By Adam Parkhurst
Staff, Audit & Assurance Services
Beginning Dec. 15 this year, several significant changes are going into effect for financial statements reported under Generally Accepted Accounting Principles (GAAP). These Accounting Standard Updates (ASUs) could affect the reporting requirements of your business or not-for-profit.
Below is a quick rundown of what these new standards could mean, broken down by types of organizations.
The following ASUs are becoming effective for all applicable entities:
- ASU 2016-14 Presentation of Financial Statements of Not-for-Profit Entities
This ASU significantly changes financial reporting for Not-For-Profit entities by making changes to net asset classes, expense presentation, statement of cash flows requirements and disclosure requirements. For more information on this ASU, please see 5 Things You Need to Know About the New Not-For-Profit Accounting Standard (ASU 2016-14).
- ASU 2017-09 Compensation – Stock Compensation: Scope of Modification Accounting
The purpose of this ASU is to provide clarity and reduce diversity in practice, as well as cost and complexity, when applying stock compensation guidance to a change in the terms or conditions of a share-based payment award.
The following ASUs are becoming effective for non-public entities, but are already effective for public entities:
- ASU 2015-17 Income Taxes: Balance Sheet Classification of Deferred Taxes
The purpose of this ASU is to eliminate the presentation of current deferred income taxes. All deferred taxes will now be presented as non-current.
- ASU 2016-05 Derivative and Hedging: Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships
This ASU clarifies whether the use of hedge accounting for a derivative arrangement must be discontinued when there is a change in counterparty.
- ASU 2016-06 Derivatives and Hedging: Contingent Put and Call Options in Debt Instruments
This ASU clarifies that the four-step decision model should be utilized when evaluating whether contingent call (put) options in debt instruments are clearly and closely related.
The following ASUs are becoming effective for public entities for fiscal years beginning after Dec. 15, 2017, and will become effective for non-public entities in the future.
- ASU 2015-14 Revenue from Contracts with Customers (previously ASU 2014-09)
- ASU 2016-15 Classification of Certain Cash Receipts and Cash Payments
- ASU 2016-16 Intra-Entity Transfers of Assets Other Than Inventory
- ASU 2016-18 Restricted Cash
- ASU 2017-01 Clarifying the Definition of a Business
- ASU 2017-07 Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost
For further information regarding the upcoming effective ASUs and how they might apply to your organization, please contact Adam Parkhurst at (317) 613-7858 or email [email protected].