Quarterly Accounting Update – Q2 2017

Welcome to the Second Quarter issue of our Quarterly Accounting Update. Each quarter, we will provide you with up-to-date information for consideration in your financial reporting and disclosures. Our goal is for you to have current, relevant information available prior to finalizing your financial reporting deliverables. This update is organized as follows:

Quarterly Accounting Update

Selected Highlights

This section includes an executive summary of selected items and hot topics covered in this update.

FASB Update

This section includes an overview of selected Accounting Standards Updates (ASUs) issued during the period.

Rev Rec Implementation

This section includes special guidance on preparing for implementation of the new revenue recognition standard.

Regulatory Update

This section includes an overview of selected updates, releases, rules and actions during the period that might impact financial information, operations and/or governance.

Other Developments

This section includes an overview of other developments, actions and projects of the FASB, PCC, EITF and/or other rulemaking organizations.

On the Horizon

This section includes an overview of selected projects and exposure drafts of the FASB.

Appendices

  • A – Important Implementation Dates
  • B – Illustrative Disclosures for Recently Issued Accounting Pronouncements

Quarterly Accounting Update: Selected Highlights

FASB Provides Guidance on Share-Based Payments

In May, the FASB issued guidance to provide clarity and reduce both diversity in practice and cost and complexity when changing the terms or conditions of a share-based payment award.

Find out more about this new standard in the FASB Update section.

Rev Rec—Are You Ready?

The new revenue recognition standard is historic in its breadth and impact across industries. It is urgent that management start assessing the impact of the new revenue recognition standard and forging a successful path to its implementation.

Find out more in the Rev Rec Implementation section.

PCAOB Expands Auditors’ Reporting Requirements

Reports prepared by public company auditors will contain more information for investors and other financial statement users as a result of new rules approved in June by the PCAOB.

Read more about these issues in the Regulatory Update section.

Private Companies May Get Relief from Common Control VIE Guidance

The FASB is poised to issue a proposal that would exempt private companies from following the variable interest entity (VIE) guidance for businesses under common control in ASC 810, Consolidation.

More information on this proposal can be found in the Other Developments section.

Quarterly Accounting Update: FASB Update

The following selected Accounting Standards Updates (ASUs) were issued by the Financial Accounting Standards Board (FASB) during the second quarter. A complete list of all ASUs issued or effective in 2017 is included in Appendix A.

FASB Issues Guidance on Service Concession Arrangements

Affects: Operating entities with service concession arrangements

On May 16, 2017, the FASB issued ASU 2017-10, Determining the Customer of the Operation Services, in response to a consensus reached by the Emerging Issues Task Force at its March 2017 meeting. The ASU addresses diversity in practice in how an operating entity determines the customer of the operation services for transactions within the scope of Accounting Standards Codification (ASC) 853, Service Concession Arrangements, by clarifying that the grantor is the customer of the operation services in all cases for those arrangements. The amendments also allow for a more consistent application of other aspects of the revenue guidance, which are affected by this customer determination.

Effective Dates

For entities that have not yet adopted ASC 606, Revenue from Contracts with Customers, the effective date is aligned with that for ASC 606. For public business entities that have adopted ASC 606, the ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. For most other entities, the ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted.

FASB Amends the Scope of Modification Accounting for Share-Based Payment Arrangements

Affects: All entities that provide share-based payment awards

On May 10, 2017, the FASB issued ASU 2017-09, Scope of Modification Accounting, which amends the scope of modification accounting for share-based payment arrangements. The ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC 718, Compensation—Stock Compensation. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions and classification of the awards are the same immediately before and after the modification.

Effective Dates

For all entities, the ASU is effective for annual reporting periods, including interim periods within those annual reporting periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period.

Quarterly Accounting Update: Rev Rec Implementation

In 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. The guidance in ASU 2014-09 is codified primarily in ASC 606, with the same title. The new revenue recognition standard affects all entities—public, private and not-for-profit—that have contracts with customers. It is broad reaching across an organization and impacts many functional areas: accounting, tax, financial reporting, financial planning and analysis, investor relations, treasury (e.g., debt covenants), sales, legal, information technology and human resources (e.g., employee compensation plans). It involves significant judgments and estimates, thoughtful revision of accounting policy and new required disclosures. Implementation is a significant effort. If companies have not begun the process already, it is imperative to start preparing immediately. For many companies, the new standard will require evaluation of 2018 financial information under the new guidance.

While the policies used by almost all entities to account for revenue and certain related costs will be affected by the new guidance, the degree of change to a specific entity’s revenue recognition policies and the effects the changes have on the entity’s financial statements will vary depending on the nature and terms of the entity’s revenue-generating transactions. In addition, entities in some industries will likely be affected by the new guidance more than entities in other industries. For example, while the revenue recognition policies for the normal course transactions of a traditional retailer will need to change so that they are aligned with the principles and guidance in ASC 606, those changes may not have a significant effect on the timing and amount of revenue recognized by the retailer. Conversely, the effects of the changes to a technology entity’s revenue recognition policies to align them with the principles and guidance in ASC 606 may result in significant changes to the timing and amount of revenue recognized by that entity. However, it is important to note that entities in virtually all industries will be significantly affected by the disclosure requirements in the new guidance.

Examples of significant changes incorporated into the new guidance that could affect how an entity accounts for its contracts with customers include the following:

  • Transfer of control model. Focus on the transfer of control instead of the transfer of risks and rewards (which is used pervasively in legacy U.S. GAAP) for purposes of determining when to recognize revenue
  • Variable consideration. Use of a model that may result in estimates of variable consideration being included in the transaction price (and recognized as revenue) sooner than they would be under legacy U.S. GAAP
  • Significant financing component. Incorporation of a significant financing component (caused by either advance payment or deferred payment terms with the customer) into the measurement of revenue (with certain exceptions), which is only done today under legacy U.S. GAAP in the context of accounting for long-term receivables
  • Use of one comprehensive approach to account for all licenses and rights to use intellectual property (IP) instead of the limited-scope industry-specific models in legacy U.S. GAAP
  • Multiple-element arrangements. Use of one comprehensive approaches to account for multiple-element arrangements instead of the general model and industry-specific models in legacy U.S. GAAP
  • Costs related to customer contracts. Requirement to capitalize certain costs related to a contract with the customer (e.g., sales commissions, setup costs) under certain circumstances instead of having the option to do so in certain cases under legacy U.S. GAAP

In addition, the disclosure requirements in the new guidance will cause the volume of revenue-related information disclosed in the financial statements to significantly increase, particularly for public entities.

Observation: The new guidance also includes ASC 610-20, which addresses the recognition of gains and losses on the transfer (i.e., sale) of nonfinancial (and in-substance nonfinancial) assets to counterparties other than customers. For example, if a landscaping business sells one of its used trucks to a counterparty that is not a customer, the gain or loss from the sale of that truck should be accounted for in accordance with ASC 610-20.

Effective Date and Transition

The new guidance is effective for public entities in annual reporting periods beginning after December 15, 2017 and the interim periods within that year. Public entities include: (a) public business entities, (b) not-for-profit entities that have issued, or are conduit bond obligors for, securities that are traded, listed or quoted on an exchange or an over-the-counter market and (c) employee benefit plans that file or furnish financial statements to the Securities and Exchange Commission (SEC). As such, for a public business entity with a calendar year end, the new guidance is effective on January 1, 2018 for both its interim and annual reporting periods. For all other entities (e.g., private companies), the new guidance is effective in annual reporting periods beginning after December 15, 2018 and interim periods within annual periods beginning after December 15, 2019. As such, for a private company with a calendar year end, the new guidance is effective for the year ending December 31, 2019 and for interim periods in the year ending December 31, 2020.

The transition alternatives that an entity must choose between when initially applying the new guidance include the full retrospective transition method and the modified retrospective transition method:

  • Full retrospective transition method. This method involves retrospective application to all periods presented with the option to elect one or more of four practical expedients.
  • Modified retrospective transition method. This method involves application of the new guidance to either: (a) all contracts at the date of initial application or (b) only contracts that are not completed at the date of initial application. Under this method, a cumulative effect adjustment is recognized as of the date of initial application (which is January 1, 2018 for a public business entity with a calendar year end that adopts the new guidance as of the effective date). In addition, a variety of information must be disclosed under this transition method, including the effects of applying the new guidance in the period of adoption. In other words, an entity must determine and disclose the amount of revenue and related costs it would have recognized in the period of adoption if it had continued to apply legacy U.S. GAAP in that period.

Observation: If you have questions or need more information related to the new revenue recognition standard, please contact your Elliott Davis Decosimo advisor. We have a questionnaire designed to help clients identify the significant changes that may occur to their revenue recognition and cost policies as a result of ASC 606. In addition, we have a checklist to assist clients in their transition to and initial application of ASC 606.

Quarterly Accounting Update: Regulatory Update

Basel Committee Issues Interpretive Guidance for Lease Accounting Standards

On April 6, 2017, the Basel Committee on Banking Supervision (an international panel of central banks, including the U.S. Federal Reserve) issued a frequently asked questions document for the upcoming changes to lease accounting and their effect on bank regulatory capital. The document covers three questions related to the treatment of new assets and liabilities that will be recorded on bank balance sheets as a result of the FASB and International Accounting Standards Board’s (IASB) overhaul of how businesses account for leases.

