The quarter close - Fourth quarter 2018

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Dec 05, 2018

This edition of The quarter close focuses on timely accounting and reporting information that can help you prepare for year-end reporting. Get up to speed on the top issues for annual financial reporting on our webpage - easy to read on your phone, tablet or computer.

What's covered in this edition of The quarter close

Front and center

We provide an overview of the disclosure requirements for the new leases standard as companies get ready to adopt in 2019.

Accounting hot topics

Learn more about the FASB's amended fair value measurement disclosures and other guidance that is effective now and in the future.

Regulatory update

We share information about SEC comment letter trends and what companies should be considering for Brexit.

Hot off the press

Learn more about the FASB's clarifying guidance on collaborative arrangements.

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Front and center

Year-end reporting reminders

This edition of The quarter close provides the quarter’s latest accounting hot topics and developments in financial reporting. In addition, to help companies heading into their annual reporting, we have included an Appendix – Annual reporting considerations, which provides a listing of topics that continue to present challenges to financial statement preparers and links to where you can find more detailed information.


Leases


Calendar year-end public business entities (PBEs) are required to adopt the new leases standard effective January 1, 2019. While preparing to do so, lessors should consider the impact of the FASB's recent amendments, which address certain accounting issues specific to lessors. Additionally, as lessees and lessors move beyond the accounting impacts, their focus should be on the standard’s disclosure requirements, which will be effective beginning with the first quarter in the year of adoption. Lastly, as companies are preparing their year-end reporting, they should also ensure their SAB 74 disclosures have become more robust as adoption approaches.

New guidance

In October 2018, the FASB tentatively approved new guidance that provides certain simplifications and clarifications of the accounting by lessors. This new guidance would allow lessors to make an accounting policy election to exclude sales tax (and similar taxes) collected from lessees from contract consideration. In addition, the new guidance would require that a lessor exclude from variable payments all lessor costs that are explicitly required to be paid directly to a third party by the lessee on behalf of the lessor (e.g., property taxes, insurance). This means that the lessor would report revenue net of these amounts. Costs that are not part of contract consideration that are paid by a lessor to a third party and reimbursed by the lessee are considered lessor costs and would be accounted for as variable payments by the lessor. Therefore, the lessor would report these amounts gross on the income statement. Further, the new guidance would clarify that variable payments allocated to nonlease components should be recognized in accordance with other guidance (e.g., the new revenue standard).

Refer to PwC's In brief US2018-25, More changes to ease lessor adoption of the new leases standard, for more details on this guidance. The final standard is expected to be released before the end of the year. 

Disclosure requirements after adoption

In an effort to increase transparency to financial statement users, the new leases standard expands the disclosure requirements for lease arrangements. Companies should focus on evaluating the readiness of their systems, processes and internal controls to capture the information and data needed to prepare these disclosures. As a reminder, SEC rules require companies to provide both the annual and the interim period disclosures for each interim reporting period in the initial year of adoption. So for a calendar year-end PBE, a company will need to have all annual and interim lease disclosures starting with its March 31, 2019 quarterly filing.

The new leases standard has a number of qualitative disclosures. Companies are required to disclose the following:

  • Key terms
  • Practical expedients
  • Significant judgments and assumptions
  • Related party leases
  • Accounting policy elections

The disclosure of significant judgments and assumptions should include those used to determine whether a contract is or contains a lease, separate lease and nonlease components, and determine the allocation of the applicable lease cost or consideration among them.

While these qualitative disclosures apply to all companies, there are other disclosures specific to lessees and lessors. For example, lessees are required to disclose leases that have not commenced that create significant rights or obligations. While lessors, for example, are required to disclose strategies for managing risks related to the residual values of leased assets.

There are also a number of significant quantitative disclosures required. Many of the quantitative requirements for lessors and lessees are similar, except that they reflect opposite sides of the lease transaction. For example, companies are required to disclose certain profit and loss information. For lessees this includes disclosing the cost of their leases (e.g., rent expense), while for lessors it relates to the profits generated from their leases (e.g., rental income).

For more information on the presentation and disclosure of lease arrangements under the new leases standard, refer to Chapter 9: Presentation and disclosure of our Leases guide.

Additionally, in Episode 42 of our CFOdirect podcast series, we provide further insight into the new leases standard and share some reminders for companies to consider as they prepare to adopt the new guidance.

