FASB Standard setting update, Q2 2018

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Overview

Trying to find an update on recent FASB standard setting? Stop looking and start listening. In this episode, we highlight the key accounting and financial reporting developments that took place during the second quarter of 2018. Among topics covered, we examine recently finalized accounting standards—including clarifying guidance on accounting for grants and contributions, as well as the new rules for share-based payment awards granted to nonemployees. We also discuss recently issued exposure drafts—including targeted improvements to the collaborative arrangements guidance—and give an update on accounting for implementation costs incurred in a cloud computing arrangement based on recent developments and the discussions at the June EITF meeting.

| Duration 19:30

 

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Show notes

The FASB issued three new accounting standard updates this quarter:

  • In June, the FASB issued an amendment that attempts to clarify and improve the scope and accounting guidance around contributions of cash and other assets received. This update is intended to address feedback from stakeholders that indicated that there was significant diversity in practice on the accounting conclusions reached for many grants and similar contracts. To learn more, refer to PwC's In brief: FASB clarifies guidance on accounting for grants and contributions.
  • Also in June, the FASB issued an amendment on accounting for nonemployee share-based payment programs. The new guidance creates a single model for the accounting for all share-based payments -- both employee and nonemployee programs. The amendments attempt to reduce cost and complexity in applying the guidance, and to improve the financial reporting for these transactions. To learn more, refer to PwC's In brief: FASB aligns the accounting for all share-based payment awards.
  • In May, a few codification improvements to Topic 942, Financial Services--Depository and Lending were published. These are non-substantive improvements that are not expected to have a significant effect on accounting practice or create a significant administrative cost for most companies. The ASU eliminates some outdated references to an old banking circular.

The FASB also issued one exposure draft during the quarter.

  • In April, an exposure draft on targeted improvements to the Collaborative Arrangements guidance (Topic 808) was issued. The current guidance doesn’t provide comprehensive recognition or measurement guidance for collaborative arrangements, and the issuance of the new revenue standard raised questions about its interaction with Topic 808. The exposure draft proposes three key changes in response to these concerns.

Finally, we provide a brief update on the June EITF meeting relating to Accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. The EITF met in early June and reached a final consensus that implementation costs should be capitalized using the same model as if the cloud computing arrangement included a software license. The final consensus is in line, for the most part, with the March exposure draft.

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Heather Horn
US Strategic Thought Leader, National Professional Services Group, PwC US
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David Schmid
IFRS & US Standard Setting Leader, National Professional Services Group, PwC US
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