The first issue addresses leases of intangible assets and concludes that these leases should be excluded from the calculation of regulatory capital. However, if the leased asset is a tangible asset, it should be included in the risk-based capital and leverage denominators, according to the answer to a second question. Finally, the central bankers stated that leased tangible assets should be risk-weighted at 100 percent.

The FAQs can be accessed at: http://www.bis.org/press/p170406a.htm

Bank Regulators Raise Concerns about the Credit Loss Standard

Bank regulators told the members of the FASB’s Transition Resource Group (TRG) for the credit loss standard that they are concerned that many banks will implement the standard in a way that reflects the existing accounting practices that contributed to the global financial crisis and the new standard is intended to replace.

The debate during a meeting of the TRG shed light on the sharply differing views banks and their regulators have about one of the most important elements in ASU 2016-13, Measurement of Credit Losses on Financial Instruments. The standard, which was issued in June 2016, was written to correct one of the key accounting problems in the run-up to the global financial crisis—the delayed recognition of problem loans that kept up the appearance of health on banks’ balance sheets while their loan portfolios slipped further into trouble.

The disagreement between bankers and regulators centered on how banks should respond to loans, particularly home mortgages, for which borrowers are having problems meeting payments. In recent years, banks have often modified the loans with easier terms that help borrowers get back on their feet. U.S. GAAP calls the modifications troubled debt restructurings (TDR), and regulators want the troubled loans evaluated on the basis of an entire portfolio because they believe this approach will push banks to recognize the loans and set aside loss reserves early enough in the cycle to avoid a reprise of the crisis. But, bankers on the TRG believe the restructurings should be recognized on an individual loan level.

According to Robert Storch, chief accountant for the Federal Deposit Insurance Corporation, regulators would like to make sure that the issues are well vetted among all the different stakeholders, and appropriate solutions can be developed that balance the accounting with safety and soundness concerns.

SEC Warns Against Delay of FASB Credit Loss Standard

The chief accountant of the SEC, Wesley Bricker, warned against efforts by some banks to delay implementation of the FASB’s credit loss standard. Bricker urged bankers with questions about implementing the standard to submit questions to the Transition Resource Group the FASB created to assist with implementation of the standard.

On a related note, the Independent Community Bankers Association has stated that some publicly traded mid-sized regional banks may be concerned about a one-time charge against retained earnings and regulatory capital when the standard becomes effective. However, the organization believes the implementation process to date has still been a relatively smooth effort, particularly in light of the concerns some bankers raised prior to the standard’s publication.

SEC’s Division of Corporation Finance Expands Popular JOBS Act Benefit to All Companies

In June, the SEC announced that the Division of Corporation Finance will permit all companies to submit draft registration statements relating to initial public offerings for review on a non-public basis.  Permitting all companies to submit registration statements for non-public review, similar to the benefit used by emerging growth companies (EGC) under the JOBS Act, is intended to provide companies with more flexibility to plan their offering. The non-public review process after the IPO reduces the potential for lengthy exposure to market fluctuations that can adversely affect the offering process and harm existing public shareholders. By requiring a public filing period prior to the launch of marketing, the process incorporates a feature of the EGC review process that provides an opportunity for the public to evaluate those offerings.

This process will be available for IPOs as well as most offerings made in the first year after a company has entered the public reporting system. It will be effective on July 10, 2017.

Don’t Forget New SEC Requirement for Hyperlinks to Exhibits in Regulatory Filings

In March 2017, the SEC published Release No. 33-10322, Exhibit Hyperlinks and HTML Format, which requires public companies to include hyperlinks to the exhibits in the indexes of their regulatory filings.  The SEC said the hyperlinks will make finding old exhibits in its Electronic Data Gathering, Analysis and Retrieval System (EDGAR) filing system easier because investors will not have to search through previous filings to find and review an exhibit.

Specifically, the hyperlinks have to be incorporated into registration statements and quarterly and annual reports submitted through the EDGAR filing system and formatted in the HyperText Markup Language (HTML). Companies will not be able to submit their filings using the American Standard Code for Information Interchange (ASCII) text format because it does not support hyperlinks.

The requirements will become effective on September 1, 2017, however companies classified as nonaccelerated filers by Rule 12b-2 of the Securities Exchange Act of 1934, which means the value of the shares trading publicly is less than $75 million, and companies that are defined as smaller reporting companies in Rule 405 of the Securities Act of 1933 will not have to meet the requirements until September 1, 2018.

Treasury Department Report Outlines Rollback of Bank Rules and Questions Need for FASB’s Credit Loss Standard

A White House-ordered report from the Treasury Department recommended an overhaul to the financial regulatory system, including an easing of Dodd-Frank Act rules for banks. Treasury prepared the document as the first of several reviews of the financial regulatory system, under an early February executive order by President Donald Trump. Subsequent reports will cover capital markets regulation, the asset management and insurance industries and nonbank financial institutions.

The bulk of the report focused on the overall easing of bank rules, but in a handful of references, it questions the purpose of the FASB’s credit loss standard (ASU 2016-13). In its assessment of the standard, the Treasury report said, “It is unclear if such changes are needed to promote a more robust U.S. banking system.” The report says that the FASB standard, which is based upon what the accounting board calls a current expected credit loss model, may drive up bank costs because it will ask banks to set aside loss reserves earlier in the business cycle.

Some of the report’s more significant requests call for tailoring regulation based on a bank’s size and complexity, reducing unnecessary complexity in regulations, and reviewing regulatory fragmentation, overlap and duplication across regulatory agencies. Some of the points echo provisions of H.R. 10, the Financial Choice Act, a Republican bill to rewrite the Dodd-Frank Act passed by the House in June with no Democratic support.

The Treasury report supports giving banks that maintain high levels of capital an off-ramp from Dodd-Frank rules and other standards, mirroring a core Financial Choice Act provision. Like the Financial Choice Act, the Treasury report takes aim at the Consumer Financial Protection Bureau, an agency created under Dodd-Frank to oversee the consumer lending market.

Democrats criticized the 150-page report and said it includes changes that will gut post-crisis reforms.

FEI Advises That Tax Reform May Significantly Affect Financial Reporting

Financial Executives International (FEI), which represents some of the largest U.S. companies, is encouraging the FASB to start considering the impact that tax reform could have on accounting practices, including the application of ASC 740, Income Taxes. The Trump administration and GOP lawmakers are weighing proposals that are not alterations of the existing tax code, but a complete overhaul. The effect on financial reporting could be significant, and companies may not have enough time to digest all the changes, according to FEI.

The proposal released by House Ways and Means Committee Chairman Kevin Brady, calls for the U.S. to consider a consumption tax that is a hybrid of an income tax and the value-added tax (VAT), particularly common among European Union members. The model allows immediate expensing rather than deprecation for acquired assets, bars deductions for net interest expense and includes a border adjustment tax that exempts goods and services that are exported but taxes imports.

Under current U.S. GAAP, income taxes typically are accounted for under ASC 740, while gross receipts taxes and equity taxes have been excluded from that guidance. Consumption taxes, such as a VAT, also are usually accounted for as operating taxes outside the scope of the income tax guidance.

PCAOB Adopts Expanded Auditor’s Report

The Public Company Accounting Oversight Board (PCAOB) unanimously adopted a new auditing standard, The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion. The new standard is designed to enhance the relevance and usefulness of the auditor’s report by providing additional and important information to investors. The new rules are subject to approval by the SEC.

The new standard and related amendments require auditors to include in the auditor’s report a discussion of the critical audit matters (CAMs). “Critical audit matters” are matters that have been communicated to the audit committee, are related to accounts or disclosures that are material to the financial statements and involve especially challenging, subjective or complex auditor judgment.

The new standard requires the auditor’s report to:

  • Discuss CAMS
  • Disclose the tenure of an auditor, specifically, the year in which the auditor began serving consecutively as the company’s auditor
  • Include the phrase, “whether due to error or fraud,” in the description of the auditor’s responsibility under PCAOB standards to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements

The final standard applies to audits conducted under PCAOB standards. Communication of CAMs is not required for audits of emerging growth companies; brokers and dealers; investment companies other than business development companies; and employee stock purchase, savings, and similar plans.

The new requirements are to be phased in, to provide investors and other financial statement users with new information as soon as reasonably practicable, while allowing accounting firms, companies and audit committees time to prepare for implementation of the CAM reporting requirements.

The phased effective dates are as follows, subject to SEC approval:

  • New auditor’s report format, tenure and other information: audits for fiscal years ending on or after December 15, 2017
  • Communication of CAMs for audits of large accelerated filers: audits for fiscal years ending on or after June 30, 2019
  • Communication of CAMs for audits of all other companies: audits for fiscal years ending on or after December 15, 2020

Quarterly Accounting Update: Other Developments

GASB Issues New Guidance on Debt Extinguishment Issues

On May 15, 2017, the Governmental Accounting Standards Board (GASB) issued guidance that aims to improve consistency for the ways state and local governments account for methods of paying off debt. GASB Statement 86, Certain Debt Extinguishment Issues, establishes uniform guidance for derecognizing debt that is defeased in substance, regardless of how cash placed in an irrevocable trust for the purpose of extinguishing that debt was acquired.

Key Points

GASB Statement 7, Advance Refundings Resulting in Defeasance of Debt, requires that debt be considered defeased in substance when the debtor irrevocably places cash or other monetary assets acquired with refunding debt proceeds in a trust to be used solely for satisfying scheduled payments of both principal and interest of the defeased debt. Statement 86 establishes essentially the same requirements for when a government places cash and other monetary assets acquired with only existing resources in an irrevocable trust to extinguish the debt.