SAB 74 considerations

SEC Staff Accounting Bulletin (SAB) No. 74 requires a company to provide information on the status of their analysis and the impact that adoption of new standards will have on the financial statements. Calendar year-end PBEs will adopt the new leases standard on January 1, 2019. Therefore, prior to their 2018 annual filing, companies should be virtually completed with their implementation and their Form 10-K should include robust SAB 74 disclosures. These disclosures should discuss the expected impact of adoption of the new leases standard, including:

  • The expected classification of lease arrangements
  • Any material assets or liabilities to be recorded
  • Practical expedients to be adopted

Below is a summary of SAB 74 disclosures on the potential impact of adopting the new leases standard in annual and quarterly filings of the S&P 500 companies between October 1, 2018 and November 9, 2018.


Accounting hot topics

Fair value measurement disclosures

In August 2018, the FASB amended the fair value disclosure requirements (ASU 2018-13). These changes arose from the FASB's disclosure effectiveness project. The amendments removed, modified and added certain disclosures. While this is not an exhaustive listing, the following provides an overview of the more significant amendments.


Removed Modified Added
Disclosure of the valuation processes related to Level 3 fair value measurements This did not amend the requirement to disclose the valuation approach and techniques used for Level 2 and Level 3 valuations. Companies with investments that calculate a net asset value are required to disclose the timing of liquidation and when restrictions from redemptions might lapse, only when the information is publicly announced or communicated by the investee. The previous guidance required an estimate when the information was not publicly announced or communicated by the investee. Public entity* only - Disclosure of the range and weighted average of significant unobservable inputs used to develop Level 3 measurements, as well as the method used for calculating the weighted average
Disclosure of transfers between Level 1 and Level 2 and the related policy for the timing of transfers Nonpublic entity* only - In lieu of a Level 3 rollforward, companies can disclose transfers into or out of Level 3, the reasons for the transfers, as well as Level 3 purchases and issues (by asset class). Public entity* only - Disclosure of changes in unrealized gains/losses in other comprehensive income for recurring Level 3 measurements
Nonpublic entity* only – Disclosure of changes in unrealized gains and losses included in income for recurring Level 3 investments    

* "Nonpublic entity" is defined in the ASC Master glossary, while a public entity is an entity that is not a nonpublic entity.

The amended guidance is effective for all companies in fiscal years beginning after December 15, 2019. Early adoption of the standard is permitted. Companies may early adopt the provisions that remove or modify disclosures without early adopting the requirements to add disclosures. The guidance requires that the removed and modified disclosures are to be applied retrospectively, while the added disclosures are to be applied prospectively.

For more information, refer to our In depth US2018-19, Changes to fair value disclosure requirements: FASB reduces some disclosures.


Simplified disclosures for pension and postretirement plans

The FASB amended the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans (ASU 2018-14). This amendment, issued in August 2018, was also a result of the FASB’s disclosure effectiveness project. The new guidance removes six disclosure requirements in an effort to streamline employers’ disclosures while retaining those that are most relevant to financial statement users. Furthermore, the new guidance added two new disclosures and clarified the disaggregation disclosure requirements for plans in which benefit obligations exceed the fair value of plan assets. The following is a summary of the removed and additional disclosures.

Removed Added
Amount and timing of plan assets expected to be returned to the employer Weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates
Amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year An explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period
Certain related party disclosures  
Disclosures related to the June 2001 amendments to the Japanese Welfare Pension Insurance Law  
PBE only - the effects of a one-percentage-point change in assumed health care cost trend rates  
Non-PBE only - the reconciliation of the opening and closing balances of Level 3 plan assets; companies will still need to disclose the amounts of transfers into and out of Level 3 of the fair value hierarchy and purchases of Level 3 plan assets.  

The amendments apply to all employers that sponsor defined benefit pension or other postretirement plans and are effective for calendar year-end PBEs on January 1, 2020. Early adoption is permitted and retrospective application is required.


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Valuation of inventory in a business combination - quick cut

In November 2018, the AICPA issued a working draft of its guidance on the valuation of inventory acquired in a business combination. This non-authoritative guidance provides considerations companies may find helpful when determining the fair value of inventory acquired in a business combination.

