FASB: 2024 - What You Need To Know & A Review of 2023 Updates

We are pleased to release MaloneBailey's January 2024 issue of The Crunch. This special edition of The Crunch highlights FASB updates that went into effect in 2023 as well as a review of the FASB updates will go into effect in 2024 and beyond.

Please note that the updates provided in this newsletter are not a comprehensive list. We encourage you to visit the SEC , FASB and IRS websites for more information as well as a complete list of updated rules, regulations and proposals.

We invite you to contact us should you have any questions about the information provided in this issue. We invite you to visit our website to review archived versions of this newsletter containing past accounting, regulatory and tax updates.

The MaloneBailey Team

www.malonebailey.com

What's the Crunch?

Featured Podcast

Cybersecurity in a CPA Firm Environment

Recent Accounting & Regulatory Updates

FASB: What You Need to Know for 2024

Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative
Business Combinations— Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures
Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method
Leases (Topic 842): Common Control Arrangements
Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions
FASB Accounting Standards Updates - Accounting Standards Update No. 2023-09 -- Income Taxes (Topic 740) --- Improvements to Income Tax Disclosures
Accounting Standards Update No. 2023-08 -- Intangibles Goodwill and Other Crypto Assets (Subtopic 350-60) --- Accounting for and Disclosure of Crypto Assets

FASB: A Review of 2023 Updates

Liabilities (Topic 405): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 121
Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation S-X: Income or Loss Applicable to Common Stock
Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848
Financial Services—Insurance (Topic 944): Transition for Sold Contracts
Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations
Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures
Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method
Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method
Financial Services-Insurance (Topic 944): Effective Date and Early Application

Extra Crunch

IR Magazine: The Ticker Podcast

About MaloneBailey, LLP

Featured Podcast

Cybersecurity in the CPA Firm Environment

Summary - Technology has evolved to where we can store everything we need in one convenient place at just the click of a button, however, this convenience comes at a cost as it’s now easier than ever for someone to get into your system and take your sensitive information. It’s important to familiarize yourself and stay a few steps ahead of these looming cyber threats to prepare and train yourself in case there are any attempts of a breach.

Simply click on the image below to listen to the podcast. For this podcast and many more, please visit the Resources section of our website.

FASB: What You Need to Know for 2024

Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative

Summary - This ASU incorporates certain U.S. Securities and Exchange Commission (SEC) disclosure requirements into the FASB Accounting Standards Codification™. The amendments in the ASU are expected to clarify or improve disclosure and presentation requirements of a variety of Codification Topics, allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the Codification with the SEC’s regulations. In SEC Release No. 33-10532, Disclosure Update and Simplification, issued August 17, 2018, the SEC referred certain of its disclosure requirements that overlap with, but require incremental information to, generally accepted accounting principles to the FASB for potential incorporation into the Codification.

The ASU incorporates into the Codification 14 of the 27 disclosures referred by the SEC. They modify the disclosure or presentation requirements of a variety of Topics in the Codification. The requirements are relatively narrow in nature. Some of the amendments represent clarifications to, or technical corrections of, the current requirements. Because of the variety of Topics amended, a broad range of entities may be affected by one or more of those amendments.

For more information, click here.

Business Combinations— Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement

Summary - This ASU applies to the formation of entities that meet the definition of a joint venture (or a corporate joint venture) as defined in the FASB Accounting Standards Codification® Master Glossary. While joint ventures are defined in the Master Glossary, there has been no specific guidance in the Codification that applies to the formation accounting by a joint venture in its separate financial statements. The amendments in the ASU require that a joint venture apply a new basis of accounting upon formation. As a result, a newly formed joint venture, upon formation, would initially measure its assets and liabilities at fair value (with exceptions to fair value measurement that are consistent with the business combinations guidance).

For more information, click here.

Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures

Summary - The amendments apply to all public entities that are required to report segment information in accordance with Topic 280, Segment Reporting.

The amendments in the ASU is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The key amendments:

Require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of segment profit or loss.

Require that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition. The other segment items category is the difference between segment revenue less the significant expenses disclosed and each reported measure of segment profit or loss.
Require that a public entity provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by FASB Accounting Standards Codification® Topic 280, Segment Reporting, in interim periods.
Clarify that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit. However, at least one of the reported segment profit or loss measures (or the single reported measure, if only one is disclosed) should be the measure that is most consistent with the measurement principles used in measuring the corresponding amounts in the public entity’s consolidated financial statements.
Require that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.
Require that a public entity that has a single reportable segment provide all the disclosures required by the amendments in the ASU and all existing segment disclosures in Topic 280.

For more information, click here.

Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method

Summary - These amendments allow reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. The ASU responds to stakeholder feedback that the proportional amortization method provides investors and other allocators of capital with a better understanding of the returns from investments that are made primarily for the purpose of receiving income tax credits and other income tax benefits.

For more information, click here.

Leases (Topic 842): Common Control Arrangements

Summary - These amendments provide private companies and not-for-profit organizations that are not conduit bond obligors with a practical expedient to use the written terms and conditions of a common control arrangement to determine whether a lease exists and, if so, the classification of and accounting for that lease. In addition, the ASU requires all entities (i.e., including public companies) to amortize leasehold improvements associated with common control leases over the useful life to the common control group.

For more information, click here.

Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions

Summary - These amendments clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.

For more information, click here.

Accounting Standards Update No. 2023-09 -- Income Taxes (Topic 740) --- Improvements to Income Tax Disclosures

Summary - We have published a new edition of the Summary Checklist of Recent Authoritative U.S. Accounting Standards. This new edition reflects the issuance of Accounting Standards Update (ASU) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU is effective for public business entities for annual periods beginning after December 15, 2024. For other entities, the amendments are effective for annual periods beginning after December 15, 2025. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.