Governments that defease debt using only existing resources should provide a general description of the transaction in the notes to financial statements in the period of the defeasance. In all periods following an in-substance defeasance  of  debt  using  only  existing  resources,  the  amount  of  that  debt  that remains outstanding at period-end should be disclosed.

Effective Date and Transition

The provisions of Statement 86 are effective for reporting periods beginning after June 15, 2017. Earlier application is encouraged.

GASB Issues Implementation Guide Related to OPEB Standard

On May 10, 2017, the GASB issued an implementation guide consisting of Q&As that are intended to help state and local government financial statement preparers and auditors apply GASB Statement 74, which provides guidance on financial reporting for postemployment benefit plans other than pension plans. Topics discussed in the guide include the following:

  • Scope and applicability of Statement 74.
  • Types of other postemployment benefits (OPEB) and OPEB plans.
  • Defined benefit OPEB plans that are administered through trusts.
  • Assets accumulated to provide OPEB through defined benefit OPEB plans that are not administered through trusts that meet the criteria in paragraph 3 of Statement 74.
  • Defined contribution OPEB plans that are administered through trusts that meet the criteria in paragraph 3 of Statement 74.
  • Effective date and transition of Statement 74.

Most of the requirements in the guide are effective for reporting periods beginning after December 15, 2016. Early application is encouraged if Statement 74 has been implemented.

Accounting for Changes in Tax Law

With Congress actively debating bills that affect tax law, it’s important to remember that ASC 740, Income Taxes, requires that the effects of a change in tax law or rates be recognized in the period that includes the enactment date. For U.S. federal tax purposes, the enactment date is most often the date the President signs the bill into law. The key concept is that the full legislative process is complete. Most states follow the same or similar processes.

In some instances, changes may be enacted after year-end but before the financial statements are issued. In those situations, also in accordance with ASC 740-10-45-15, the enacted change would not be recognized until the period that includes the enactment date. In addition, any valuation allowance for deferred tax assets should not take into consideration the impact of a decrease in tax rates. The intent of ASC 740 is that the impact of all tax rate or tax law changes be reflected in the period of enactment, regardless of the effect on deferred assets and liabilities in financial statements for earlier periods. Accordingly, the impact on the valuation allowance of a decrease in tax rates enacted after year-end but before the financial statements are issued, would not be recorded at year-end. However, when changes in tax laws or rates are enacted subsequent to year-end but before the financial statements are released, the effect on existing deferred tax assets or liabilities should be disclosed.

Relief May Be Near for Private Companies’ Biggest Accounting Complaint

The FASB plans to release in the third quarter of this year a proposal that lets private companies opt out of applying the variable interest entity (VIE) guidance in U.S. GAAP’s complex standard for consolidated reporting. Private companies have long complained that this is their biggest source of frustration with financial reporting. Private companies have complained for years that the VIE guidance in FASB ASC 810 is overly complicated for businesses trying to determine whether to consolidate affiliated entities with the same parent company. Private companies often set up separate limited liability companies, partnerships or sole proprietorships for estate and tax planning purposes and, under existing guidance, have to examine the intercompany transactions, services, leases and all guarantees of debt or implied guarantees of debt to assess who holds power. With companies where ownership is shared among close relatives, this is not always clear. As a result, many companies err on the side of consolidating multiple affiliated and subsidiary businesses onto a parent’s balance sheet—a practice that frustrates lenders and creditors, who want to see cleaner balance sheets. After years of debate, the FASB is poised to offer relief with a proposal that will let private companies opt out of applying the VIE guidance for businesses under common control.

Summary of the VIE Guidance

Unless a scope exception exists, a reporting entity first must apply the provisions of the variable interest model in FASB ASC 810. If an entity is deemed not to be a VIE or is otherwise exempt from the variable interest entity model, a reporting entity would then apply the provisions of the voting interest model in FASB ASC 810.

Identify Variable Interests

In the first step, a reporting entity is required to determine whether it has a variable interest in an entity. Simply put, a variable interest is an economic arrangement that gives a reporting entity the right to the economic risks or rewards of another entity. For example, traditional equity and debt guarantees are considered to be variable interests. Fees received by decision makers or service providers may represent variable interests depending on the facts and circumstances.

Evaluate Whether the Entity is a VIE

If a reporting entity has a variable interest, the reporting entity then must assess whether the entity is a VIE. The VIE model considers an entity to be a VIE if, by design, any one of the following characteristics is met:

  • The entity does not have sufficient equity investments at risk to finance its activities without additional subordinated financial support
  • The equity holders, as a group, lack the characteristics of a controlling financial interest
  • The equity holders have (i) voting rights that are not proportional to their obligation to absorb losses or their right to receive expected residual returns and (ii) activities substantially all of which either involve or are conducted on behalf of the equity investor who has disproportionately few voting rights

Determine if the Reporting Entity is the Primary Beneficiary

If a reporting entity has a variable interest in a VIE, then the reporting entity must determine whether it is the primary beneficiary of the VIE (that is, the reporting entity that consolidates the VIE). The primary beneficiary is defined as the variable interest holder that has (a) the power to direct the activities that most significantly affect the economic performance of the VIE, and (b) the obligation to absorb losses or the right to receive benefits of the VIE that could be potentially significant to the VIE.

The Private Company Dilemma

Ultimately, consolidation under VIE guidance centers around power—not voting power, but other power—and it’s often difficult to determine who holds the power in a private company. For example, real estate development companies often set up separate entities to run their business. One company might sell lots that are developed by an affiliated company, while another affiliate grades the lots and builds the houses. In some cases, all three entities are owned by one person. In others, the businesses are owned by siblings; or two might be owned by a wife and one by a husband. Under existing guidance, the reporting entity has to examine the intercompany transactions, services, leases and all guarantees of debt or implied guarantees of debt to assess who holds power. With companies where ownership is shared among close relatives, this is not always clear. Further, in certain private company transactions, such as those between friends or relatives, there are often no formalized arrangements, the parent may change and there is often little to no paperwork to back up decisions.

Private Company Accounting Alternative

After the FASB decided to add to its technical agenda a project on consolidation reorganization and targeted improvements at its November, 2016 meeting, the FASB directed the staff to research issues related to applying the VIE model to entities under common control. At its May, 2017 meeting, the FASB directed the staff to draft a proposed ASU to be published early in the third quarter of 2017. The following are the key elements of the proposed guidance:

  • The accounting alternative would provide an accounting policy election that a private company would apply to all current and future legal entities under common control that meet the criteria for applying the alternative
    • The alternative could not be applied to select common control arrangements
    • If the alternative is elected, a private company would still be required to follow other consolidation guidance, particularly the voting interest entity guidance unless another scope exception applies
  • A private company would not have to apply VIE guidance to legal entities under common control (including common control leasing arrangements) if both the parent and the legal entity being evaluated for consolidation are not public business entities
  • Under the accounting alternative, a private company would provide detailed disclosures (in addition to existing related party disclosures) so that users would have sufficient information to understand the reporting entity’s involvement with and exposure to the legal entity under common control, including the following:
    • Nature and risks associated with the legal entity under common control
    • How the legal entity affects the reporting entity’s financial position, results of operations and cash flows
    • Assets and liabilities on the reporting entity’s balance sheet arising from its involvement with the legal entity
    • The reporting entity’s maximum exposure to loss related to the legal entity
    • If the reporting entity’s maximum exposure to loss exceeds the assets and liabilities arising from its involvement with the legal entity, information to allow users to understand the excess exposure (considering both explicit and implicit arrangements)

Finally, under the proposal, combined statements would still be permitted if the entities are under common control.

What Is Common Control?

A majority of comment letters from constituents received in response to the exposure draft that became ASU 2014-07 requested that a definition of common control be included in the final standard because no such definition presently exists in U.S GAAP. However, no definition was provided. Common practice is to refer to the guidance from the Securities Exchange Commission (SEC), which was discussed by the Emerging Issues Task Force (EITF) in EITF Issue 02-5, Definition of “Common Control” in Relation to FASB Statement No. 141. Though no consensus was reached, EITF Issue 02-5 includes SEC staff discussions that suggest common control exists between (or among) separate entities only in the following situations:

  • An individual or enterprise holds more than 50% of the voting ownership of each entity.
  • Immediate family members (i.e., a married couple and their children, but not grandchildren) hold more than 50% of the voting ownership interest of each entity (with no evidence that those family members will vote their shares in any way other than in concert). Entities might be owned in varying combinations among living siblings and their children, requiring careful consideration regarding the substance of the ownership and voting relationships.

A group of shareholders holds more than 50% of the voting ownership interest of each entity, and contemporaneous written evidence of an agreement to vote a majority of the entities’ shares in concert exists.

Quarterly Accounting Update: On the Horizon

The following selected FASB exposure drafts and projects are outstanding as of June 30, 2017.

Balance Sheet Classification of Debt

The purpose of this project is to reduce cost and complexity by replacing the fact-pattern specific guidance in U.S. GAAP with a principle to classify debt as current or noncurrent based on the contractual terms of a debt arrangement and an entity’s current compliance with debt covenants.

On January 10, 2017, the FASB issued a proposed ASU on determining whether debt should be classified as current or noncurrent in a classified balance sheet. In place of the current, fact-specific guidance in ASC 470-10, the proposed ASU would introduce a classification principle under which a debt arrangement would be classified as noncurrent if either (1) the “liability is contractually due to be settled more than one year (or operating cycle, if longer) after the balance sheet date” or (2) the “entity has a contractual right to defer settlement of the liability for at least one year (or operating cycle, if longer) after the balance sheet date.” Under an exception to the classification principle, an entity would not classify debt as current solely because of the occurrence of a debt covenant violation that gives the lender the right to demand repayment of the debt, as long as the lender waives its right before the financial statements are issued (or are available to be issued).

