This week's PwC update on financial reporting includes: Tax accounting insights: How will recently expired US tax provisions affect your financial statements?... Webcast: Key considerations for board and audit committee members – January 29... FASB issues exposure draft on classification of government-guaranteed mortgage loans upon foreclosure... Final minutes of the November 14 EITF meeting... and more.
PwC's weekly alert highlighting current financial reporting developments (including accounting, auditing and regulatory matters).
This week's topics include:
Tax accounting insights: How will recently expired US tax provisions affect your financial statements?
A number of widely relevant US tax law provisions affecting businesses expired on December 31, 2013. That includes the research and development tax credit, work opportunity tax credit, increased expensing and bonus depreciation allowances, and certain favorable 'subpart F' provisions (i.e., the look-through treatment of payments between related controlled foreign corporations and exceptions for certain active financing income). The financial reporting implications of the expirations should be kept in mind both for calendar year-end and interim-period financial statements. This publication discusses how recently expired US tax provisions will affect your financial statements.
Tax accounting insights: Around the world — When to account for tax law changes
Keeping track of tax law changes around the world has increasingly become a challenge for businesses. Companies are rapidly expanding their geographic footprint at a time when the evolution and developments in jurisdictional tax laws are undergoing nearly constant change. Naturally, changes in tax law have an impact on tax planning, tax return preparation and, ultimately, tax cash flows. Those consequences, however, are often preceded by the impact of such changes on company financial reporting.
Companies reporting under US Generally Accepted Accounting Principles (US GAAP) or International Financial Reporting Standards (IFRS) need to understand when a change in tax law impacts the measurement of current and deferred income taxes — that is, they must understand in which reporting period the effects of a change in the law are to be recorded.
This second edition of our publication Around the world: When to account for tax law changes has been updated to include information on 48 additional jurisdictions, including three US states. It also reflects any changes in our understanding of the lawmaking processes of jurisdictions presented in the original edition.
Webcast: Key considerations for board and audit committee members – January 29
On January 29 at 2 p.m. EST, Mary Ann Cloyd, Leader of PwC's Center for Board Governance, and Tim Ryan, PwC Vice Chair and Leader of Markets, Strategy, and Stakeholders, will lead the Center for Board Governance “Key considerations for board and audit committee members” webcast. The webcast will focus on what issues are top of mind for board and audit committee members and will address the regulatory environment, financial reporting developments, cybercrime and board leadership. It will provide 1.0 CPE credit to participants.
We invite you to pre-register for the webcast through the CFOdirect Network.
FASB issues final guidance on reclassification of residential real estate collateralized consumer mortgage loans upon foreclosure
The FASB published Accounting Standards Update 2014-04, Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (the ASU), to codify a final consensus reached by the Emerging Issues Task Force (EITF) at its November 2013 meeting. The amendments in the ASU clarify when an in substance repossession or foreclosure occurs — that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. The new ASU requires a creditor to reclassify a collateralized consumer mortgage loan to real estate property upon obtaining legal title to the real estate collateral, or the borrower voluntarily conveying all interest in the real estate property to the lender to satisfy the loan through a deed in lieu of foreclosure or similar legal agreement.
The ASU is effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15 2014. For entities other than public business entities, the amendments in the ASU are effective for annual periods beginning after December 15, 2014, and interim periods within annual periods beginning after December 15, 2015.
Also see the November 2013 edition of PwC’s EITF observer for a high-level overview of the new guidance.
FASB issues exposure draft on classification of government-guaranteed mortgage loans upon foreclosure
The FASB has published an exposure draft on the classification of certain government-guaranteed residential mortgage loans upon foreclosure. The proposal represents a consensus for exposure reached by the EITF at its November 2013 meeting.
Currently, there is diversity in practice related to classification by creditors of government-guaranteed residential mortgage loans entitling a creditor to the full unpaid principal balance of the loan (fully-government-guaranteed residential mortgage loans), including those with an FHA guarantee, upon foreclosure. Some creditors reclassify those loans to real estate as with other foreclosed loans that do not have guarantees; others reclassify the loans to other receivables. The EITF is proposing to eliminate this diversity. Upon foreclosure of a property subject to a full guarantee by the federal government, the proposal would require a creditor to reclassify the loan to a receivable from the guarantor.
Comments are requested by April 30, 2014.
Also see the November 2013 edition of PwC’s EITF observer for an overview of this Issue.
Meeting summaries: The following meetings were held over the past week:
Next open board meetings: The following meetings are scheduled for next week:
See the FASB’s website for further information on the meetings.
Final minutes of the November 14 EITF meeting
The FASB staff has published the final minutes of the November 2013 EITF meeting. Also, see the November 2013 edition of PwC’s EITF observer for a synopsis of the discussions and decisions reached at the EITF's meeting.
Flashline is a weekly alert highlighting current financial-reporting developments (including accounting, auditing and regulatory matters) and is produced by the National Professional Services Group of PwC. It is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. To access additional content on financial reporting issues, visit CFOdirect Network (www.cfodirect.pwc.com), PwC’s online resource for financial executives.