAS 17 Leases IFRS 16 Leases IFRIC 4 Determining Whether an Arrangement Contains a Lease SIC 15 Operating Leases Incentives SIC 27 Evaluating the Substance of Transactions in the Legal Form of a Lease Quick links IFRS 16 Leases 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

    Original URL path: http://www.iasplus.com/en-us/news/2016/01/ifrs-16 (2016-02-10)
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  • FASB issues final standard on classification and measurement of financial instruments
    of financial instruments Jan 05 2016 The FASB has issued ASU 2016 01 Recognition and Measurement of Financial Assets and Financial Liabilities which contains limited amendments to the guidance in U S GAAP on the classification and measurement of financial instruments The new standard significantly revises an entity s accounting related to 1 the classification and measurement of investments in equity securities and 2 the presentation of certain fair value changes for financial liabilities measured at fair value It also amends certain disclosure requirements associated with the fair value of financial instruments For more information see Deloitte s related Heads Up newsletter and journal entry as well as the ASU press release and FASB in Focus newsletter on the FASB s Web site Related Topics Resources Financial Accounting Standards Board FASB Projects Financial instruments Classification and measurement Standards ASC 825 Financial Instruments Related news Highlights from the FASB s February 3 meeting Feb 05 2016 FASB proposes guidance on certain cash flow classification issues Jan 29 2016 FASB issues proposed ASUs on pensions and other postretirement benefit plans Jan 26 2016 Highlights from the FASB s January 20 meeting Jan 22 2016 FASB publishes new issue of FASB Outlook Jan 12 2016 Highlights from the FASB s January 6 meeting Jan 07 2016 All Related Related Publications Heads Up FASB proposes guidance on cash flow classification Feb 04 2016 Accounting Roundup January 2016 Feb 02 2016 Heads Up FASB proposes guidance on presentation of net periodic benefit cost and disclosures related to defined benefit plans Jan 28 2016 U S comment letter on clarifying the definition of a business Jan 25 2016 All Related Related Dates FASB proposal on government assistance Feb 11 2016 Comment deadline FASB proposal on the disclosure requirements for fair value measurements Mar 01 2016 Comment

    Original URL path: http://www.iasplus.com/en-us/news/2016/01/fasb-asu-financial-instruments (2016-02-10)
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  • ASC 605 — Revenue Recognition
    of products if either The buyer has a right to return the product The product sold is subsequently repurchased subject to an operating lease 605 20 Services ASC 605 20 notes the following This Subtopic specifies the accounting for revenue from service arrangements not addressed elsewhere in the Codification including the following Separately priced extended warranty and product maintenance contracts Commissions from certain experience rated or retrospective insurance arrangements Certain loan guarantee fees In transit freight service Advertising barter transactions 605 25 Multiple Element Arrangements ASC 605 25 notes the following This Subtopic addresses some aspects of the accounting by a vendor for arrangements under which it will perform multiple revenue generating activities Specifically this Subtopic addresses how to determine whether an arrangement involving multiple deliverables contains more than one unit of accounting and how arrangement consideration shall be measured and allocated to the separate units of accounting in the arrangement 605 28 Milestone Method ASC 605 28 notes that it specifies the accounting for research or development deliverables or units of accounting that include milestones that are accounted for under the milestone method of revenue recognition 605 30 Rights to Use ASC 605 30 notes that it only contains links to other guidance on rights to use which are transactions in which one entity conveys the right to use an asset and generate revenue from using that asset to another entity in return for payment 605 35 Construction Type and Production Type Contracts ASC 605 35 notes that it provides guidance on the accounting for the performance of contracts for which specifications are provided by the customer for the construction of facilities or the production of goods or for the provision of related services 605 40 Gains and Losses ASC 605 40 notes that it clarifies the accounting for involuntary conversions of nonmonetary assets such as property or equipment to monetary assets such as insurance proceeds Examples of such conversions are total or partial destruction or theft of insured nonmonetary assets and the condemnation of property in eminent domain proceedings It further notes that although ASC 605 40 provides specific guidance for gains and losses resulting from involuntary conversions the majority of other guidance for gains and losses is included in the Derecognition Section of the relevant asset or liability Topic 605 45 Principal Agent Considerations ASC 605 40 notes that it provides guidance as to whether an entity should report revenue gross or net of certain amounts paid to others The reporting depends on whether the entity functions as principal or agent 605 50 Customer Payments and Incentives ASC 605 50 notes the following This Subtopic provides guidance on all of the following A vendor s accounting for consideration given by a vendor to a customer including both a reseller of the vendor s products and an entity that purchases the vendor s products from a reseller Such consideration including sales incentives offered by a vendor on either a limited or a continuous basis to a customer may