Expanded Inventory Disclosures Proposed

On January 10, 2017, the FASB issued a proposed ASU, Disclosure Framework—Changes to the Disclosure Requirements for Inventory, which calls on businesses to provide more detailed disclosures about their raw materials and finished goods.

The proposed ASU would require business to disclose their inventory by component, such as by raw materials, finished goods, supplies and works-in-process. Businesses also would have to break down how their inventory is measured. Businesses use a variety of measurement techniques for inventory, including last-in, first-out (LIFO), first-in, first-out (FIFO), LIFO retail inventory method or weighted average. Significant shrinkage, spoilage, damage or other unusual transactions or circumstances affecting inventory balances also would have to be disclosed.

Additionally, businesses would have to describe the types of costs capitalized into inventory, the effect of LIFO liquidations on income, and the replacement cost of LIFO inventory.

The comment period for this proposed ASU closed on March 13. The FASB is currently redeliberating the proposed ASU in light of the comments received.

Nonemployee Share-Based Payment Accounting Improvements

The purpose of this project is to reduce cost and complexity and improve the accounting for nonemployee share-based payment awards issued by public and private companies.

On March 7, 2017, the FASB issued a proposed ASU that would simplify the accounting for share-based payments granted to nonemployees for goods and services. Under the proposal, most of the guidance on such payments would be aligned with the requirements for share-based payments granted to employees.

Financial Instruments – Hedging Activities

The FASB’s financial instruments project has three primary areas which are being individually addressed: (1) recognition and measurement, (2), impairment and (3) hedging. On January 5, 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, to address certain aspects of recognition, measurement, presentation and disclosure of financial instruments. On June 16, 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments. This standard introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale (AFS) debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination.

The final part of the project, related to hedge accounting, was exposed for public comment in September 2016. Many companies use derivative financial instruments to hedge their exposure to certain risks. Today, hedge accounting is an elective approach that minimizes the accounting volatility created when derivatives, which are otherwise accounted for at fair value through net income, are used to hedge revenue or expenses that are not yet reported (e.g., forecasted sales or purchases) or to hedge assets or liabilities that are not measured at fair value through net income (e.g., inventory or debt). Qualifying criteria must be met in order to apply hedge accounting. The proposed ASU, Targeted Improvements to Accounting for Hedging Activities, contains proposals for improving how the economic results of an entity’s risk management activities are portrayed by:

  • Expanding the use of component hedging for both nonfinancial and financial risks
  • Refining the measurement techniques for hedged items in fair value hedges of benchmark interest rate risk
  • Eliminating the separate measurement and reporting of hedge ineffectiveness
  • Requiring for cash flow and net investment hedges that all changes in fair value of the hedging instrument included in the hedging relationship be deferred in other comprehensive income and released to the income statement in the period(s) when the hedged item affects earnings
  • Requiring that changes in the fair value of hedging instruments be recorded in the same income statement line item as the earnings effect of the hedged item
  • Requiring enhanced disclosures to highlight the effect of hedge accounting on individual income statement line items

In addition, the proposal simplifies the application of hedge accounting by:

  • Providing more time for the completion of initial quantitative assessments of hedge effectiveness
  • Allowing subsequent assessments of hedge effectiveness to be performed on a qualitative basis when an initial quantitative test is required
  • Clarifying the application of the critical terms match method for a group of forecasted transactions
  • Allowing an entity that elects the shortcut method to continue hedge accounting by using a “long-haul” method to assess hedge effectiveness if use of the shortcut method was not or no longer is appropriate after hedge inception

On June 8, 2017, the FASB voted unanimously to issue a final ASU in August and have it effective for public companies starting after December 15, 2018. Private companies and other organizations will have another year to comply. Early adoption will be allowed.

Disclosure Framework

The disclosure framework project consists of two phases: (1) the FASB’s decision process and (2) the entity’s decision process. The overall objective of the project is to improve the effectiveness of disclosures in notes to financial statements by clearly communicating the information that is most important to users of each entity’s financial statements. Although reducing the volume of the notes to financial statements is not the primary focus, the FASB hopes that a sharper focus on important information will result in reduced volume in most cases.

In March 2014, the FASB issued an Exposure Draft, Conceptual Framework for Financial Reporting: Chapter 8 Notes to Financial Statements, intended to improve its process for evaluating existing and future disclosure requirements in notes to financial statements. Specifically, it addresses the FASB’s process for identifying relevant information and the limits on information that should be included in notes to financial statements. If approved, it would become part of the FASB’s Conceptual Framework, which provides the foundation for making standard-setting decisions.

In September 2015, the FASB issued two proposals—one about the use of materiality by reporting entities, Assessing Whether Disclosures Are Material, and the other amending the Conceptual Framework’s definition of materiality, Conceptual Framework for Financial Reporting Chapter 3: Qualitative Characteristics of Useful Financial Information. These two proposals were issued to help entities decide what information should be included in their footnotes without bogging them down with extra details.

The main provisions would draw attention to the role materiality plays in making decisions about disclosures. More specifically, the proposed ASU explains that: (a) materiality would be applied to quantitative and qualitative disclosures individually and in the aggregate in the context of the financial statements as a whole; therefore, some, all or none of the requirements in a disclosure Section may be material; (b) materiality would be identified as a legal concept; and (c) omitting a disclosure of immaterial information would not be an accounting error.

Consolidation Reorganization

On November 2, 2016, the Board added this project to its technical agenda. Further, it tentatively decided to (1) clarify the consolidation guidance in ASC 810, Consolidation, by dividing it into separate Codification subtopics for voting interest entities and variable interest entities (VIEs); (2) develop a new Codification topic that would include those reorganized subtopics and would completely supersede ASC 810; (3) rescind the subsections on consolidation of entities controlled by contract in ASC 810-10-15 and in ASC 810-30 on research and development arrangements; (4) further clarify that power over a VIE is obtained through a variable interest; and (5) provide further clarification of the application of the concept of “expected,” which is used throughout the VIE consolidation guidance.

At its March 8, 2017, meeting, the FASB discussed the feedback received at its December 16, 2016, public roundtable and voted to move forward with a proposed ASU that reorganizes the consolidation guidance.

Targeted Improvements to VIE Guidance

At its March 8, 2017, meeting, the FASB decided to add to its agenda a project on an elective private-company scope exception to the VIE guidance for entities under common control and certain targeted improvements to the existing related-party guidance in the VIE model. On May 18, 2017, the FASB directed the staff to draft a proposed ASU for a vote by written ballot. The FASB expects to publish a proposed ASU in the third quarter of 2017.

For more information on this proposal, see “Relief May Be Near for Private Companies’ Biggest Accounting Complaint,” in the Other Developments section.

EITF Agenda Items

There are no Emerging Issues Task Force (EITF) developments or updates as the EITF held no meetings during the second quarter of 2017.

PCC Activities

The Private Company Council (PCC) met on Tuesday, April 4, 2017. The FASB staff delivered updates (and the PCC provided input) on the following FASB projects:

  • Disclosure Framework. Several PCC members supported the FASB’s project, specifically the Exposure Draft on inventory. PCC members also provided input on various aspects of the project.
  • Financial instruments—hedge accounting. Several PCC members supported the forthcoming standard, including the guidance that provides private companies more time to complete hedge effectiveness documentation, and other benefits.
  • Liabilities and Equity—Targeted Improvements. PCC members discussed the feedback received on the FASB’s Exposure Draft, and the FASB’s current research on another alternative that would simplify the accounting of financial instruments with “down round” features. PCC members encouraged the Board to consider the feedback received from stakeholders to determine next steps on the project.
  • Consolidation Targeted Improvements to Related Party Guidance for Variable Interest Entities. PCC members discussed the Board’s recent tentative decisions on the project, including the private company accounting alternative not to apply VIE guidance to companies under common control. PCC members indicated that they were pleased with the general direction of the project.
  • FASB Pre-Agenda Project on Cloud Computing. PCC members provided the Board with private company examples and situations for recognizing and measuring cloud computing services, contracts, and related expenses.

APPENDIX A

Important Implementation Dates

The following table contains significant implementation dates and deadlines for FASB/EITF/PCC and GASB standards.