This working draft will be a chapter in a comprehensive AICPA Business Combinations Accounting and Valuation Guide, to be released at a future date. The AICPA released the inventory valuation guidance in advance of the complete guide to seek feedback from valuation specialists, industry professionals and accounting firms. Comments to the AICPA are due by February 1, 2019.


Accounting for long-duration insurance contracts

In August 2018, the FASB issued guidance that revises key elements of the measurement and disclosure requirements for long-duration insurance contracts issued by insurers and reinsurers (ASU 2018-12). It is the biggest change in US GAAP for life insurers in the last 40 years.


Under the new guidance:

  • Insurance companies are required to update, at least annually, the insurance cash flow assumptions used in the calculation of the net premium ratio and the resulting liability for future policy benefits for certain long-duration insurance contracts on a retrospective catch up basis. This primarily affects whole life, term, long-term care and payout annuity contracts. The guidance also standardizes the interest rate used to discount those insurance cash flows, which is required to be updated at each reporting period (i.e., quarterly) through other comprehensive income.
  • The term "market risk benefits" (MRBs) is introduced to identify certain contracts or contract features that have other-than-nominal capital market risk (i.e., equity, interest rate, and foreign exchange risk). MRBs are required to be measured at fair value. The new MRB guidance applies to various types of guaranteed minimum benefits in both variable and fixed annuity contracts.
  • Straight-line amortization of deferred acquisition costs over the expected term of the related contracts is required for almost all types of long-duration investment and insurance contracts. Deferred acquisition costs will no longer be subject to an impairment test.
  • Significant additional disclosures will be required, including disaggregated rollforwards for all of the key long-duration balances. The new guidance also requires additional quantitative and qualitative information about significant inputs and assumptions used to determine those balances. 

The new guidance is effective for calendar year-end PBEs on January 1, 2021. Other entities will have an additional year. Earlier application is permitted. Upon adoption, the transition date (i.e., the remeasurement date) is the beginning of the earliest year presented in the financial statements, which would be January 2019 for calendar year-end PBEs. Companies will therefore need to restate their previously issued financial statements back to the earliest year presented. As a result, companies will need to begin to capture and retain additional data as early as January 2019.

For more information, refer to our In depth US2018-20, Detailing the new accounting for long-duration contracts of insurers, and watch our video.

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FASB guidance: past, present, and future

The following graphic identifies the FASB's recently released guidance, grouped into four categories — those standards that are effective for calendar year-end PBEs in 2018, 2019, 2020, and 2021.

Guidance effective now for calendar year-end PBEs


Guidance effective in 2019 for calendar year-end PBEs


Guidance effective in 2020 for calendar year-end PBEs


Guidance effective in 2021 for calendar year-end PBEs


For further information on the new accounting guidance, including available PwC resources, refer to the following links.

Effective dates for new FASB guidance for calendar year-end public companies

Effective dates for new FASB guidance for calendar year-end nonpublic companies

Regulatory update

SAB 118 reminders

SEC SAB No. 118 gave companies in the period of enactment the ability to account for the effects of US tax reform on a provisional basis when they did not have the necessary information available, prepared or analyzed in reasonable detail to complete the accounting. SAB 118 provided a measurement period during which the company could complete its accounting. The measurement period is complete when a company’s accounting is complete, but in no circumstances extends beyond one year from the enactment date of December 22, 2017. This means that all companies must complete their accounting for the impacts of tax reform by the end of this year.

For more information on the accounting impacts of tax reform, refer to our In depth US2018-01, Frequently asked questions: Accounting considerations of US tax reform, and watch our tax reform video series, the latest of which addresses valuation allowance considerations post-tax reform.

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SAB 74 disclosures - CECL quick cut

The new standard on credit impairment is expected to have a widespread impact and is effective in 2020 for calendar year-end PBEs. Consistent with any new standard, companies should ensure that their SAB 74 disclosures become more specific as the effective date of the standard nears. Companies should disclose information on the status of their analysis and the impact that adoption of the standard will have on their financial statements.


SEC speech on digital assets

Digital ledger technology (e.g., blockchain) and digital assets (e.g., cryptographic assets, digital tokens) are technologies that continue to evolve and expand. Wesley Bricker, Chief Accountant of the SEC, shared his views on financial reporting considerations related to recent innovations in technology and commerce at the AICPA National Conference on Banks and Savings Institutions in September.