    Original URL path: http://www.iasplus.com/en-us/standards/fasb/revenue/asc605 (2016-02-10)
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  • ASC 450 — Contingencies
    for loss and gain contingencies An estimated loss from a loss contingency is recognized only if the available information indicates that 1 it is probable that an asset has been impaired or a liability has been incurred at the reporting date and 2 the amount of the loss can be reasonably estimated Loss contingencies that do not meet both criteria for recognition still may need to be disclosed in the financial statements Gain contingencies usually are not be reflected in the financial statements because to do so might be to recognize revenue before its realization The Codification also provides certain industry specific contingency guidance but such guidance is included in the industry sections of the Codification Related resources See our comprehensive collection of news and publications related to contingencies International guidance For the IASB s guidance on this topic see IAS 37 Provisions Contingent Liabilities and Contingent Assets Overview The full text of ASC 450 can be found in the FASB Accounting Standards Codification link to the FASB s Web site registration required Also the full text of the Codification and Deloitte authored Q As related to the Codification are available in Deloitte s Technical Library Web site subscription required ASC 450 comprises three Subtopics Overall Loss Contingencies and Gain Contingencies Below is an overview of each Subtopic 450 10 Overall ASC 450 10 notes that it establishes the scope and scope exceptions for the Contingencies Topic provides definitions and includes links to the standards that appear in Subtopics 450 20 and 450 30 450 20 Loss Contingencies ASC 450 20 notes the following The following are examples of loss contingencies that are discussed in this Subtopic Injury or damage caused by products sold Risk of loss or damage of property by fire explosion or other hazards Actual or possible claims and assessments Threat of expropriation of assets Pending or threatened litigation 450 30 Gain Contingencies ASC 450 30 notes that it provides guidance for the recognition and disclosure of a gain contingency but notes that contingencies that result in a gain should generally not be included in the financial statements because doing so would recognize revenue before it is realized Content from the FASB Accounting Standards Codification included at http www usgaapplus com is copyrighted by the Financial Accounting Foundation 401 Merritt 7 PO Box 5116 Norwalk CT 06856 5116 and is reproduced with permission FASB Accounting Standards Updates The following ASUs amended the guidance in this Topic ASU 2014 09 Revenue From Contracts With Customers issued May 2014 effective December 15 2016 for public entities ASU 2010 20 Receivables Topic 310 Disclosures About the Credit Quality of Financing Receivables and the Allowance for Credit Losses issued July 2010 effective December 15 2010 for public entities and December 15 2011 for nonpublic entities ASU 2010 07 Not for Profit Entities Topic 958 Not for Profit Entities Mergers and Acquisitions issued January 2010 effective December 15 2009 Proposed FASB Accounting Standards Updates No current proposed ASUs on Topic 450 Quick