FASB/EITF/PCC Implementation Dates

Pronouncement Affects Effective Date and Transition
ASU 2017-10, Determining the Customer of the Operation Services—a consensus of the Emerging Issues Task Force Operating entities with service concession arrangements within the scope of ASC 853, Service Concession Arrangements Dependent upon the adoption of ASC 606, Revenue from Contracts with Customers.
ASU 2017-09, Scope of Modification Accounting Entities that provide share-based payment awards. Effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period. The amendments should be applied prospectively to an award modified on or after the adoption date.
ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities Entities that hold investments in callable debt securities held at a premium Effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments are effective for fiscal years beginning after  December  15,  2019,  and  interim  periods  within  fiscal  years  beginning  after December 15, 2020. Early adoption is permitted, including adoption in an interim period.
ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost Entities that offer defined benefit pension plans, other postretirement benefit plans, or other types of benefits accounted for under ASC 715. Effective for public business entities for interim and annual periods beginning after December 15, 2017. For other entities, the amendments are effective for annual periods beginning after December 15, 2018, and interim periods in the subsequent annual period. Early adoption is permitted as of the beginning of any annual period for which an entity’s financial statements have not been issued or made available for issuance.
ASU 2017-06, Employee Benefit Plan Master Trust Reporting—a consensus of the Emerging Issues Task Force                                         Entities within the scope of ASC 960, ASC 962, or ASC 965. Effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. An entity should apply the amendments retrospectively to each period for which financial statements are presented.
ASU 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets All entities. See the Effective Date and Transition of ASU 2014-09, below.
ASU 2017-04, Simplifying the Test for Goodwill Impairment All entities. Effective for public business entities that are SEC filers for annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2019. For public business entities that are not SEC filers, the amendments are effective for annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2020. For all other entities, including not-for-profit entities, the amendments are effective for annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2021. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.
ASU 2017-03, Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings  All entities. Effective upon issuance.
ASU 2017-02, Clarifying When a Not-for-Profit Entity That Is a General Partner or a Limited Partner Should Consolidate a For-Profit Limited Partnership or Similar Entity Not-for-profit entities. Effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period.
ASU 2017-01, Clarifying the Definition of a Business All entities. Effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those annual periods. For all other entities, the amendments are effective for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019.
ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers All entities. See the Effective Date and Transition of ASU 2014-09, below.
ASU 2016-19, Technical Corrections and Improvements All entities. Effective upon issuance (December 14, 2016) for amendments that do not have transition guidance. Amendments that are subject to transition guidance: effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted.
ASU 2016-18, Restricted Cash (a consensus of the FASB Emerging Issues Task Force) All entities. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.

The amendments should be applied using a retrospective transition method to each period presented.

ASU 2016-17, Interests Held through Related Parties That Are under Common Control All entities. The amendments are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.

Entities that have not yet adopted the amendments in ASU 2015-02 are required to adopt the amendments at the same time they adopt the amendments in ASU 2015-02 and should apply the same transition method elected for the application of ASU 2015-02.

Entities that already have adopted the amendments in ASU 2015-02 are required to apply the amendments retrospectively to all relevant prior periods beginning with the fiscal year in which the amendments in ASU 2015-02 initially were applied.

ASU 2016-16, Intra-Entity Transfers of Assets Other Than Inventory All entities. For public business entities, the amendments are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. For all other entities, the amendments are effective for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual periods beginning after December 15, 2019. Early adoption is permitted for all entities as of the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued or made available for issuance. That is, earlier adoption should be in the first interim period if an entity issues interim financial statements.

The amendments should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption.

ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force) All entities. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period.

The amendments should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable.

ASU 2016-14, Presentation of Financial Statements of Not-for-Profit Entities All not-for-profit entities. The amendments are effective for annual financial statements issued for fiscal years beginning after December 15, 2017, and for interim periods within fiscal years beginning after December 15, 2018. Application to interim financial statements is permitted but not required in the initial year of application. Early application of the amendments is permitted.
ASU 2016-13, Measurement of Credit Losses on Financial Instruments All entities that hold financial assets and net investment in leases that are not accounted for at fair value through net income. For public business entities (PBE) that are Securities and Exchange Commission (SEC) filers, the new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 (for a calendar-year entity, it would be effective January 1, 2020).

For PBEs that are not SEC filers, the new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.

For all other organizations, the new standard is effective for fiscal years beginning after December 15, 2020, and for interim periods within fiscal years beginning after December 15, 2021.

Early application will be permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.

ASU 2016-12, Narrow-Scope Improvements and Practical Expedients All entities See the Effective Date and Transition of ASU 2014-09, below.
ASU 2016-11, Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting (SEC Update) None. None.
ASU 2016-10, Identifying Performance Obligations and Licensing All entities See the Effective Date and Transition of ASU 2014-09, below.
ASU 2016-09, Improvements to Employee Share-Based Payment Accounting All entities that issue share-based payment awards to their employees. For public business entities, the amendments are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods.

For entities other than public business entities, the amendments are effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018.

Early adoption is permitted for any organization in any interim or annual period.

ASU 2016-08, Principal versus Agent Considerations

(Reporting Revenue Gross versus Net)

All entities. See the Effective Date and Transition of ASU 2014-09, below.
ASU 2016-07, Simplifying the Transition to the Equity Method of Accounting Entities that have an investment that becomes qualified for the equity method of accounting as a result of an increase in the level of ownership interest or degree of influence. The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The amendments should be applied prospectively upon their effective date to increases in the level of ownership interest or degree of influence that result in the adoption of the equity method. Earlier application is permitted.
ASU 2016-06, Contingent Put and Call Options in Debt Instruments (a consensus of the Emerging Issues Task Force) Entities that are issuers of or investors in debt instruments (or hybrid financial instruments that are determined to have a debt host) with embedded call (put) options. For public business entities, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years.

For entities other than public business entities, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within fiscal years beginning after December 15, 2018.

An entity should apply the amendments on a modified retrospective basis to existing debt instruments as of the beginning of the fiscal year for which the amendments are effective.

Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.

ASU 2016-05, Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships (a consensus of the Emerging Issues Task Force) Entities for which there is a change in the counterparty to a derivative instrument that has been designated as a hedging instrument. For public business entities, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years.

For all other entities, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within fiscal years beginning after December 15, 2018.

An entity has an option to apply the amendments on either a prospective basis or a modified retrospective basis.

Early adoption is permitted, including adoption in an interim period.

ASU 2016-04, Recognition of Breakage for Certain Prepaid Stored-Value Products (a consensus of the Emerging Issues Task Force) Entities that offer certain prepaid stored-value products. For public business entities, NFPs that have issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an OTC market, or an employee benefit plan that files financial statements with the SEC, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.

For all other entities, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019.

The amendments should be applied either using a modified retrospective transition method by means of a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year in which the guidance is effective or retrospectively to each period presented.

Earlier application is permitted, including adoption in an interim period.

ASU 2016-03, Effective Date and Transition Guidance (a consensus of the Private Company Council) All entities except public business entities, as defined in the Master Glossary of the FASB Accounting Standards Codification, not-for-profit entities, and employee benefit plans. The amendments are effective immediately.
ASU 2016-02, Leases All lessee and lessor entities. For public business entities, NFPs that have issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an OTC market, or an employee benefit plan that files financial statements with the SEC, the amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020.

Early application of the amendments is permitted for all entities.

ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities Entities that hold financial assets or owe financial liabilities. For public companies the amendments are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.

For private companies, not-for-profit organizations, and employee benefit plans, the standard becomes effective for fiscal years beginning after December 15, 2018, and for interim periods within fiscal years beginning after December 15, 2019.

ASU 2015-17, Balance Sheet Classification of Deferred Taxes Entities that have deferred tax assets and/or deferred tax liabilities. For public business entities, the amendments are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods.

For all other entities, the amendments are effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018.

ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments Entities that have reported provisional amounts for items in a business combination for which the accounting is incomplete. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. All other entities are required to apply the new requirements for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017.

All entities are required to apply the amendments prospectively to adjustments to provisional amounts that occur after the effective date, with earlier application permitted for financial statements that have not been issued.

ASU 2015-14, Revenue From Contracts With Customers (ASC 606): Deferral of the Effective Date All entities. See the Effective Date and Transition of ASU 2014-09, below.
ASU 2015-11, Simplifying the Measurement of Inventory Entities that have inventory. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The amendments should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period.
ASU 2015-09, Disclosures about Short-Duration Contracts Insurance entities that issue short-duration contracts as defined in FASB ASC 944, Financial Services—Insurance. For public business entities, the amendments are effective for annual periods beginning after December 15, 2015, and interim periods within annual periods beginning after December 15, 2016. For all other entities, the amendments are effective for annual periods beginning after December 15, 2016, and interim periods within annual periods beginning after December 15, 2017.
ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement All entities. For public business entities, the amendments will be effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. For all other entities, the amendments will be effective for annual periods beginning after December 15, 2015, and interim periods in annual periods beginning after December 15, 2016. Early adoption is permitted for all entities.
ASU 2015-04, Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets All entities. The amendments are effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. For all other entities, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. Earlier application is permitted.
ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs All entities. For public business entities, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. For all other entities, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within fiscal years beginning after December 15, 2016. Early adoption is permitted for financial statements that have not been previously issued.
ASU 2015-02, Amendments to the Consolidation Analysis All entities. Effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2016, and for interim periods within fiscal years beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.

A reporting entity may apply the amendments using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption. A reporting entity also may apply the amendments retrospectively.

ASU 2014-18, Accounting for Identifiable Intangible Assets in a Business Combination—a consensus of the Private Company Council All entities except public business entities, as defined in the Master Glossary of the FASB Accounting Standards Codification, not-for-profit entities, and employee benefit plans. Effective prospectively to the first in-scope transaction after the adoption of the accounting alternative.
ASU 2014-16, Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or to Equity All entities that are issuers of, or investors in, hybrid financial instruments that are issued in the form of a share. Effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2016. Early adoption is permitted. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.

Entities should apply the guidance on a modified retrospective basis (cumulative-effect retained earnings adjustment as of the beginning of the year of adoption) to existing hybrid instruments issued in the form of a share as of the beginning of the fiscal year for which this ASU is effective. Retrospective application is permitted to all relevant prior periods.

