FASB Issues Changes to Accounting Guidance

The amendments in the ASU apply to all reporting organizations—including public companies, private companies, and not-for-profit organizations—within the scope of the affected accounting guidance. For that reason, reporting organizations should review all provisions of the new standard to ensure compliance with the ones that apply to them.

While not a complete list of provisions contained in the ASU, the following amendments affect all companies and organizations:

• An amendment to Subtopic 715-30, Compensation—Retirement Benefits—Defined Benefit Plans—Pension, and Subtopic 715-60, Compensation—Retirement Benefits—Defined Benefit Plans—Other Postretirement, and Topic 944, Financial Services—Insurance, promotes consistent use of the term participating insurance throughout the relevant guidance.
• An amendment to Topic 825, Financial Instruments, and Topic 944 promotes consistent use of the term reinsurance recoverable across both Topics.
• Another amendment removes the term debt from the Master Glossary. The current definition was codified from guidance that was specific to troubled debt restructuring. This amendment restricts the use of the current definition to Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors, and Subtopic 470-60, Debt—Troubled Debt Restructurings by Debtors.
• An amendment to Topic 958, Not-for-Profit Entities, removes the phrase “that contain no purpose restrictions” from the guidance that was added in error by ASU No. 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities.
• An amendment to Subtopic 350-40, Intangibles—Goodwill and Other—Internal-Use Software adds to guidance a reference to use when accounting for internal-use software licensed from third parties that is within the scope of Subtopic 350-40.
• An amendment to Subtopic 360-20, Property, Plant, and Equipment—Real Estate Sales, corrects existing guidance to clarify that loans insured under the Federal Housing Administration and the Veterans Administration do not have to be fully insured by those government-insured programs to recognize profit using the full accrual method.
• Amendments to Topic 820, Fair Value Measurement, clarify the difference between a valuation approach and a valuation technique when applying the guidance in that Topic. This amendment also requires an organization to disclose when there has been a change in either or both a valuation approach and/or a valuation technique.
• An amendment to Subtopic 405-40, Liabilities—Obligations Resulting from Joint and Several Liability Arrangements, clarifies that for an amount of an obligation under an arrangement to be considered fixed at the reporting date, the amount that must be fixed is not the amount that is the organization’s portion of the obligation but, rather, is the obligation in its entirety.
• An amendment to Subtopic 860-20, Transfers and Servicing—Sales of Financial Assets, aligns implementation guidance to its corresponding guidance. That amendment clarifies the considerations that should be included in an analysis to determine whether a transferor once again has effective control over transferred financial assets.
• An amendment to Subtopic 860-50, Transfers and Servicing—Servicing Assets and Liabilities, adds guidance that existed in AICPA Statement of Position 01-6, Accounting by Certain Entities (Including Entities With Trade Receivables) That Lend to or Finance the Activities of Others, on the accounting for the sale of servicing rights when the transferor retains loans that was omitted from the Accounting Standards Codification.

A complete list of the amendments—including full details on transition and effective dates—is contained in the ASU, available at www.fasb.org.