In his remarks, Mr. Bricker stressed the need for companies to maintain appropriate books and records, regardless of whether distributed ledger technology, smart contracts, or other technology-driven records are used. Mr. Bricker also stressed that companies must understand innovations in distributed ledger technology and digital assets to ensure that they comply with federal securities laws relating to maintaining books and records, internal accounting controls, internal control over financial reporting, and custody. He noted the emergence of new technologies, despite their exciting possibilities, do not alter a company's fundamental responsibilities. 


The following are some of the considerations highlighted by Mr. Bricker for management, auditors and audit committees with respect to digital assets:

  • To support their explicit and implicit financial statement assertions, promote the integrity of the independent audit of the financial statements, and promote the reliability and completeness of the financial information filed with the SEC, companies must assess the knowledge of their accounting staff and the sufficiency of their policies, systems and process before acquiring digital assets.
  • Because sellers and purchasers of digital assets recorded on distributed ledgers are generally anonymous, companies must ensure that they have appropriate processes to identify and disclose transactions with related parties, as required by Regulation S-X, GAAP, and IFRS. Beyond disclosures, identifying such transactions is especially important when reporting amounts at fair value, as fair value measurement assumes that an asset is exchanged between market participants who are buyers and sellers independent of the reporting entity (i.e., not related parties).
  • Digital assets may expose an entity to litigation, claims and assessments, when, for example, private claims follow a government investigation or enforcement action for failure to comply with securities laws. Companies should consider published results of enforcement actions taken by the SEC, state regulators, and others, such as FINRA, in addition to their own experience, the experience of other companies and the views of legal counsel and other advisors when assessing if accrual and/or disclosure is required.
  • Audit committees' processes to initially select and subsequently retain the external auditor should include an evaluation of the auditor’s qualifications with digital assets, including a consideration of the auditor’s regulatory and litigation experience and access to legal and technology specialists in the area of digital assets. Audit committees should assess the impact of instances in which the auditor declines or is unable to issue an unqualified audit opinion.

For further discussion of Mr. Bricker's speech and an overview of the September conference, refer to our In depth US2018-21, AICPA National Conference on Banks and Savings Institutions.

Holders and issuers of cryptographic assets may encounter a variety of complex accounting issues beyond the considerations highlighted by Mr. Bricker. The diverse range of rights and preferences associated with different cryptographic assets requires consideration of a broad set of accounting guidance. For examples of accounting considerations that both issuers and holders should evaluate, please refer to our Point of view, Cryptocurrencies: Time to consider plan B, and our In depth, Cryptographic assets and related transactions: accounting considerations under IFRS. While the In depth addresses accounting issues under IFRS, given convergence in certain key accounting standards (e.g., accounting for revenue from contracts with customers), we believe many of the accounting considerations are similar for US GAAP.


SEC’s cybersecurity enforcement

There are SEC rules designed to protect confidential customer information and to protect customers from the risk of identity theft. The SEC charged a broker-dealer and investment adviser with violating two of these rules (the Safeguards Rule and the Identity Theft Red Flags Rule). In September 2018, the company settled the charges and agreed to pay $1 million related to its failures to follow adequate cybersecurity policies and procedures surrounding a cyber-intrusion that compromised personal information of at least 5,600 of the company’s customers. This was the first SEC enforcement action charging violation of the Identity Theft Red Flags Rule. Given the continued rise in the number of cyber intrusions and the SEC cybersecurity rules in place, companies should ensure that they have the appropriate procedures and controls, which are reasonably designed to fit the company’s needs. Companies also need to regularly review and update those procedures and controls to respond to changes in the risks that companies encounter.

 

The SEC also issued interpretative guidance on cybersecurity disclosures earlier this year. The interpretive guidance expanded on the 2011 SEC guidance and highlighted the importance of maintaining policies that effectively address the fact that cybersecurity risks and incidents can constitute material, nonpublic information. Furthermore, the interpretive guidance emphasizes the importance of maintaining sufficient disclosure controls and procedures to ensure relevant information about cybersecurity risks and incidents is processed and reported in SEC filings. Companies should consider filing a Form 8-K to report material cybersecurity incidents.

For more information on the SEC’s interpretative guidance, see our In brief US2018-07, SEC issues interpretative guidance on cybersecurity disclosures and our publication on Rethinking cybersecurity disclosures to investors.


