FASB 2021 Road Map - BKD

FASB 2021 Road MapEffective DatesTopic & TitleIntangibles—Goodwill andOther (Topic 350)ASU 2017-04, Simplifying theTest for Goodwill ImpairmentResources:Goodwill Impairment TestSimplifiedDescriptionPBEsOther EntitiesRemoves Step 2 from theimpairment test; the same one-stepimpairment test applies to allreporting units, including those withzero or negative carrying amounts.PBE SEC filers, notSRCs – anyinterim or annualgoodwillimpairment testsin fiscal yearsbeginning afterDecember 15,2019Interim or annualgoodwillimpairment testingin fiscal yearsbeginning afterDecember 15, 2022Prospective application.Considerations for EarlyAdoption of GoodwillImpairmentFair Value Measurement(Topic 820)Eliminates some disclosures andstrengthens remaining disclosures.ASU 2018-13, DisclosureFramework—Changes to theDisclosure Requirements forFair Value MeasurementAn entity can early adopt anyremoved or modified disclosures anddelay adoption of the newdisclosures until their effective datein 2020.Resource:FASB Updates Fair ValueDisclosuresIntangibles—Goodwill andOther—Internal-UseSoftware (Subtopic 350-40)ASU 2018-15, Customer’sAccounting forImplementation CostsIncurred in a CloudComputing ArrangementThat Is a Service ContractResource: New CloudComputing AccountingGuidanceCollaborative Arrangements(Topic 808)ASU 2018-18, Clarifying theInteraction between Topic808 and Topic 606Resource: New CollaborativeArrangement GuidanceAligns cost capitalization guidancefor hosting arrangements that areservice contracts, hostingarrangements that include asoftware license, and the costsincurred to develop or obtaininternal-use software.Annual and interim reporting periodsbeginning after December 15, 2019Fiscal yearsbeginning afterDecember 15,2019, andinterim periodsthereinFiscal yearsbeginning afterDecember 15, 2020,and interim periodsbeginning afterDecember 15, 2021Fiscal yearsbeginning afterDecember 15,2019, includinginterim periodsFiscal yearsbeginning afterDecember 15, 2020,and interim periodsbeginning afterDecember 15, 2021Prospective or retrospectivetransition permitted.Clarifies when transactions betweenparticipants in a collaborativearrangement are within the scope ofrevenue guidance, ASC 606.The ASU should be appliedretrospectively to the date of initialapplication of ASC 606.8

FASB 2021 Road MapEffective DatesTopic & TitleDescriptionEntertainment—Films—Other Assets—Film Costs(Subtopic 926-20) odwill and Other(Subtopic 920-350)The ASU aligns the accounting forproduction costs of an episodictelevision series with the accountingfor production costs of films byremoving the content distinction forcapitalization.ASU 2019-02, Improvementsto Accounting for Costs ofFilms and LicenseAgreements for ProgramMaterialsNot-for-Profit Entities (Topic958)ASU 2019-03, Updating theDefinition of CollectionsResource: FASB Updates‘Collection’ DefinitionCompensation—StockCompensation (Topic 718)and Revenue from Contractswith Customers (Topic 606)ASU 2019-08, n Payable to aCustomerResource: AccountingClarified for Share-BasedPayments to CustomersASU 2020-03, CodificationImprovements to FinancialInstrumentsPBEsFiscal yearsbeginning afterDecember 15,2019, andinterim periodsthereinOther EntitiesFiscal yearsbeginning afterDecember 15, 2020,and interim periodsthereinThe ASU addresses presentation,requires new disclosures aboutcontent that is either produced orlicensed, and addresses cash flowclassification for license agreements.The amendments align FASB’scollection definition with thedefinition used by one of theindustry’s governing bodies—theAmerican Alliance of Museums.Fiscal years beginning after December15, 2019, and interim periods beginningafter December 15, 2020Prospective application.Entities must apply ASC 718 tomeasure and classify customershare-based payments. The amountthat would be recorded as areduction in revenue would be thegrant-date fair value of the sharebased payment. The grant date isthe date at which a supplier andcustomer reach a mutualunderstanding of the award’s keyterms and conditions.Fiscal yearsbeginning afterDecember 15,2019, andinterim periodsthereinFiscal yearsbeginning afterDecember 15, 2019,and interim periodsbeginning afterDecember 15, 2020VariousIssues 1, 2, 4, and 5: Upon issuanceIssue 3: Fiscal years beginning afterDecember 15, 2019, including interimperiodsIssues 6 and 7: For entities that have notyet adopted ASU 2016-13, the same asASU 2016-13. For entities that haveadopted ASU 2016-13, fiscal yearsbeginning after December 15, 2019,including interim periods9