ASU 2014-15, Disclosure of Uncertainties About and an Entity’s Ability to Continue as a Going Concern All entities. Effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted.
ASU 2014-13, Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity—a Consensus of the Emerging Issues Task Force A reporting entity that is required to consolidate a collateralized financing entity. Effective for public business entities for annual periods and interim periods within those annual periods beginning after December 15, 2015. For all other entities, the amendments are effective for annual periods ending after December 15, 2016, and interim periods beginning after December 15, 2016. Early adoption is permitted as of the beginning of an annual period.
ASU 2014-10, Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation All entities. Except for the amendments to ASC 810, the guidance is effective for public business entities for reporting periods (including interim periods) beginning after December 15, 2014. For other entities, the amendments are effective for annual periods beginning after December 15, 2014, and interim periods beginning after December 15, 2015. The amendments to ASC 810 are effective one year later for public business entities and two years later for other entities. The guidance should be applied retrospectively, except for the clarification to ASC 275, which applied prospectively.

Early adoption of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued.

ASU 2014-09, Revenue from Contracts with Customers All entities. For public business entities, certain not-for-profit entities, and certain employee benefit plans, the ASU is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2017. Early application is permitted only as of annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016.

For all other entities, the ASU is effective for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. All other entities may apply the ASU early as of an annual reporting period beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities also may apply the guidance in the ASU early as of an annual reporting period beginning after December 15, 2016, and interim reporting periods within annual reporting periods beginning one year after the annual reporting period in which the entity first applies the guidance in the ASU.

An entity should apply the guidance either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying guidance at the date of initial application.

GASB Implementation Dates

Pronouncement Affects Effective Date and Transition
Statement 86, Certain Debt Extinguishment Issues Governmental entities. Effective for reporting periods beginning after June 15, 2017. Earlier application is encouraged.
Statement 85, Omnibus 2017 Governmental entities. Effective for reporting periods beginning after June 15, 2017. Earlier application is encouraged.
Statement 84, Fiduciary Activities Governmental entities. Effective for reporting periods beginning after December 15, 2018. Earlier application is encouraged.
Statement 83, Certain Asset Retirement Obligations Governmental entities. Effective for reporting periods beginning after June 15, 2018. Earlier application is encouraged.
Statement 82, Pension Issues Governmental entities. Effective for reporting periods beginning after June 15, 2016, except for the requirements for the selection of assumptions in a circumstance in which an employer’s pension liability is measured as of a date other than the employer’s most recent fiscal year-end. In that circumstance, the requirements for the selection of assumptions are effective for that employer in the first reporting period in which the measurement date of the pension liability is on or after June 15, 2017. Earlier application is encouraged.
Statement 81, Irrevocable Split-Interest Agreements Governmental entities. Effective for financial statements for periods beginning after December 15, 2016, and should be applied retroactively. Earlier application is encouraged.
Statement 80, Blending Requirements for Certain Component Units—an amendment of GASB Statement No. 14 Governmental entities. Effective for reporting periods beginning after June 15, 2016. Earlier application is encouraged.
Statement 79, Certain External Investment Pools and Pool Participants Governmental entities. Effective for reporting periods beginning after June 15, 2015, except for certain provisions on portfolio quality, custodial credit risk, and shadow pricing. Those provisions are effective for reporting periods beginning after December 15, 2015. Earlier application is encouraged.
Statement 78, Pensions Provided Through Certain Multiple-Employer Defined Benefit Pension Plans Governmental entities. Effective for reporting periods beginning after December 15, 2015. Earlier application is encouraged.
Statement 77, Tax Abatement Disclosures Governmental entities. Effective for reporting periods beginning after December 15, 2015. Earlier application is encouraged.
Statement 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments Governmental entities. Effective for reporting periods beginning after June 15, 2015. Earlier application is encouraged.
Statement 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions Governmental entities. Effective for fiscal years beginning after June 15, 2017. Early adoption is encouraged.
Statement 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans Governmental entities. Effective for financial statements for periods beginning after June 15, 2016. Early adoption is encouraged.
Statement 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68 Governmental entities. Effective for fiscal years beginning after June 15, 2015—except those provisions that address employers and governmental nonemployer contributing entities for pensions that are not within the scope of Statement 68, which are effective for financial statements for fiscal years beginning after June 15, 2016. Early adoption is encouraged.
Statement 72, Fair Value Measurement and Application Governmental entities. Effective for financial statements for periods beginning after June 15, 2015. Early adoption is encouraged.

APPENDIX B

Illustrative Disclosures for Recently Issued Accounting Pronouncements

For the Quarter Ended June 30, 2017

The illustrative disclosures below are presented in plain English.  Please review each disclosure for its applicability to your organization and the need for disclosure in your organization’s financial statements.

ASU 2014-09 ― Applicable to all:

In May 2014, the FASB issued guidance to change the recognition of revenue from contracts with customers. The core principle of the new guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. This guidance also includes expanded disclosure requirements that result in an entity providing users of financial statements with comprehensive information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from the entity’s contracts with customers. The guidance will be effective for the Company for [reporting periods beginning after December 15, 2017.-public business entities] [annual periods beginning after December 15, 2018, and interim periods within annual reporting periods beginning after December 15, 2019.-all other entities] The Company will apply the guidance using a [full retrospective approach] [modified retrospective approach]. The Company is currently in the process of evaluating the impact of adoption of this guidance on the financial statements.

ASU 2014-10 ― Applicable to development stage entities:

In June 2014, the FASB issued guidance which eliminates the concept of a development stage entity. Accordingly, the incremental reporting requirements for a development stage entity, including inception-to-date information, will no longer apply.  The amendments were effective for the Company for [reporting periods beginning after December 15, 2014, except for certain consolidation requirements which are effective one year later-public business entities] [annual periods beginning after December 15, 2014, and interim periods beginning after December 15, 2015, except for certain consolidation requirements which are effective two years later-all other entities], with early implementation of the amendments permitted. The Company applied the guidance using a retrospective approach, except for certain disclosure requirements which will be applied prospectively. These amendments did not have a material effect on its financial statements.

ASU 2014-15 ― Applicable to all:

In August 2014, the FASB issued guidance that is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. In connection with preparing financial statements, management will need to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the organization’s ability to continue as a going concern within one year after the date that the financial statements are issued. The amendments will be effective for the Company for annual periods ending after December 15, 2016, and for annual periods and interim periods thereafter with early adoption permitted. The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2014-16 ― Applicable to companies with hybrid financial instruments:

In November 2014, the FASB issued guidance for determining whether embedded features need to be accounted for separately from their host shares. The new guidance requires companies to consider all terms and features, including the embedded feature(s) being evaluated for separate recognition, when determining whether a host contract is more akin to debt or equity; no single term or feature should be considered determinative regarding the nature of the host contract. The amendments will be effective for [fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015-public business entities] [fiscal years beginning after December 15, 2015, and interim periods within fiscal years beginning after December 15, 2016-all other entities], with early adoption, including adoption in an interim period, permitted. The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2014-18 ― Applicable to private companies that elect to not recognize certain intangible assets in a business combination:

In December 2014, the FASB amended the Business Combinations topic of the Accounting Standards Codification. Under the amended guidance, a nonpublic entity may elect to not recognize separately from goodwill (1) customer-related intangible assets that are not capable of being sold or licensed independently from the other assets of the business and (2) noncompetition agreements. This alternative generally will result in recognizing fewer intangible assets in a business combination and, correspondingly, more goodwill. The alternative is applied on a prospective basis. In addition, when this alternative is elected, the Company also is required to adopt the alternative accounting related to goodwill which requires that goodwill be amortized on a straight-line basis over a period of ten years or over a shorter period if the Company demonstrates that another useful life is more appropriate. The amendments will be effective for the Company upon the occurrence of the first transaction within the scope of this accounting alternative in fiscal years beginning after December 15, 2015, and the effective date of adoption depends on the timing of that first in-scope transaction. If the first in-scope transaction occurs in the first fiscal year beginning after December 15, 2015, the elective adoption will be effective for that fiscal year’s annual financial reporting and all interim and annual periods thereafter. If the first in-scope transaction occurs in fiscal years beginning after December 15, 2016, the elective adoption will be effective in the interim period that includes the date of that first in-scope transaction and subsequent interim and annual periods thereafter. The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2015-02 ― Applicable to all:

In February 2015, the FASB issued guidance which amends the consolidation requirements and significantly changes the consolidation analysis required under U.S. GAAP. Although the amendments are expected to result in the deconsolidation of many entities, the Company will need to reevaluate all its previous consolidation conclusions. The amendments will be effective for [fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015-public business entities] [fiscal years beginning after December 15, 2016, and interim periods beginning after December 15, 2017-all other entities], with early adoption permitted (including during an interim period), provided that the guidance is applied as of the beginning of the annual period containing the adoption date. The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2015-03 ― Applicable to entities with debt issuance costs:

In April 2015, the FASB issued guidance which changes the presentation of debt issuance costs. The amendments will be effective for [fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015-public business entities] [fiscal years beginning after December 15, 2015, and interim periods beginning after December 15, 2016-all other entities], with early adoption permitted for financial statements that have not been previously issued. The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2015-04 ― Applicable to entities with defined benefit pension plans:

In April 2015, the FASB issued guidance which provides a practical expedient that permits the Company to measure defined benefit plan assets and obligations using the month-end that is closest to the Company’s fiscal year-end. The amendments will be effective for [fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015-public business entities] [fiscal years beginning after December 15, 2016, and interim periods beginning after December 15, 2017-all other entities], with early adoption permitted. The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2015-05 ― Applicable to entities with cloud computing arrangements:

