In this edition, we spotlight accounting for warrants issued in a special purpose acquisition company (SPAC) transaction and highlight emerging hot topics relative to current FASB projects on accounting for acquired revenue contracts and subsequent accounting for goodwill. This issue also includes our observations related to trends in human capital disclosures, TMT sector trends in M&A and capital markets, and SEC comment letter trends.
It’s more than a year into the pandemic and the bond and loan markets remain on solid footing, supported by improved economic conditions, the vaccine rollout and continued support from the Federal Reserve. Refinancings, driven by low interest rates, continue to be the dominant form of issuance, particularly in the bond market. With this the TMT sector has seen a significant increase in M&A and LBO activity as buyout firms seek companies with cash flows that are more resilient to external factors such as a global pandemic.This report digs deeper into the activity in bond markets and discusses what it means for the sectors’ IPOs and SPAC Mergers.
The trend continues, and SPAC mergers continue to gain significant traction. We’ve seen an active IPO market since 2020 and SPACs are taking their fair share of that market. Most SPAC transactions involve issuing warrants to purchase a company’s common stock. Learn more about this accounting hot topic facing many SPACs today.
On March 30, 2021, the FASB issued guidance introducing an accounting alternative allowing private companies and not-for-profit entities to forgo the evaluation of goodwill impairment triggering events occurring throughout a reporting period. This accounting alternative is intended to reduce the cost and complexity of the existing model as many private companies found it difficult to implement due to the economic uncertainty and volatility caused by the COVID-19 crisis. This report discusses key considerations related to the issuance of ASU No. 2021-03.
The FASB's proposed accounting standard update to ASC 805 is aimed at improving the accounting for acquired revenue contracts with customers in a business combination by addressing diversity and inconsistency related to the recognition of an acquired contract liability. Read more about the proposed amendment updates in this report.
The SEC Division of Corporate Finance’s filing review process is a key function used by the SEC staff to monitor critical accounting and disclosure decisions applied by registrants. Our analysis of SEC comment letters identifies the frequency of topical areas addressed by the SEC staff and how their focus areas have changed over time. We provide insights on the nature of the SEC staff comments, sample text from the comments and provide links to sites where you can learn more about the accounting and disclosure requirements addressed in each topical area.
The SEC introduced revised disclosure requirements in August 2020 designed to provide stakeholders insight into human capital. This includes the operating model, talent planning, learning and innovation, employee experience and work environment. These disclosures may help stakeholders evaluate whether a business has the right workforce to meet immediate and emerging business challenges and the nature and magnitude of the related investments. This report digs deeper into the human capital trends.
This report includes a summary of the FASB's accounting standard updates and effective dates for private and public companies.