FASB 2021 Road MapEffective DatesTopic & TitleReference Rate Reform(Topic 848)ASU 2020-04, Facilitation ofthe Effects of Reference RateReform on FinancialReportingDescriptionOptional guidance to ease thepotential burden in accounting for—or recognizing the effects of—reference rate reform on financialreporting.PBEsOther EntitiesEffective upon issuance throughDecember 31, 2022Resources: FASB FinalizesLIBOR Transition ReliefLIBOR Sunset Update – Whatto Do NowSpecial Effective Dates Fiscal Year 2020Effective DateTopic & TitleDescriptionConsolidation (Topic 810)New accounting policy election so a privatecompany would not have to apply variableinterest entity (VIE) guidance to legalentities under common control—includingcommon control leasing arrangements—ifboth parties are not PBEs. If elected,additional disclosures are required.ASU 2018-17, TargetedImprovements to RelatedParty Guidance forVariable Interest EntitiesResource: ConsolidationRelief for Related PartiesEntities OtherThan PrivateCompaniesFiscal yearsbeginning afterDecember 15,2019, includinginterim periodsOther EntitiesFiscal yearsbeginning afterDecember 15,2020, and interimperiods beginningafter December15, 2021Indirect interests held through relatedparties in common control arrangementsshould be considered on a proportionalbasis when determining whether fees paidto decision makers are variable interests.Retrospective application with acumulative-effect adjustment to retainedearnings at the beginning of the earliestperiod presented.10

FASB 2021 Road MapEffective for 2021 Fiscal Years for Non-PBEsTopic & TitleDerivatives and Hedging(Topic 815)ASU 2017-12, TargetedImprovements to Accountingfor Hedging ActivitiesResource: A Deep Dive intoHedgingDescription & ImplementationGuidanceComprehensive changes to ease anentity’s ability to qualify and stayqualified for hedge accountingtreatment and improve alignment withits risk strategy; includes newdisclosures to highlight hedgeaccounting’s effect on individualincome statement line items.Effective DatePBEsOther EntitiesAlready effectiveFiscal yearsbeginning afterDecember 15,2020, and interimperiods beginningafter December15, 2021(as amended)Modified retrospective application forthe elimination of hedgingineffectiveness. Prospectiveapplication of presentation anddisclosure requirements.Derivatives and Hedging(Topic 815)ASU 2018-16, Inclusion of theSecured Overnight FinancingRate (SOFR) Overnight IndexSwap (OIS) Rate as aBenchmark Interest Rate forHedge Accounting PurposesAdds an additional benchmark rate forfair value hedging of fixed-ratesecurities—the overnight index swaprate based on the SOFR.Already effectiveConcurrent withASU 2017-12Prospective application for qualifyingnew or redesignated hedgingrelationships entered into on or afterthe adoption date.Resource:SOFR Approved as a HedgingBenchmark RateEffective for 2021 Fiscal Years for Certain PBEsTopic & TitleCompensation—RetirementBenefits—Defined BenefitPlans—General (Subtopic715-20)ASU 2018-14, Changes to theDisclosure Requirements forDefined Benefit PlansDescription & ImplementationGuidanceAdds two new disclosures and removesfive existing disclosures.To be applied on retrospective basis toall periods presented.Effective DatePBEsFiscal yearsending afterDecember 15,2020Other EntitiesFiscal yearsending afterDecember 15,2021Resource: Changes to DefinedBenefit Plan Disclosures11

