The latest round of changes to the Accounting Standards Codification (“ASC”) was recently issued by the Financial Accounting Standards Board (“FASB”). Released as Accounting Standards Update (“ASU”) No. 2018-09 Codification Improvements, the amendments clarify and make limited improvements to the Codification, as well as eliminate inconsistencies.
As part of its efforts to periodically update the Codification, the FASB says the amendments will make the Codification easier for users to understand. Most of the latest changes are considered minor, but some amendments such as those involving comprehensive income reporting requirements and the requirements for distinguishing between liabilities and equity may impact numerous companies.
Other notable changes include the following:
- The FASB replaced the phrase “taxes not payable in cash” from FASB ASC 220-10-45-10B, Income Statement—Reporting Comprehensive Income, with guidance that specifically addresses some arrangements that are similar to bankruptcy reorganizations. The amendment resolves conflicting guidance between FASB ASC 220-10-45-10B and FASB ASC 740, Income Taxes, FASB ASC 805-740, Business Combinations — Income Taxes, and FASB ASC 852-740, Reorganizations — Income Taxes. The guidance in the latter states that income taxes and adjustments to the qualifying accounts for fresh start reporting in a business combination or reorganization should be documented in income. Without the proper context, the FASB said “taxes not payable in cash” might be understood to include any tax not payable in cash.
- The FASB amended FASB ASC 480-10-55-55, Liabilities — Distinguishing Liabilities from Equity — Overall — Implementation Guidance and Illustrations — Majority Owner’s Accounting for a Transaction in the Shares of a Consolidated Subsidiary and a Derivative Instrument Indexed to the Noncontrolling Interest in that Subsidiary, to match the provisions under Statements of Financial Accounting Standards No. 150, Accounting for Certain Financial Instruments With Characteristics of Both Liabilities and Equity.
The effective date of ASU No. 2018-09 is contingent upon the details of each amendment under the standard.