SEC simplification and disclosure requirements

On August 17, 2018, the SEC adopted amendments to eliminate, modify or integrate certain disclosure rules into other SEC requirements. The amendments are part of the SEC’s efforts to improve disclosure effectiveness. The amended rules became effective for SEC filings made on or after November 5, 2018.


The amendments eliminate:

  • Redundant and duplicative requirements, which were substantially similar disclosures as US GAAP, IFRS or other SEC disclosure requirements
  • Overlapping requirements, which are related to, but not the same as US GAAP, IFRS or other SEC disclosure requirements - including the elimination of the ratio of earnings to fixed charges
  • Outdated requirements, which have become obsolete as a result of the passage of time or changes in the regulatory, business or technological environment
  • Superseded requirements, which are inconsistent with recent legislation, more recently updated SEC disclosure requirements or more recently updated US GAAP

Although the amended rules generally reduce disclosures, some provisions added disclosure requirements. This includes a requirement for companies to provide an analysis of changes in stockholders’ equity for the current and comparative quarter and year-to-date interim periods. There is no specified format that must be followed to present this interim information; however, the disclosure must be presented in the form of a reconciliation either as a separate statement or in the footnotes. The SEC subsequently published clarifying guidance indicating that the SEC staff would not object to companies including the first presentation of their changes in stockholders’ equity in its Form 10-Q for the first quarter beginning after the amendment’s effective date of November 5, 2018. For example, a calendar year-end company may include it for the first time in its March 31, 2019 Form 10-Q.

For more information on the SEC's amendments to update disclosure requirements, see our In brief US2018-21, SEC simplifies and updates disclosure requirements and In brief US2018-22, Implementing the recently adopted SEC rules.


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Proposal to simplify guarantor disclosures - quick cut

The SEC’s proposal to simplify the disclosure requirements for registered debt offerings that contain guarantee or collateral features (Regulation S-X Rules 3-10 and 3-16) was published to the Federal Register on October 2, 2018. Under the proposed SEC rule amendments, companies would generally provide less quantitative information about guarantors and collateralizations. The proposed amendments include replacing the consolidating financial information and/or financial statements with summarized financial information and non-financial narrative disclosures. The comment period for the proposal closed on December 3, 2018.

The proposed rule amendments are intended to provide investors with material information and to make the disclosures easier to understand. They would also reduce the compliance burden for companies and may encourage more companies to offer guaranteed or collateralized registered securities. These features typically reduce interest rates and, therefore, may reduce companies' cost of capital.

For information on these proposed amendments, see our In brief US2018-17, SEC proposes to simplify disclosures about guarantors and collateralizations.



Brexit – Now is the time to act

With just months to go until the UK leaves the EU, there is increasing discussion regarding whether companies are ready for the impact of new trading and border arrangements. While UK and EU companies face specific challenges, Brexit will have implications for many other companies as well. Companies that are likely to be impacted include companies that:

  • Sell or buy high volumes of goods or services to or from the UK or EU
  • Have complicated or highly integrated UK-EU supply chains, particularly those that operate "just in time" production
  • Are heavily reliant on the UK for staff–whether temporary or permanent
  • Operate in highly regulated areas, whether services (e.g., financial, legal) or goods (e.g., chemicals, pharma)
  • Sell or buy goods or services to or from one of the 50+ countries with which the EU has a Free Trade Agreement
  • Have high levels of third-country content in products sold from the UK to the EU (and may not be able to meet rules of origin in a future Free Trade Agreement)
  • Move personal data in and out of the UK
  • Benefit from UK or EU research and development grants and other funds
  • Invest in UK based assets from overseas
  • Operate in the UK or EU and are heavily regulated and have operational complexity 

The UK is expected to leave the EU in March 2019. The parties are working to negotiate the details of the withdrawal. Even with a draft agreement on Brexit, the details of a new trade deal between the UK and EU will not be clear for some time. The outcome with the biggest disruption is a "no deal" outcome, in which the UK would exit the EU without coming to an agreement on the terms of its withdrawal. This risk will continue to exist until a deal is ratified by both the UK and EU parliaments.

Some companies are waiting to act until some of the uncertainty is resolved. However, given the short timeline and the potential implications, companies should be taking the following steps now to be prepared. 

