New Rules Issued to Clarify Interaction of Equity Investment Accounting Rules
FASB has issued narrow provisions to help accountants understand the interaction of rules for equity securities, the equity method, and forward contracts and purchased options on certain types of securities—areas where accounting differences among companies have emerged. The guidance aims to resolve confusion about measurement of investment changes that result in an investor either applying or discontinuing the equity method of accounting. The changes will, as a result, provide investors with more reliable, comparable financial reporting information from companies in this area, the “basis for conclusions” section of the standard states. For public companies, the rules are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. For all other companies, they are effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. Early adoption is permitted, including in an interim period. The rules should be applied prospectively, the document states, meaning that they must be applied at the beginning of the interim period that includes the adoption date.
GASB to Consider Proposal on Retirement Savings Plans that Allow Tax Deferral of Wages
GASB plans to determine the fate of a proposal it issued last year to require governmental entities to apply pension accounting rules to some Internal Revenue Code (IRC) section 457 plans, popular plans that allow employees to defer taxation of wages to a future year. The board, in a teleconference meeting on January 27, will determine whether to flesh out the proposal or move ahead with its initial focus. IRC section 457 plans are retirement plans that have evolved to resemble defined contribution pension plans because of contributions are made by employers. They are typically offered by tax-exempt organizations and provide more flexibility than traditional benefit plans. The changes would enhance the relevance, consistency, and comparability of accounting and financial reporting by pension plans, including IRC section 457 plans, as well as the governments that provide benefits through those plans.
Mackenzie Appointed to IASB Board
South African native Bruce Mackenzie will join the IASB to replace Darrel Scott, who leaves the board at the end of September due to term limits, the Trustees of the IFRS Foundation said on January 20. Mackenzie joins the board from W.Consulting, an international firm that provides advisory and technology solutions to companies applying IFRS standards, where he served as managing director since 2006. He is a chartered accountant and registered auditor in South Africa, chairs the Pan African Federation of Accountants’ technical standards setters forum, and serves as a member of the IFRS Interpretations Committee until the end of June, when his term ends. He has been a member of the Financial Reporting Standards Council of South Africa, the IFRS Foundation’s IFRS for SMEs Implementation Group, and the IFRS Advisory Council. Mackenzie takes up the post on October 1 for an initial five-year term.