Did you know that in addition to the revenue standard, nine other new standards are effective for public companies in Q1 2018? The clock is ticking so let us help you learn what you need to know. Going beyond revenue recognition, PwC’s Jim Gazley, Jillian Pearce, and Kevin Jackson discuss a few of the new accounting standards and answer key questions to assist you in transitioning to the new guidance.
| Duration 26:02
In this episode we discuss a few of the new accounting standards that are effective for public companies in the first quarter of 2018, other than the new revenue standard. In addition to the new revenue standard, there are 9 other new accounting standards that are effective beginning this year. Four of the more broadly applicable new standards are discussed in this podcast.
There is new guidance, issued in 2016, that impacts cash flow presentation. The first new standard relates to restricted cash, and the second standard addresses cash flow presentation for specific transactions.
There is also new guidance impacting the definition of a business. The new guidance includes three major updates. The first, and perhaps the biggest change, is the introduction of a “screen test.” The screen test precludes certain transactions from being considered business combinations. The second update relates to situations where the screen is not met and the guidance provides a more detailed framework to evaluate. The third update is related to a prior requirement where you might find yourself acquiring a business even if you didn’t acquire certain processes from the seller.
The new recognition and measurement guidance primarily affects the accounting for equity investments, financial liabilities accounted for under the fair value option, and presentation and disclosure requirements for financial instruments. There are a number of changes with this new guidance, but probably the most significant area of change is for equity investments -- the elimination of available for sale classification and what has historically been referred to as the “cost method” model.
Finally, derecognition guidance for nonfinancial assets was issued in connection with the new revenue standard but covers many transactions that are outside the scope of the revenue standard. One big area of change is related to real estate. The new guidance eliminates the special, and often onerous, rules that governed sales of real estate.
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