  • Know your supply chain
  • Engage with key third parties
  • Plan to be agile
  • Clean up your current data
  • Check out your contacts
  • Support your people
  • Think about new data requirements
  • Take advantage of existing government programs
  • Determine the impact to your financial reporting


While planning for Brexit, companies should be assessing the impact to their operations, along with the legal, accounting, tax and other economic implications. Given the potentially challenging political environment, companies should be prepared to react quickly to new developments.

When speaking at the Financial Executives International November 2018 Current Financial Reporting Issues Conference, SEC Chairman Jay Clayton voiced his concern that the potential impact of Brexit on financial reporting has been understated. Mr. Clayton said that the SEC is focused on disclosures about the risks associated with Brexit. While preparing year-end financial reporting, companies should consider the impact that Brexit will have on their trends and disclosures, including those in MD&A and their risk factors.

Hot off the press

Collaborative arrangements

In November 2018, the FASB issued an amendment to clarify the accounting for certain collaborative arrangements (ASU 2018-18). Under the modified guidance, companies will have to assess whether transactions between collaborative arrangement participants are within the scope of the new revenue standard.


The "distinct" guidance in the new revenue standard will be used to identify the "units of account" within a collaboration arrangement. If an entire unit of account is a transaction with a customer, companies will apply the new revenue standard to that unit of account, including all recognition, measurement, presentation and disclosure requirements.

If an entire unit of account is not a transaction with a customer, companies can apply elements of the new revenue standard or other relevant guidance by analogy, or apply a reasonable accounting policy if there is no appropriate analogy. Transactions outside the scope of the new revenue standard must be accounted for separate from revenue within the scope of the new revenue standard. However, the guidance does not prescribe any specific presentation for these transactions. We believe there will be instances when it is acceptable to present transactions in the scope of the collaborative agreements guidance as revenue, as long as such amounts are not combined with revenue from contracts with customers.

The amended guidance is effective for calendar year-end PBEs on January 1, 2020. Early adoption is permitted after or in conjunction with adoption of the new revenue standard.

For more information, please refer to our In depth US2018-22, FASB clarifies guidance on collaborative arrangements.


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New benchmark interest rate for hedge accounting - quick cut

Due to the anticipated phase out of LIBOR, in October 2018, the FASB issued an amendment to the hedge accounting guidance that adds the Secured Overnight Financing Rate (SOFR) Overnight Index Swap rate to the list of US benchmark interest rates eligible to be used for hedge accounting purposes (ASU 2018-16). This amendment will provide companies time to prepare for the anticipated transition from LIBOR to SOFR and make the necessary changes to their hedging strategies for both risk management and accounting purposes.

The amendment is required to be adopted concurrent with the new hedge accounting guidance. For calendar year-end companies that already adopted the new hedge accounting guidance, this amendment is effective in 2019 for PBEs and 2020 for all other entities; however, it can be early adopted in any interim period.

Appendix - Annual reporting considerations

While not intended to be an exhaustive resource of all year-end reporting considerations, the following table provides a listing of topics relevant to 2018 year-end financial reporting. This table provides an overview of important developments from throughout the year and includes topics that continue to present challenges to financial statement preparers. References to PwC publications where you can find additional information on each topic are also included.

Financial reporting topic and relevant guidance Helpful resources
Effective now for calendar year-end PBEs:
Accounting for the impacts of tax reform (ASU 2018-02, 2018-05, and the 2017 US Tax Cuts and Jobs Act)

PwC accounting guide, Income taxes

In depth US2018-17, Accounting for outside basis differences in the wake of US tax reform – Same accounting rules, different mindset

In depth US2018-16, Measuring GILTI deferred taxes

In depth US2018-10, Tax reform triggers need for new accounting policy - Assessing the impact of GILTI on realizability of NOLs

In depth US2018-02, FASB addresses stranded tax effects in AOCI caused by tax reform

In depth US2018-01, Frequently asked questions: Accounting considerations of US tax reform

In depth US 2017-34, Accounting considerations of US tax reform – Summary of major provisions and potential effects

Watch our videos related to tax reform: Tax reform: Impact on compensation mattersTax reform: Impact on the estimated annual effective tax rate, Tax reform: Impact on valuation allowance assessment, How does tax reform impact a company's indefinite reinvestment assertion?