In April 2015, the FASB issued guidance which provides guidance to customers about whether a cloud computing arrangement includes a software license. The amendments will be effective for [fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015-public business entities] [fiscal years beginning after December 15, 2015, and interim periods beginning after December 15, 2016-all other entities], with early adoption permitted. The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2015-09 ― Applicable to insurance entities that issue short-duration contracts:

In May 2015, the FASB issued guidance which requires insurance entities to disclose for annual reporting periods certain information about the liability for unpaid claims and claim adjustment expenses. The amendments will be effective for [fiscal years beginning after December 15, 2015 and interim periods beginning after December 15, 2016-public business entities] [fiscal years beginning after December 15, 2016, and interim periods beginning after December 15, 2017-all other entities], with early adoption permitted. The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2015-11 ― Applicable to entities that have inventory:

In July 2015, the FASB issued amendments to the Inventory topic of the Accounting Standards Codification to require inventory other than inventory measured at LIFO or retail methods to be measured at the lower of cost and net realizable value. Other than the change in the subsequent measurement guidance from the lower of cost or market to the lower of cost and net realizable value for inventory, there are no other substantive changes to the guidance on measurement of inventory. The amendments will be effective for [fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016-public business entities] [fiscal years beginning after December 15, 2016, and interim periods beginning after December 15, 2017-all other entities], with early adoption permitted. The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2015-14 ― Applicable to all:

In August 2015, the FASB deferred the effective date of ASU 2014-09, Revenue from Contracts with Customers. As a result of the deferral, the guidance in ASU 2014-09 will be effective for the Company for [reporting periods beginning after December 15, 2017.-public business entities] [annual periods beginning after December 15, 2018, and interim periods within annual reporting periods beginning after December 15, 2019.-all other entities] The Company will apply the guidance using a [full retrospective approach] [modified retrospective approach]. The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2015-16 ― Applicable to all entities that have reported provisional amounts for items in a business combination for which the accounting is incomplete:

In September 2015, the FASB amended the Business Combinations topic of the Accounting Standards Codification to simplify the accounting for adjustments made to provisional amounts recognized in a business combination by eliminating the requirement to retrospectively account for those adjustments. The amendments will be effective for [fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015-public business entities] [fiscal years beginning after December 15, 2016, and interim periods beginning after December 15, 2017-all other entities], with early adoption permitted for financial statements that have not been issued. All entities are required to apply the amendments prospectively to adjustments to provisional amounts that occur after the effective date.  The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2015-17 ― Applicable to entities that have deferred tax assets and/or deferred tax liabilities:

In November 2015, the FASB amended the Income Taxes topic of the Accounting Standards Codification to simplify the presentation of deferred income taxes by requiring that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments will be effective for [financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods-public business entities] [financial statements issued for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018-all other entities], with early adoption permitted as of the beginning of an interim or annual reporting period. The Company will apply the guidance [prospectively] [retrospectively].  The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2016-01 ― Applicable to entities that hold financial assets or owe financial liabilities:

In January 2016, the FASB amended the Financial Instruments topic of the Accounting Standards Codification to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The amendments will be effective for [fiscal years beginning after December 15, 2017, includ­ing interim periods within those fiscal years.-public business entities] [fis­cal years beginning after Decem­ber 15, 2018, and interim periods within fiscal years beginning after December 15, 2019.-all other entities, including not-for-profit or­ganizations and employee benefit plans] The Company will apply the guidance by means of a cu­mulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily deter­minable fair values will be applied prospectively to equity in­vestments that exist as of the date of adoption of the amendments.  The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2016-02 ― Applicable to lessee and lessor entities:

In February 2016, the FASB amended the Leases topic of the Accounting Standards Codification to require all leases with lease terms over 12 months to be capitalized as a right-of-use asset and lease liability on the balance sheet at the date of lease commencement. Leases will be classified as either finance leases or operating leases. This distinction will be relevant for the pattern of expense recognition in the income statement. The amendments will be effective for [fiscal years beginning after December 15, 2018, includ­ing interim periods within those fiscal years.-public business entities] [fis­cal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020.-all other entities] Early adoption is permitted. The Company is currently in the process of evaluating the impact of adoption of this guidance on the financial statements.

ASU 2016-03 ― Applicable to private companies:

In March 2016, the FASB amended several topics of the Accounting Standards Codification to make the guidance in all private company accounting alternatives effective immediately by removing their effective dates. The amendments also include transition provisions that provide that private companies are able to forgo a preferability assessment the first time they elect the private company accounting alternatives. The amendments were effective immediately.  The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2016-04 ― Applicable to entities that offer certain prepaid stored-value products:

In March 2016, the FASB amended the Liabilities topic of the Accounting Standards Codification to address the current and potential future diversity in practice related to the derecognition of a prepaid stored-value product liability. The amendments will be effective for [financial statements issued for fiscal years beginning after December 15, 2017, includ­ing interim periods within those fiscal years.-public business entities] [financial statements issued for fis­cal years beginning after Decem­ber 15, 2018, and interim periods within fiscal years beginning after December 15, 2019.-all other entities] Early adoption is permitted. The Company will apply the guidance [using a modified retrospective transition method by means of a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year in which the guidance is effective] [retrospectively] to each period presented.  The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2016-05 ― Applicable to entities for which there is a change in the counterparty to a derivative instrument that has been designated as a hedging instrument:

In March 2016, the FASB amended the Derivatives and Hedging topic of the Accounting Standards Codification to clarify that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The amendments will be effective for [financial statements issued for fiscal years beginning after December 15, 2016, includ­ing interim periods within those fiscal years.-public companies] [financial statements issued for fis­cal years beginning after Decem­ber 15, 2017, and interim periods within fiscal years beginning after December 15, 2018.-all other entities] Early adoption is permitted. The Company will apply the guidance [using a modified retrospective transition] [prospectively] to each period presented.  The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2016-06 ― Applicable to entities that are issuers of or investors in debt instruments (or hybrid financial instruments that are determined to have a debt host) with embedded call (put) options:

In March 2016, the FASB amended the Derivatives and Hedging topic of the Accounting Standards Codification to clarify the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. The amendments will be effective for [financial statements issued for fiscal years beginning after December 15, 2016, includ­ing interim periods within those fiscal years.-public business entities] [financial statements issued for fis­cal years beginning after Decem­ber 15, 2017, and interim periods within fiscal years beginning after December 15, 2018.-all other entities] Early adoption is permitted. The Company will apply the guidance using a modified retrospective transition to existing debt instruments as of the beginning of the fiscal year for which the amendments are effective.  The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2016-07 ― Applicable to entities that have an investment that becomes qualified for the equity method of accounting as a result of an increase in the level of ownership interest or degree of influence:

In March 2016, the FASB amended the Investments—Equity Method and Joint Ventures topic of the Accounting Standards Codification to eliminate the requirement to retroactively adopt the equity method of accounting. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. The Company will apply the guidance prospectively upon their effective date to increases in the level of ownership interest or degree of influence that result in the adoption of the equity method.  The Company does not expect these amendments to have a material effect on its financial statements

ASU 2016-08 ― Applicable to all:

In March 2016, the FASB amended the Revenue from Contracts with Customers topic of the Accounting Standards Codification to clarify the implementation guidance on principal versus agent considerations and address how an entity should assess whether it is the principal or the agent in contracts that include three or more parties. The amendments will be effective for the Company for [reporting periods beginning after December 15, 2017.-public business entities] [annual periods beginning after December 15, 2018, and interim periods within annual reporting periods beginning after December 15, 2019.-all other entities] The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2016-09 ― Applicable to all:

In March 2016, the FASB issued guidance to simplify several aspects of the accounting for share-based payment award transactions including the income tax consequences, the classification of awards as either equity or liabilities, and the classification on the statement of cash flows.  Additionally, the guidance simplifies two areas specific to entities other than public business entities allowing them apply a practical expedient to estimate the expected term for all awards with performance or service conditions that have certain characteristics and also allowing them to make a one-time election to switch from measuring all liability-classified awards at fair value to measuring them at intrinsic value.  The amendments will be effective for the Company for [annual periods beginning after December 15, 2016 and interim periods within those annual periods.-public business entities] [annual periods beginning after December 15, 2017, and interim periods within annual reporting periods beginning after December 15, 2018.-all other entities] Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2016-10 ― Applicable to all:

In April 2016, the FASB amended the Revenue from Contracts with Customers topic of the Accounting Standards Codification to clarify guidance related to identifying performance obligations and accounting for licenses of intellectual property. The amendments will be effective for the Company for [reporting periods beginning after December 15, 2017.-public business entities] [annual periods beginning after December 15, 2018, and interim periods within annual reporting periods beginning after December 15, 2019.-all other entities] The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2016-12 ― Applicable to all:

In May 2016, the FASB amended the Revenue from Contracts with Customers topic of the Accounting Standards Codification to clarify guidance related to collectability, noncash consideration, presentation of sales tax, and transition. The amendments will be effective for the Company for [reporting periods beginning after December 15, 2017.-public business entities] [annual periods beginning after December 15, 2018, and interim periods within annual reporting periods beginning after December 15, 2019.-all other entities] The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2016-13 ― Applicable to entities that hold financial assets and net investment in leases that are not accounted for at fair value through net income:

In June 2016, the FASB issued guidance to change the accounting for credit losses and modify the impairment model for certain debt securities. The guidance requires a financial asset (including trade receivables) measured at amortized cost basis to be presented at the net amount expected to be collected. Thus, the income statement will reflect the measurement of credit losses for newly-recognized financial assets as well as the expected increases or decreases of expected credit losses that have taken place during the period. The amendments will be effective for the Company for [reporting periods beginning after December 15, 2019.-SEC filers] [reporting periods beginning after December 15, 2020.-public business entities that are not SEC filers] [annual periods beginning after December 15, 2020, and interim periods within annual reporting periods beginning after December 15, 2021.-all other entities] Early adoption is permitted for all organizations for periods beginning after December 15, 2018. The Company is currently in the process of evaluating the impact of adoption of this guidance on the financial statements.