For more information, click here.

Accounting Standards Update No. 2023-08 -- Intangibles Goodwill and Other Crypto Assets (Subtopic 350-60) --- Accounting for and Disclosure of Crypto Assets

Summary - The FASB published an Accounting Standards Update (ASU) intended to improve the accounting for and disclosure of certain crypto assets. FASB ASU No. 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets, is effective for all entities for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued (or made available for issuance). If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period.

ASU No. 2023-08 requires a cumulative-effect adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets) as of the beginning of the annual reporting period in which an entity adopts the amendments.

The amendments in ASU No. 2023-08 are intended to improve the accounting for certain crypto assets by requiring an entity to measure those crypto assets at fair value each reporting period with changes in fair value recognized in net income. The amendments also improve the information provided to investors about an entity’s crypto asset holdings by requiring disclosure about significant holdings, contractual sale restrictions, and changes during the reporting period.

The amendments in the ASU apply to all assets that meet all the following criteria:

Meet the definition of intangible asset as defined in the FASB Accounting Standards Codification®;
Do not provide the asset holder with enforceable rights to or claims on underlying goods, services, or other assets;
Are created or reside on a distributed ledger based on blockchain or similar technology;
Are secured through cryptography;
Are fungible; and
Are not created or issued by the reporting entity or its related parties.

For more information, click here.

FASB: A Review of 2023 Updates

Liabilities (Topic 405): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 121

Summary - This ASU amends the FASB Accounting Standards Codification™ for SEC paragraphs pursuant to SEC Staff Accounting Bulletin No. 121 which expresses the views of the staff regarding the accounting for obligations to safeguard crypto-assets an entity holds for platform users.

The FASB Codification contains the authoritative standards that are applicable to both public entities and nonpublic entities. Content contained in the SEC sections of the Codification is provided for convenience only and relates only to SEC registrants.

For more information, click here.

Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation S-X: Income or Loss Applicable to Common Stock

Summary - This ASU amends the FASB Accounting Standards Codification™ for SEC paragraphs pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation S-X: Income or Loss Applicable to Common Stock.

For more information, click here.

Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848

Summary - These amendments extend the period of time preparers can utilize the reference rate reform relief guidance in Topic 848. The objective of the guidance in Topic 848 is to provide relief during the temporary transition period, so the FASB included a sunset provision within Topic 848 based on expectations of when the London Interbank Offered Rate (LIBOR) would cease being published. In 2021, the UK Financial Conduct Authority (FCA) delayed the intended cessation date of certain tenors of USD LIBOR to June 30, 2023. To ensure the relief in Topic 848 covers the period of time during which a significant number of modifications may take place, the ASU defers the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848.

For more information, click here.

Financial Services—Insurance (Topic 944): Transition for Sold Contracts

Summary - These amendments amend the LDTI transition guidance to allow an insurance entity to make an accounting policy election on a transaction-by-transaction basis to exclude contracts that meet certain criteria from applying the amendments in ASU No. 2018-12. To qualify for the accounting policy election, as of the LDTI effective date both of the following conditions must be met:

The insurance contracts must have been derecognized because of a sale or disposal of individual or a group of contracts or legal entities.
The entity has no significant continuing involvement with the derecognized contracts.

For more information, click here.

Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations

Summary - These amendments require that a company that uses a supplier finance program in connection with the purchase of goods or services disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude.

For more information, click here.

Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures

Summary - These amendments eliminate the TDR recognition and measurement guidance and, instead, require that an entity evaluate (consistent with the accounting for other loan modifications) whether the modification represents a new loan or a continuation of an existing loan. The amendments also enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. For public business entities, these amendments require that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investment in leases within the scope of Subtopic 326-20. Gross write-off information must be included in the vintage disclosures required for public business entities in accordance with paragraph 326-20-50-6, which requires that an entity disclose the amortized cost basis of financing receivables by credit quality indicator and class of financing receivable by year of origination.

For more information, click here.

Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method

Summary - In 2017, the FASB issued a new hedging standard to better align the economic results of risk management activities with hedge accounting.

One of the major provisions of that standard was the addition of the last-of-layer hedging method. For a closed portfolio of fixed-rate prepayable financial assets or one or more beneficial interests secured by a portfolio of prepayable financial instruments, such as mortgages or mortgage-backed securities, the last-of-layer method allows an entity to hedge its exposure to fair value changes due to changes in interest rates for a portion of the portfolio that is not expected to be affected by prepayments, defaults, and other events affecting the timing and amount of cash flows.

Since issuing that standard, stakeholders have told the FASB that the ability to elect hedge accounting for a single layer is useful, but hedge accounting could better reflect risk management activities if expanded to allow multiple layers of a single closed portfolio to be hedged under the method. The ASU expands the current single-layer method to allow multiple hedged layers of a single closed portfolio under the method. To reflect that expansion, the last-of-layer method is renamed the portfolio layer method.

For more information, click here.

Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method

Summary - 'This ASU requires entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The amendments improve comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination.

For more information, click here.

Financial Services-Insurance (Topic 944): Effective Date and Early Application

Summary - This ASU allows the delayed adoption date of ASU No. 2018-12, as noted in the "Effective Date" information at the left. And allows insurance companies to restate only one previous period, rather than two, if they choose to early adopt LDTI.

For more information, click here.

Extra Crunch

IR Magazine: The Ticker Podcast

Summary - The Ticker brings the world of IR to your ears with the latest insights, comments and research from leading IR professionals, analysts and investors plus the IR Magazine team. Listen, learn, enjoy and subscribe to your monthly editions from wherever you get your podcasts.

To access the podcast, please click here.

About MaloneBailey, LLP

Our Partners

www.malonebailey.com