    Original URL path: http://www.iasplus.com/en-us/standards/fasb/liabilities/asc450 (2016-02-10)
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  • Inventories: Key differences between U.S. GAAP and IFRSs
    Measurement of carrying value Lower of cost or market Lower of cost or net realizable value Costing formula The same formula used to determine the cost of inventory does not need to be applied to all inventories that have a similar nature and use to the entity The same formula used to determine the cost of inventory must be applied to all inventories that have a similar nature and use to the entity Asset retirement obligations AROs An ARO that is created during the production of inventory is added to the carrying amount of the property plant and equipment used to produce the inventory An ARO that is created during the production of inventory is accounted for as a cost of the inventory in accordance with IAS 2 and may be added to the carrying amount of the inventory Accounting methods First in first out FIFO last in first out LIFO weighted average cost and specific identification are acceptable accounting methods for determining cost of inventory FIFO and weighted average cost are acceptable accounting methods for determining cost of inventory LIFO is not permitted The specific identification method is required for inventory items that are not ordinarily interchangeable and for goods or services produced and segregated for specific projects Reversal of write downs Write downs taken to reduce inventories to the lower of cost or market may not be reversed for subsequent increases in value Write downs taken to reduce inventories to the lower of cost or net realizable value are reversed for subsequent increases in value Measurement of Carrying Value Although a lower of cost or market approach is used under U S GAAP to determine the carrying value of inventory under IFRSs a lower of cost or net realizable value approach is used Under U S GAAP the term market as defined in ASC 330 10 20 states that market generally means current replacement cost except that this replacement cost should not 1 exceed net realizable value or 2 be lower than net realizable value less a normal profit margin Similarly to U S GAAP IFRSs define net realizable value as estimated selling price less estimated costs of completion and sale Example 1 Carrying value 100 Replacement cost 90 Net realizable value 95 Net realizable value less normal profit margin 80 Inventory would be recorded at 90 under U S GAAP and at 95 under IFRSs Example 2 Carrying value 100 Replacement cost 90 Net realizable value 105 Net realizable value less normal profit margin 95 Inventory would be recorded at 95 under U S GAAP and at 100 under IFRSs i e no write down is required Costing Formula ASC 330 10 30 13 permits an entity to apply different costing formulas to different components of its inventory The business operations in some cases may be such as to make it desirable to apply one of the acceptable methods of determining cost to one portion of the inventory or components thereof and another of the acceptable methods

    Original URL path: http://www.iasplus.com/en-us/standards/ifrs-usgaap/inventories (2016-02-10)
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  • Leases (IFRS 16)
    obligation is reassessed for other reasons e g a change in the lease term Variable payments based on index or rate would be reassessed when there is a change in contractual cash flows e g the lease payments are adjusted for a change in the consumer price index Discount rate Lessee would use the rate if available that the lessor charges the lessee If the rate is not available the lessee would use its incremental borrowing rate as of the date of lease commencement Lessor would use the rate it charges the lessee Private company lessees can also use a risk free rate No exemptions provided for private company lessees Lease modifications A lease modification would be any change to the contractual terms and conditions of a lease that was not part of the original terms and conditions of the lease A lessee lessor would account for a lease modification as a new lease separately from the original lease when the modification 1 grants the lessee an additional ROU asset and 2 prices the additional ROU asset commensurately with its stand alone price Lessees would account for a lease modification that is not a new lease by using the updated lease payments and current discount rate to revise the lease liability and adjust the ROU asset and in some cases a gain loss may be recognized Lessors would account for a lease modification that is not a new lease either effectively as a new lease modification of a Type B lease or applying the guidance on accounting for modifications of receivables Type A lease Sublease A lessor in a sublease would determine the lease classification on the basis of the underlying asset A lessor in a sublease would determine the lease classification on the basis of the ROU asset Sale and leaseback arrangements The transaction would not be considered a sale if 1 it does not qualify as a sale under ASC 606 or 2 the leaseback is a type A lease The full gain would be recognized if the transaction is considered a sale The transaction would not be considered a sale if it does not qualify as a sale under IFRS 15 All leasebacks would be considered type A leases The gain would be limited to only the portion associated with the residual asset sold The portion of the gain related to the underlying asset leased back would be offset against the ROU asset FASB s Disclosure Requirements Lessee Disclosure Requirements The overall objective of the lessee disclosure requirements is to enable users of financial statements to understand the amount timing and uncertainty of cash flows arising from leases Accordingly the FASB decided that in addition to this disclosure objective the final leases standard should include both qualitative and quantitative disclosures about a lessee s lease arrangements Qualitative Disclosures While the FASB decided not to provide additional guidance on the level of disaggregation required for presenting qualitative information about a lessee s lease arrangements the Board agreed that