New revenue standard (ASC 606)

PwC accounting guide, Revenue from contracts with customers

In the loop, New revenue guidance: first quarter recap, where we discuss policy elections and disclosures provided under the new revenue standard

In transition US2017-01, The new revenue recognition standard - FAQs about SEC reporting and transition

Stay informed, SEC comment letter observations on the new revenue standard

Watch our videos about the new revenue standard: Significant financing components, Variable consideration, Capitalizing costs, Disclosures, Return rights, Gift cards, Warranties, Bill and hold transactions, and Performance obligations

In Episode 43 of our CFOdirect podcast series, we discuss areas of focus based on public comment letters related to the adoption of the new revenue standard

Derecognition of nonfinancial assets and equity method investments (ASU 2017-05)

Chapter 5 of the PwC accounting guide, Property, plant, equipment and other assets

PwC accounting guide, Transfers and servicing of financial assets

Watch our video on Derecognition of nonfinancial assets

Financial instruments: Recognition and measurement (ASU 2016-01) PwC accounting guide, Loans and investments
Statement of cash flows – presentation of certain transactions (ASU 2016-15)

Chapter 6 of the PwC accounting guide, Financial statement presentation

In depth US2017-31, Sales of trade receivables get new statement of cash flow treatment

New definition of a business (ASU 2017-01)

PwC accounting guide, Business combinations and noncontrolling interests

In the loop, The new business definition: Why it matters

In Episode 39 of our CFOdirect podcast series, we provide clarity around some of the practical challenges faced when applying the new standard

Accounting in a highly inflationary economy – Argentina (ASC 830-10)

Chapter 6 of the PwC accounting guide, Foreign currency

In brief US2018-14, Monitoring inflation in Argentina

Accounting for hurricanes and other natural disasters In depth US2018-18, Accounting and disclosure implications of Hurricane Florence
Effective in 2019 for calendar year-end PBEs:
New leases standard (ASC 842)

PwC accounting guide, Leases

In brief US2018-25, More changes to ease lessor adoption of the new leases standard

Watch our videos on the new leases standard: Lessor practical expedient, How lessees should account for operating leases, How lessees should account for finance leases, Accounting for variable lease payments, Discount rate for the lease liability, Practical expedients, Identifying embedded leases under the new standard, Determining the lease term, and Transition

In Episode 31 of our CFOdirect podcast series, we provide reminders on the new leasing standard as companies prepare for adoption

Hedge accounting (ASU 2016-13)

PwC accounting guide, Derivatives and hedging

Watch our videos on hedge accounting: Hedging – Accounting for excluded components and Hedging - Benchmark rate component

Down round features (ASU 2017-11) In depth US2018-04, Adopting the new guidance on down round features
Employee and nonemployee stock-based compensation guidance (ASU 2018-07) In depth US2018-11, FASB aligns employee and nonemployee stock compensation guidance
Effective in 2020 for calendar year-end PBEs:
New credit impairment standard (ASU 2016-13)

PwC accounting guide, Loans and investments

In depth US2018-24, Update from the TRG for Credit Losses: November 2018

In brief US2018-19, Recent developments related to the new credit loss standard

In depth US2018-09, Transition Resource Group for Credit Losses: June 2018

In depth US2018-08, How the credit impairment standard impacts non-financial services companies

In depth US2017-12, Transition Resource Group for credit losses discusses implementation issues

In the loop, Preparing for the new credit loss model

Watch our webcast replay, Navigating Current Expected Credit Loss (CECL) implementation

Watch our videos on the new credit impairment standard: CECL – Accounting impacts to guarantees, and CECL – Impacts for nonfinancial services companies

Goodwill impairment test (ASU 2017-04) In depth US2017-03, Measuring goodwill impairment to get easier
Cloud computing (ASU 2018-15)

In depth US2018-23, Accounting for certain costs in a cloud computing arrangement - Considerations for regulated entities

In depth US2018-14, Cloud computing arrangements: Customer accounting for implementation costs and watch our related video

Critical audit matters - CAMs (PCAOB AS 3101)

In depth US2017-29, SEC approves PCAOB standard changing the auditor reporting model

Point of view, Auditor reporting: Changes coming

Watch our video on, Auditor reporting model: SEC approves changes affecting all PCAOB audit reports

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