Leasing Standard to Get Minor Revisions Before Effective Date
On November 29, FASB said it plans to float a proposal for public comment in January to make the much-watched lease accounting standard easier to apply. The proposal, which will be released less than a year before public companies must comply with the sweeping new standard, is expected to call for changes in how companies make the transition to the new accounting. Businesses had complained about the provisions as they planned to implement the standard, which was published in February 2016 after almost a decade of debate. Property managers had been especially vocal about a requirement that would have made them break out the fees for “common area maintenance” charges, such as security, elevator repairs, or snow removal, and account for them separately from the charges associated with renting out land or buildings. FASB also expects to revise guidance that would require property managers to separately report their receipts from maintenance charges from rent payments.
GAAP Update Drops Outdated SEC Interpretive Guidance for Revenue Standard
On November 22, FASB updated U.S. GAAP to reflect the SEC’s changes to its interpretive guidance for the accounting board’s revenue recognition standard, which removed some specialized revenue guidance that will no longer be relevant under the new accounting. The SEC published these changes in August with Release 33-10402, Commission Guidance Regarding Revenue Recognition for Bill-and-Hold Arrangements, which states that public companies should no longer follow the guidance for bill-and-hold transactions in Accounting and Auditing Enforcement Release (AAER) 108, In the Matter of Stewart Parness, once they adopt FASB’s Topic 606, “Revenue From Contracts With Customers.” In a bill-and-hold transaction, the seller can recognize the revenue from the sale before delivering the goods to the customer.
Project to Amend Segment Reporting to Proceed Slowly
IASB members want to move cautiously before revising the board’s accounting standard for segment reporting. After debating its next steps with Exposure Draft (ED) 2017-2, Improvements to IFRS 8 Operating Segments: Proposed Amendments to IFRS 8 and IAS 34, the board did not take action at its November 14 meeting; however, board members do plan to reconvene to plan their next steps on the project. Investors told the IASB they thought the plan did not offer significant enough changes to segment reporting, which is viewed as some of the most important information for analyzing a company’s financial condition. Businesses, national standards setters, accounting firms, and professional groups, however, questioned whether the proposal’s benefits outweighed its costs. IASB member Martin Edelmann said he believed there always would be questions about segment reporting, and that the IASB would not necessarily find a cure-all for them. “I think we should not take too much time to resolve this question,” Edelmann said.