    Original URL path: http://www.iasplus.com/en-us/projects/convergence/leases (2016-02-10)
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  • Overview of the structure of the Financial Accounting Foundation and the FASB
    regulators Overview of the structure of the Financial Accounting Foundation and the FASB Info Overview of the structure of the Financial Accounting Foundation and the FASB The Financial Accounting Foundation FAF is a nonprofit organization that comprises the Financial Accounting Standards Board FASB The structure of the FAF is outlined below Group Role Formed Governance Financial Accounting Foundation FAF Oversees the work of the FASB GASB and their advisory councils structure strategy administration and finances 1972 Technical Financial Accounting Standards Board FASB Establishes standards of financial accounting and reporting for private sector entities including business and not for profit organizations 1973 Governmental Accounting Standards Board GASB Establishes standards of financial accounting and reporting for state and local governmental entities 1984 Emerging Issues Task Force EITF Assists the FASB in improving financial reporting through the timely identification discussion and resolution of financial accounting issues 1984 Private Company Council PCC Determines alternatives to existing nongovernmental U S GAAP to address the needs of users of private company financial statements based on criteria mutually agreed upon by the PCC and the FASB 2012 Advisory Financial Accounting Standards Advisory Council FASAC Consults with the FASB on technical issues project priorities and other matters likely to concern the FASB 1973 Governmental Accounting Standards Advisory Council GASAC Consults with the GASB on technical issues project priorities and other matters likely to concern the GASB Selected advisory groups Investor Advisory Committee IAC 2007 Not for Profit Advisory Committee NAC 2009 Small Business Advisory Committee SBAC 2004 Joint Transition Resource Group for Revenue Recognition Consults with the FASB and IASB on implementation issues when applying ASC 606 and IFRS 15 2014 Latest news GASB proposes guidance on lease contracts Feb 09 2016 Highlights from the FASB s February 3 meeting Feb 05 2016 FASB proposes guidance on certain

    Original URL path: http://www.iasplus.com/en-us/resources/faf (2016-02-10)
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  • Revenue: News and publications
    January 6 2016 meeting the FASB discussed 1 revenue recognition 2 the definition of a business and 3 goodwill impairment Investment Management Accounting and Financial Reporting Update 2015 Dec 21 2015 The eighth annual accounting and financial reporting update discusses topics that may be of particular interest to investment management entities It summarizes notable developments and activities that occurred during 2015 including 1 the FASB s completion of the amendments to its consolidation requirements 2 the continued activities related to the implementation of the FASB s new revenue guidance and 3 the SEC s continued focus on rulemaking Standard setting activities that affect advisers are outlined in the first section of the publication and standard setting activities that affect funds are outlined in the second Journal entry FASB to issue final standard on improvements to principal versus agent guidance Dec 17 2015 At their joint meeting yesterday the FASB and IASB discussed feedback received on their proposals to clarify certain aspects of the principal versus agent guidance in their new revenue standard ASC 606 and IFRS 15 Respondents were largely supportive of the boards efforts to improve the understandability and operability of the standard s principal versus agent guidance During the meeting the boards completed their redeliberations and the FASB directed its staff to draft a final Accounting Standards Update for a vote by written ballot U S comment letter on narrow scope improvements and practical expedients Nov 20 2015 Deloitte Touche LLP comments on the FASB s proposed ASU Narrow Scope Improvements and Practical Expedients issued by the FASB on September 30 2015 Banking Securities Accounting and Financial Reporting Update 2015 Nov 18 2015 The eighth edition of the annual update highlights selected accounting and reporting developments that may be of interest to banking and securities entities IFRS in Focus Joint meeting on revenue Nov 18 2015 This newsletter summarizes the November meeting of the IASB and FASB joint revenue transition resource group TRG discusses implementation of new revenue standard Nov 11 2015 At its November 9 2015 meeting the FASB s and IASB s joint revenue transition resource group TRG discussed potential issues related to implementing the boards new revenue standard TRG Snapshot Joint meeting on revenue November 2015 Nov 11 2015 This TRG Snapshot summarizes the November 9 2015 meeting of the joint FASB and IASB transition resource group TRG on revenue recognition which was formed to discuss and analyze potential issues that preparers may face when implementing the boards new revenue standard AICPA issues working drafts on revenue implementation issues Nov 02 2015 The AICPA s Financial Reporting Executive Committee has released for public comment nine working drafts on accounting issues associated with the implementation of the new revenue standard U S comment letter on principal versus agent considerations Oct 16 2015 Deloitte Touche LLP comments on the FASB s proposed Accounting Standards Update Principal Versus Agent Considerations Reporting Revenue Gross Versus Net issued on August 31 2015 Highlights from recent FASB meetings Oct 09 2015

    Original URL path: http://www.iasplus.com/en-us/collections/topics/revenue/605 (2016-02-10)
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