FASB 2021 Road MapTopic & TitleASU 2019-12Income Taxes (Topic 740)Simplifying the Accounting forIncome TaxesDescription & ImplementationGuidanceIncludes several narrow-focusedsimplifications. The ASU does notcreate new accounting requirementsbut instead eliminates existingconfusing guidance.Effective DatePBEsOther EntitiesFiscal yearsbeginning afterDecember 15,2020, includinginterim periodsFiscal yearsbeginning afterDecember 15,2021, and interimperiods beginningafter December15, 2022Resource: Simpler Income TaxAccounting FinalizedEarly adoption is permitted uponissuance, if all simplification issues areapplied.ASU 2020-01, Clarifying theInteractions between Topic321, Topic 323, and Topic 815Addresses accounting for certainequity securities upon the applicationor discontinuation of the equitymethod of accounting and scopeconsiderations for forward contractsand purchased options on certainsecuritiesAnnual andinterim reportingperiodsbeginning afterDecember 15,2020Annual andinterim reportingperiods beginningafter December15, 2021The ASU clarifies when a reportingentity should assess whether a callabledebt security is within the scope of ASC310-20-35-33, which affects theamortization period for nonrefundablefees and other costs.Fiscal years, andinterim periodswithin thosefiscal years,beginning afterDecember 15,2020Fiscal yearsbeginning afterDecember 15,2021, and interimperiods beginningafter December15, 2022Early applicationis not permittedEarly applicationis permittedbeginning afterDecember 15,2020Annual andinterim reportingperiodsbeginning afterDecember 15,2020Annual reportingperiods beginningafter December15, 2021, andinterim periodsbeginning afterDecember 15,2022Resource: Updates to EquityInvestment AccountingReceivables—NonrefundableFees and Other Costs(Subtopic 310-20)ASU 2020-08, CodificationImprovementsASU 2020-10, CodificationImprovementsImproves the consistency of U.S.generally accepted accountingprinciples (GAAP) codification so alldisclosure guidance is labeled as“disclosures” instead of “otherpresentation matters.”12

FASB 2021 Road MapSpecial Effective Date – NFPs OnlyTopic & TitleASU 2020-07Not-for-Profit Entities (Topic958)Presentation and Disclosuresby Not-for-Profit Entities forContributed NonfinancialAssetsDescription & ImplementationGuidanceNew disclosures and nonfinancial giftsin kind would be disclosed separatelyfor financial statement presentation.Retrospective applicationEffective DateNFPs with annual reporting periodsbeginning after June 15, 2021, andinterim periods beginning after June15, 2022Resource: New NFP Gift-inKind Presentation &Disclosure GuidanceEffective for 2022 Fiscal Years for PBEsEffective DateTopic & TitleASU 2020-06Debt (Topic 470) andDerivatives and Hedging(Topic 815)Accounting for ConvertibleInstruments and Contractsin an Entity’s Own EquityResource: Easier Rules forDebt Equity ClassificationDescription & Implementation GuidancePBEs (Not SRC)Other EntitiesThe ASU reduces the number ofaccounting models available forconvertible debt securities, resulting infewer embedded conversion featuresbeing separately recognized from the hostcontract. The ASU also amends guidancefor the derivatives scope exception forcontracts in an entity’s own equity. Itremoves three conditions required toqualify for the settlement guidance relatedto settlement in unregistered shares,collateral requirements, and shareholderrights.Annual andinterim reportingperiodsbeginning afterDecember 15,2021Annual andinterim reportingperiods beginningafter December15, 202313

FASB 2021 Road MapEffective for 2023 Fiscal Years for PBEsEffective DateTopic & TitleFinancial Services—Insurance (Topic 944)ASU 2018-12, TargetedImprovements to theAccounting for LongDuration ContractsASU 2020-11, EffectiveDate and Early ApplicationResource: New Guidancefor Long-DurationInsurance ContractsDescription & Implementation GuidanceThe new guidance:1.Requires an annual assumptionsupdate for liability measurement2.Standardizes liability discount rate3.Improves measurement of market riskbenefits4.Simplifies amortization of deferredacquisition costs on a more level basis5.Requires significant new disclosuresPBEs (Not SRC)Other EntitiesSEC filers, notSRCs – fiscalyears beginningafter December15, 2022,including interimperiodsFiscal yearsbeginning afterDecember 15,2024, and interimperiods beginningafter December15, 2025Special transition guidance for variouselements.Proposed ASUs – Exposure DraftsThe following chart includes proposed updates not included in other sections of this document, where FASB hasnot issued a final pronouncement as of this publication’s date. FASB will determine the effective dates of theproposed amendments—if issued as a final ASU—after it considers feedback on the amendments.Topic & TitleDescriptionStatusProposed ASUsIntangibles—Goodwill and Other(Topic 350)Accounting Alternative forEvaluating Trigger EventsIssued December 21, 2020Resource: FASB ReconsidersGoodwill Impairment TriggersThe proposal creates an option for privatecompanies and NFPs that only report in-scopefinancial information on an annual basis toperform the identification and evaluation of atriggering event for goodwill impairment only asof their annual reporting date. If elected, anentity would not be required to monitor forgoodwill impairment triggering events in interimperiods but would instead evaluate the facts andcircumstances as of year-end to determinewhether it is more likely than not that goodwill isimpaired.Comments were dueJanuary 20, 202114

