Under previous guidance, Rolls-Royce recorded some of the service revenue early. Rolls-Royce sells aircraft engines often at a loss but makes profit on the backend by servicing the engines. New Accounting Standard Will Hurt Rolls-Royce Result, CFO Says (November 16, 2016) – Wall Street Journal CFO indicated that implementation of the new IFRS 15 revenue recognition guidance will have a negative impact to the company’s reporting. I think all of us would welcome a slowdown in pace and activity to catch our breath and focus on the tasks at hand. There is definitely an abundance of work to be done to implement these in addition to the other guidance issued or expected to be coming (hedging and long-duration contracts for insurance companies to name a couple). The FASB is aware and will be taking the comments into consideration as they discuss and plan future FASB projects.Īnyone overwhelmed yet? The new revenue recognition standard (ASC Topic 606) is effective for public companies in January 2018, the new lease standard (ASC Topic 842) is effective for public companies in 2019, and the new credit losses standard (ASC Topic 326) is effective for public companies that are SEC filers in 2020. Golden indicated that comments received reflected concern over the work and resources that are needed to successfully implement the new standards. In his speech at the recent AICPA conference, Mr.
#November 11 2015 fasb update#
Refer to the FASB Project Plan Update and the Proposed ASU for further information.įASB Considers Slowdown in Standard Setting (December 6, 2016) – Journal of Accountancy the big 3 standards now issued (Revenue Recognition, Leases and Credit Losses), FASB Chairman, Russ Golden, reached out to the public for input regarding what the FASB should prioritize next. The due date for comment letters on this proposed ASU is February 6, 2017. This proposed ASU stems from the Boards project to make targeted improvements that simplify the accounting guidance for financial instruments with characteristics of liabilities and equity. The proposed amendments in Part II will not have an accounting effect. Part II addresses the difficulty of navigating Subtopic 480-10, Distinguishing Liabilities from Equity-Overall due to extensive amounts of pending content. Stakeholders also suggest that this accounting does not reflect the economics of the down round feature, which exists to protect certain investors from declines in the issuer’s share price.” “Stakeholders have asserted that accounting for freestanding and embedded instruments with down round features as liabilities subject to fair value measurement on an ongoing basis creates a significant reporting burden and unnecessary income statement volatility associated with changes in value of an entity’s own share price. Part I addresses complexity of accounting for certain financial instruments with down round features. The proposed ASU is comprised of two parts. Stay tuned for further guidance expected from the SEC.įASB Zeros in on Liability and Equity Accounting (December 8, 2016) – AccountingWeb December 7, 2016, the FASB issued a proposed ASU on distinguishing liabilities from equity. For more information on that guidance click here. The SEC released guidance on the use of non-GAAP financial measures in May 2016. The SEC acknowledges that some non-GAAP measures are useful to financial statement users, but want to ensure that they are not given undue prominence and are not misleading to investors. Non-GAAP measures continue to be an area of focus for the SEC. “…non-GAAP measures are not prohibited…You’re allowed to use them, and investors and analysts find quite a bit of value in non-GAAP measures, but they need to be high quality.” Christine Davine, deputy managing partner of Deloitte & Touche LLP’s National Office who facilitated the panel discussion, summed it up well with her remarks:
In a panel discussion, Mark Kronforst, chief accountant of the SEC’s Division of Corporate Finance, provided insight into progress made with regards to non-GAAP measures as well as issues with non-GAAP reporting that still needs work. At the conference, non-GAAP measures were a hot topic once again. SEC Moves to Identify 'High-Quality' Non-GAAP Measures (December 12, 2016) – Accounting Today AICPA Conference on Current SEC and PCAOB Developments was held on December 5-7, 2016 in Washington DC. This week’s GAAP Flash includes articles about non-GAAP financial measures, IFRS 15, Revenue from Contracts with Customers, and recent activity from the Financial Accounting Standards Board.