ASU 2016-14 ― Applicable to all not-for-profit entities:

In August 2016, the FASB issued guidance to make targeted improvements to the not-for-profit financial reporting model, including changes in how a not-for-profit organization classifies its net assets, as well as the information it presents in financial statements and notes about its liquidity, financial performance, and cash flows. The amendments will be effective for the Organization for fiscal years beginning after December 15, 2017 and interim periods within fiscal years beginning after December 15, 2018. Early adoption is permitted. The Organization is currently evaluating the effect that implementation of the new standard will have on its financial statements.

ASU 2016-15 ― Applicable to all:

In August 2016, the FASB amended the Statement of Cash Flows topic of the Accounting Standards Codification to clarify how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments will be effective for the Company for [fiscal years beginning after December 15, 2017 including interim periods within those fiscal years.-public business entities] [fiscal years beginning after Decem­ber 15, 2018, and interim periods within fiscal years beginning after December 15, 2019.-all other entities] Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2016-16 ― Applicable to all:

In October 2016, the FASB amended the Income Taxes topic of the Accounting Standards Codification to modify the accounting for intra-entity transfers of assets other than inventory. The amendments will be effective for the Company for [fiscal years beginning after December 15, 2017 including interim periods within those fiscal years.-public business entities] [fis­cal years beginning after Decem­ber 15, 2018, and interim periods within fiscal years beginning after December 15, 2019.-all other entities] Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2016-17 ― Applicable to all:

In October 2016, the FASB amended the Consolidation topic of the Accounting Standards Codification to revise the consolidation guidance on how a reporting entity that is the single decision maker of a variable interest entity (VIE) should treat indirect interests in the entity held through related parties that are under common control with the reporting entity when determining whether it is the primary beneficiary of that VIE. The amendments will be effective for the Company for [fiscal years beginning after December 15, 2016 including interim periods within those fiscal years.-public business entities] [fiscal years beginning after Decem­ber 15, 2016, and interim periods within fiscal years beginning after December 15, 2017.-all other entities] Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2016-18 ― Applicable to all:

In November 2016, the FASB amended the Statement of Cash Flows topic of the Accounting Standards Codification to clarify how restricted cash is presented and classified in the statement of cash flows. The amendments will be effective for the Company for [fiscal years beginning after December 15, 2017 including interim periods within those fiscal years.-public business entities] [fis­cal years beginning after Decem­ber 15, 2018, and interim periods within fiscal years beginning after December 15, 2019.-all other entities] Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2016-19 ― Applicable to all:

In December 2016, the FASB issued amendments to clarify the Accounting Standards Codification, correct unintended application of guidance, and make minor improvements to the ASC that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. The amendments were effective upon issuance (December 14, 2016) for amendments that do not have transition guidance. Amendments that are subject to transition guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2016-20 ― Applicable to all:

In December 2016, the FASB issued technical corrections and improvements to the Revenue from Contracts with Customers Topic.  These corrections make a limited number of revisions to several pieces of the revenue recognition standard issued in 2014.  The effective date and transition requirements for the technical corrections will be effective for the Company for [reporting periods beginning after December 15, 2017.-public business entities] [annual periods beginning after December 15, 2018, and interim periods within annual reporting periods beginning after December 15, 2019.-all other entities] The Company will apply the guidance using a [full retrospective approach] [modified retrospective approach]. The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2017-01 ― Applicable to all:

In January 2017, the FASB issued guidance to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendment to the Business Combinations Topic is intended to address concerns that the existing definition of a business has been applied too broadly and has resulted in many transactions being recorded as business acquisitions that in substance are more akin to asset acquisitions. The guidance will be effective for the Company for [reporting periods beginning after December 15, 2017.-public business entities] [annual periods beginning after December 15, 2018, and interim periods within annual reporting periods beginning after December 15, 2019.-all other entities] Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2017-02 ― Applicable to all not-for-profit entities:

In January 2017, the FASB amended the Not-for-Profit Entities Topic of the Accounting Standards Codification to clarify consolidation guidance for not-for-profit entities. The amendments will be effective for the Organization for fiscal years beginning after December 15, 2016 and interim periods within fiscal years beginning after December 15, 2017. Early adoption is permitted. The Organization is currently evaluating the effect that implementation of the new standard will have on its financial statements.

ASU 2017-03 ― Applicable to SEC filers:

In January 2017, the FASB updated the Accounting Changes and Error Corrections and the Investments—Equity Method and Joint Ventures Topics of the Accounting Standards Codification.  The ASU incorporates into the Accounting Standards Codification recent SEC guidance about disclosing, under SEC SAB Topic 11.M, the effect on financial statements of adopting the revenue, leases, and credit losses standards.  The ASU was effective upon issuance. The Company is currently evaluating the impact on additional disclosure requirements as each of the standards is adopted, however it does not expect these amendments to have a material effect on its financial position, results of operations or cash flows.

ASU 2017-04 ― Applicable to all:

In January 2017, the FASB amended the Goodwill and Other Topic of the Accounting Standards Codification to simplify the accounting for goodwill impairment for public business entities and other entities that have goodwill reported in their financial statements and have not elected the private company alternative for the subsequent measurement of goodwill. The amendment removes Step 2 of the goodwill impairment test. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.  The effective date and transition requirements for the technical corrections will be effective for the Company for [reporting periods beginning after December 15, 2019.-public business entities that are SEC filers] [reporting periods beginning after December 15, 2020.-public business entities that are not SEC filers] [reporting periods beginning after December 15, 2021.-all other entities] Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.  The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2017-05 ― Applicable to all:

In February 2017, the FASB amended the Other Income Topic of the Accounting Standards Codification to clarify the scope of the guidance on nonfinancial asset derecognition as well as the accounting for partial sales of nonfinancial assets. The amendments conform the derecognition guidance on nonfinancial assets with the model for transactions in the new revenue standard. The amendments will be effective for the Company for [reporting periods beginning after December 15, 2017.-public business entities] [annual periods beginning after December 15, 2018, and interim periods within annual reporting periods beginning after December 15, 2019.-all other entities] The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2017-06 ― Applicable to employee benefit plans with a master trust:

In February 2017, the FASB amended the guidance related to employee benefit plan master trust reporting. The new guidance provides for presentation within the plan’s financial statements of its interest in a master trust as a single line item; disclosure of the master trust’s investments by general type as well as by the dollar amount of the plan’s interest in each type; disclosure of the master trust’s other assets and liabilities and the balances related to the plan; and elimination of required disclosures for Section 401(h) accounts that are already provided by the associated defined benefit plan. The amendments are effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. The Plan does not expect these amendments to have a material effect on its financial statements.

ASU 2017-07 ― Applicable to entities that offer defined benefit pension plans, other postretirement benefit plans, or other types of benefits accounted for under ASC 715:

In March 2017, the FASB amended the requirements in the Compensation—Retirement Benefits Topic of the Accounting Standards Codification related to the income statement presentation of the components of net periodic benefit cost for an entity’s sponsored defined benefit pension and other postretirement plans. The amendments will be effective for the Company for [interim and annual periods beginning after December 15, 2017.-public business entities] [annual periods beginning after December 15, 2018, and interim periods within annual reporting periods beginning after December 15, 2019.-all other entities] Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2017-08 ― Applicable to entities that hold investments in callable debt securities held at a premium

In March 2017, the FASB amended the requirements in the Receivables—Nonrefundable Fees and Other Costs Topic of the Accounting Standards Codification related to the amortization period for certain purchased callable debt securities held at a premium. The amendments shorten the amortization period for the premium to the earliest call date. The amendments will be effective for the Company for [interim and annual periods beginning after December 15, 2018.-public business entities] [annual periods beginning after December 15, 2019, and interim periods within annual reporting periods beginning after December 15, 2020.-all other entities] Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2017-09 ― Applicable to entities with stock compensation plans

In May 2017, the FASB amended the requirements in the Compensation—Stock Compensation Topic of the Accounting Standards Codification related to changes to the terms or conditions of a share-based payment award. The amendments provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The amendments will be effective for the Company for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2017-10 ― Applicable to entities with service concession arrangements

In May 2017, the FASB amended the requirements in the Service Concession Arrangements Topic of the Accounting Standards Codification to clarify how an operating entity determines the customer of the operation services for service concession arrangements. The amendments will be effective for the Company for {[reporting periods beginning after December 15, 2017.-public business entities] [annual periods beginning after December 15, 2018, and interim periods within annual reporting periods beginning after December 15, 2019.-all other entities] –entities that have not adopted ASU 2014-09} {[fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.-public business entity, a not-for-profit entity that has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market, and an employee benefit plan that files or furnishes financial statements with or to the SEC] [fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019.-all other entities]-entities that have adopted ASU 2014-09} The Company does not expect these amendments to have a material effect on its financial statements.

Applicable to all:

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.