January 3, 2023
The following summarizes the FASB’s activities in Q4 2022.
Final Accounting Standards Issued
- In December 2022, the FASB issued ASU 2022-05, Financial Services─ Insurance (Topic 944), Transition for Sold Contracts. The new standard allows an insurance entity to make an accounting policy election to exclude certain contracts or legal entities from the long-duration targeted improvement (LDTI) transition guidance in ASU 2018-12 when (1) they have been derecognized due to a sale or disposal before the LDTI effective date and (2) the entity has no significant continuing involvement with the derecognized contracts. The effective date is consistent with the effective dates of the amendments in ASU 2020-11.
- In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which defers the sunset date of ASC 848, Reference Rate Reform, from December 31, 2022 to December 31, 2024. ASC 848 provides temporary relief relating to the potential accounting impact relating to the replacement of LIBOR or other reference rates expected to be discounted as a result of reference rate reform. ASU 2022-06 is effective immediately for all entities.
Exposure Drafts
The following exposure drafts are open for comment:
Exposure Draft | Summary | Comment Deadline |
Proposed Accounting Standards Update—Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures | The amendments in this proposed Update would improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. Certain other reconciliations would also be required under the proposal, as well as additional interim disclosures. | 12/20/22 |
Proposed Accounting Standards Update—Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement | The amendments in this proposed ASU would require that a joint venture apply a new basis of accounting to reduce diversity in practice and provide decision-useful information to a joint venture’s investors. As a result, a newly formed joint venture would initially measure its assets and liabilities at fair value (with certain exceptions that are consistent with the business combinations guidance) upon formation. | 12/27/22 |
Proposed Statement of Financial Accounting Concepts No. 8—Conceptual Framework for Financial Reporting—Chapter 2: The Reporting Entity | This chapter would provide the Board with a framework for matters relating to the identification of a reporting entity. Under the proposed framework, combined or carve-out financial statements could represent a reporting entity if they meet certain criteria, but parent-only financial statements that do not reflect consolidated subsidiaries would not. | 1/16/23 |
Proposed Accounting Standards Update—Leases (Topic 842): Common Control Arrangements | The proposed ASU would provide private companies and not-for-profit organizations that are not conduit bond obligors with a practical expedient that would allow those entities to use the written terms and conditions of an arrangement between entities under common control to determine whether a lease exists and, if so, the classification of and accounting for that lease. The proposed ASU also would change the accounting for leasehold improvements associated with leases for all entities under common control. All companies are allowed to amortize leasehold improvements related to common control leases over their economic life as long as the lessee controls the use of the leased asset. | 1/16/23 |
Proposed Statement of Financial Accounting Concepts No. 8—Conceptual Framework for Financial Reporting—Chapter 5: Recognition and Derecognition | The proposed chapter sets forth recognition and derecognition criteria and guidance on when an item should be incorporated into and removed from financial statements. Under the proposed framework, financial statement items would be recognized if they meet three criteria: (i) the item meets the definition of a financial statement element; (ii) the item is measurable; and (iii) the item can be depicted and measured with faithful representation. Derecognition would occur if any one of the recognition criteria is no longer met. | 2/21/23 |
Taxonomy Updates
- The FASB issued for comment proposed GAAP Taxonomy Improvements for Leases (Topic 842) ─ Common Control Arrangements to address the accounting for leases between entities under common control. Comment period ends January 16, 2023.
- The FASB issued a proposed Taxonomy Implementation Guide based on the proposed 2023 GAAP Financial Reporting Taxonomy that is pending SEC acceptance and is subject to change until published as final. The proposed Guide, Financial Services-Investment Companies (Including SEC S-X Schedules for Business Development Companies), includes examples to help users of the Taxonomy understand how the modeling for the reporting by investment companies is structured within the Taxonomy.
Meetings
The following summarizes the various meetings with the FASB. Full recaps and more details can be found at FASB.org.
- The Small Business Advisory Committee (SBAC) met on November 10, 2022 at the FASB’s offices. At the meeting, the SBAC members provided input on accounting for and disclosure of software costs, targeted improvements to income tax disclosures, joint venture formations, segment reporting, and government grants.
- The November 30, 2022 FASB Board Meeting included tentative board decisions regarding changes to interim disclosure requirements and targeted improvements to income tax disclosures.
- The Emerging Issues Task Force (EITF) met on December 1, 2022, and deliberated Issue No. 21-A, “Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method.”
- The Investor Advisory Committee (IAC) met on November 17, 2022 and discussed FASB highlights, emerging issues and trends, disaggregation related to income statement expenses, and accounting for and disclosure of software costs.
- The Private Company Council (PCC) met on Friday, December 16, 2022 and discussed with the Technical Issues Committee regarding Leases (Topic 842): Common Control Arrangements, accounting for government grants, post-implementation review of Topic 606, scope application of profits interests awards under ASC 718, accounting for and disclosure of software costs, and accounting for and disclosure of crypto assets.
- The Financial Accounting Standards Advisory Council (FASAC) held its quarterly meeting on Tuesday, December 6, 2022 and discussed segment reporting, accounting for government grants, improvements to income tax disclosures, and disaggregation- income statement expenses.
Upcoming Effective Dates
Guidance effective in Q1 2023 for calendar year-end public business entities (PBEs):
Guidance | Effective Date |
ASU 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts | As amended by ASU 2020-11, fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022 |
ASU 2019-09 , Financial Services—Insurance (Topic 944): Effective Date | As amended by ASU 2020-11, fiscal years beginning after December 15, 2022, and interim periods within those fiscal years |
ASU 2020-11, Financial Services—Insurance (Topic 944): Effective Date and Early Application | Fiscal years beginning after December 15, 2022, and interim periods within those fiscal years |
ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers | Fiscal years beginning after December 15, 2022, and interim periods within those fiscal years |
ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method | Fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. |
ASU 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures | Fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. |
ASU 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations | Fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. |
Guidance effective in Q1 2023 for calendar year-end small reporting companies (SRCs):
Guidance | Effective Date |
ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments | As amended by ASU 2019-10, fiscal years beginning after December 15, 2022, including interim periods within those fiscal years |
ASU 2017-04 ,Intangibles—Goodwill and Other (Topic 350) | As amended by ASU 2019-10, annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2022 |
ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses | The same effective date as ASU 2016-13 |
ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments | The same effective date as ASU 2016-13 |
ASU 2019-05, Financial Instruments—Credit Losses (Topic 326) Targeted Transition Relief | The same effective date as ASU 2016-13 |
ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates | The same effective date as ASU 2016-13 |
ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments—Credit Losses | The same effective date as ASU 2016-13 |
ASU 2020-03, Codification Improvements to Financial Instruments | The same effective date as ASU 2016-13 |
ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers | Fiscal years beginning after December 15, 2022, and interim periods within those fiscal years |
ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method | Fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. |
ASU 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures | The same effective date as ASU 2016-13 |
ASU 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations | Fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. |
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