FASB 2021 Road MapTopic & TitleDescriptionStatusProposed ASUsBusiness Combinations (Topic805)Accounting for Contract Assetsand Contract Liabilities fromContracts with CustomersThe proposal would add guidance in ASC 805 torequire an acquirer to recognize and measurecontract assets and contract liabilities acquiredin a business combination in accordance withASC 606.Comments due March15, 2021This proposal would expand the scope ofguidance in ASC 848 so that companies can applythe optional expedients in ASU 2020-04 toderivative instruments affected by clearinghouse changes.Comments were dueNovember 13, 2020Issued December 15, 2020Resource: Accounting to BeClarified on Contract Liabilities in aBusiness CombinationReference Rate Reform (Topic848):Scope RefinementIssued October 29, 2020ASU 2020-01 wasissued in January 2021Resource: Derivative ClearingChange Prompts New LIBOR ReliefIn November, the London Interbank OfferedRate (LIBOR) administrator announced its intentto consult on timing of cessation and mayconsider extending the deadline to June 30,2023.Various TopicsThe proposal creates a principles-basedframework to assist with either an adjustment toequity and any related earnings per share (EPS)calculations or the recognition and pattern of anexpense. The model clarifies which guidance isapplicable based on the modification’ssubstance. No new disclosures would be added.Comments were dueDecember 28, 2020The exposure draft addresses three issues:Comments were dueDecember 4, 2020Issuer’s Accounting for CertainModifications or Exchanges ofFreestanding Equity-ClassifiedForwards and OptionsIssued October 26, 2020Resource: Proposal ClarifiesWarrant Modification AccountingLeases (Topic 842)Targeted ImprovementsIssued October 20, 2020Resource: Additional TargetedLease Relief Proposed Sales-type leases with variable leasepayments – lessor only Option to remeasure lease liability –lessee only Modifications to reduce the scope of alease contract15

FASB 2021 Road MapTopic & TitleDescriptionStatusProposed ASUsFranchisors—Revenue fromContracts with Customers(Subtopic 952-606): PracticalExpedientThe proposal would add a new practicalexpedient to simplify the judgments needed indetermining whether a good or service isdistinct.Comments were dueNovember 5, 2020The proposal would create a practical expedientto measure an equity award’s grant date fairvalue by determining the fair value of theservices received as a proxy for the fair value ofthe equity-classified awards being granted.Comment periodended October 1,2020Issued September 21, 2020A final ASU isexpected in firstquarter 2021Resource: FASB Proposes RevenueRelief for Private FranchisorsCompensation—StockCompensation (Topic 718):Determining the Current Price ofan Underlying Share for EquityClassified Share-Option Awards (aproposal of the Private CompanyCouncil)Issued August 17, 2020Resource: Private Company ReliefProposed for Share-BasedPaymentsDerivatives and Hedging (Topic815)Codification Improvements toHedge AccountingIssued November 12, 2019Resource: More ChangesProposed to Hedge AccountingThe proposed expedient would allow a nonpublicentity to use a valuation performed underInternal Revenue Code Section 409A todetermine the price of its underlying shares.Additional clarifications on the following issues: Change in hedged risk in a cash flowhedge Contractually specified components incash flow hedges of nonfinancialforecasted transactions Foreign currency-denominated debtinstruments as hedging instrument andhedged item (dual hedge) “Prepayable” definition in the shortcutmethodRedeliberating16

FASB 2021 Road MapTopic & TitleDescriptionStatusProposed ASUsDebt (Topic 470)Simplifying the Classification ofDebt in a Classified

FASB 2021 Road Map . 2 . Table of Contents . The ASU also defers ASC 606, Revenue from Contracts with Customers, for all entities that have not yet issued, or made available for issuance, their financial statements as of June 3, 2020. COVID-19 is expected to result in many lease modifications and concessions, and on April 10, 2020,