We are pleased to release MaloneBailey's July 2024 issue of The Crunch. This special edition of The Crunch highlights FASB updates that went into effect in 2024 as well as a review of the FASB updates will go into effect in 2025.


Please note that the updates provided in this newsletter are not a comprehensive list. We encourage you to visit the  SEC  FASB  and IRS  websites for more information as well as a complete list of updated rules, regulations and proposals. 


We invite you to contact us should you have any questions about the information provided in this issue. We invite you to visit our website to review archived versions of this newsletter containing past accounting, regulatory and tax updates.


The MaloneBailey Team

www.malonebailey.com 


What's the Crunch?



Featured Podcast


  • Navigating Leadership Roles in the CPA Industry


Recent Accounting & Regulatory Updates



FASB: What You Need to Know for 2025


  • Business Combinations— Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement
  • Codification Improvements—Amendments to Remove References to the Concepts Statements
  • Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards
  • Income Taxes (Topic 740): Improvements to Income Tax Disclosures
  • Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets



FASB: A Review of 2024 Updates


  • Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures 
  • Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method
  • Leases (Topic 842): Common Control Arrangements 
  • Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions
  • Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method
  • Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers
  • Financial Services-Insurance (Topic 944): Effective Date and Early Application


Extra Crunch


  • AICPA: The Rise of GenAI


About MaloneBailey, LLP


Featured Podcast

Navigating Leadership Roles in the CPA Industry


Summary - In the latest edition of Everybody Counts, our host, Matt Setzekorn, Administrative Assistant, and special guest, Krystal Sha, Audit Manager, explore what it takes to be a manager in the dynamic and ever-evolving field of accounting. Krystal shares her journey, daily responsibilities, and the challenges and rewards that come with the territory of being a manager at a CPA firm. Whether you're an aspiring CPA, a seasoned professional, or just curious about the inner workings of a CPA firm, this edition of Everybody Counts is packed with valuable insights and practical advice. 


Simply click on the image below to listen to the podcast. For this podcast and many more, please visit the Resources section of our website.

FASB: What You Need to Know for 2025

Business Combinations— Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement


Summary - This ASU is effective on a prospective basis for all joint ventures with a formation date on or after January 1, 2025. Early adoption of ASU No. 2023-05 is permitted in any interim or annual period in which financial statements have not yet been issued (or made available for issuance). A joint venture that elects to early adopt may apply ASU No. 2023-05 either prospectively or retrospectively.


This ASU applies to the formation of entities that meet the definition of a joint venture (or a corporate joint venture) as defined in the FASB Accounting Standards Codification® Master Glossary. While joint ventures are defined in the Master Glossary, there has been no specific guidance in the Codification that applies to the formation accounting by a joint venture in its separate financial statements. The amendments in the ASU require that a joint venture apply a new basis of accounting upon formation. As a result, a newly formed joint venture, upon formation, would initially measure its assets and liabilities at fair value (with exceptions to fair value measurement that are consistent with the business combinations guidance).


For more information, click here.


© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Codification Improvements—Amendments to Remove References to the Concepts Statements


Summary - This ASU is effective for public business entities for fiscal years beginning after December 15, 2024. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2025. Early application of the amendments is permitted for all entities, for any fiscal year or interim period for which financial statements have not yet been issued (or made available for issuance). If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period.


An entity should apply these amendments using one of the following transition methods:


  1. Prospectively to all new transactions recognized on or after the date that the entity first applies the amendments; or
  2. Retrospectively to the beginning of the earliest comparative period presented in which the amendments were first applied. An entity should adjust the opening balance of retained earnings (or other appropriate components of equity or net assets in the statement of financial position) as of the beginning of the earliest comparative period presented.


'This ASU contains amendments to the Codification that remove references to various Concepts Statements. In most instances, the references are extraneous and not required to understand or apply the guidance. In other instances, the references were used in prior Statements to provide guidance in certain topical areas.


For more information, click here.


© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards


Summary - This ASU is effective for public business entities for annual periods beginning after December 15, 2024, and interim periods within those annual periods. For all other entities, the amendments are effective for annual periods beginning after December 15, 2025, and interim periods within those annual periods. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. If an entity adopts the amendments in an interim period, it should adopt them as of the beginning of the annual period that includes that interim period.


The amendments should be applied either (1) retrospectively to all prior periods presented in the financial statements or (2) prospectively to profits interest and similar awards granted or modified on or after the date at which the entity first applies the amendments.


Certain entities, typically private companies, provide employees and other nonemployees with profits interest and similar awards to align compensation with the company’s operating performance and provide those holders with the opportunity to participate in future profits and/or equity appreciation of the company. The Private Company Council and other stakeholders noted diversity in practice in accounting for these awards as share-based payment arrangements under Topic 718 or similar to cash bonus or profit-sharing arrangements (Topic 710, Compensation—General, or other Topics).


The ASU addresses this input by providing an illustrative example intended to demonstrate how entities that account for profits interest and similar awards would determine whether a profits interest award should be accounted for in accordance with Topic 718.

 

For more information, click here.


© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Income Taxes (Topic 740): Improvements to Income Tax Disclosures


Summary - The ASU is effective for public business entities for annual periods beginning after December 15, 2024. For entities other than public business entities, the amendments are effective for annual periods beginning after December 15, 2025.


Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.


The amendments should be applied on a prospective basis. Retrospective application is permitted.


Among other things, these amendments require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income [or loss] by the applicable statutory income tax rate).


The amendments require that all entities disclose on an annual basis the following information about income taxes paid: 


  1. The amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes 
  2. The amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received). 


The amendments also require that all entities disclose the following information: 


  1. Income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign 
  2. Income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign. 

 

For more information, click here.


© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets


Summary - The ASU is effective for all entities for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued (or made available for issuance). If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period.


ASU No. 2023-08 requires a cumulative-effect adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets) as of the beginning of the annual reporting period in which an entity adopts the amendments.


The amendments apply to all entities. ASU No. 2023-08 is intended to improve the accounting for certain crypto assets by requiring an entity to measure those crypto assets at fair value each reporting period with changes in fair value recognized in net income. The amendments also improve the information provided to investors about an entity’s crypto asset holdings by requiring disclosure about significant holdings, contractual sale restrictions, and changes during the reporting period.


The amendments in the ASU apply to all assets that meet all the following criteria:


  1. Meet the definition of intangible asset as defined in the FASB Accounting Standards Codification®;
  2. Do not provide the asset holder with enforceable rights to or claims on underlying goods, services, or other assets;
  3. Are created or reside on a distributed ledger based on blockchain or similar technology;
  4. Are secured through cryptography;
  5. Are fungible; and
  6. Are not created or issued by the reporting entity or its related parties.

 

For more information, click here.


© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

FASB: A Review of 2024 Updates

Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures 


Summary - The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted.


A public entity should apply the amendments retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption.


The amendments apply to all public entities that are required to report segment information in accordance with Topic 280, Segment Reporting.


The amendments in the ASU is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.


The key amendments:


  1. Require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of segment profit or loss.
  2. Require that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition. The other segment items category is the difference between segment revenue less the significant expenses disclosed and each reported measure of segment profit or loss.
  3. Require that a public entity provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by FASB Accounting Standards Codification® Topic 280, Segment Reporting, in interim periods.
  4. Clarify that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit. However, at least one of the reported segment profit or loss measures (or the single reported measure, if only one is disclosed) should be the measure that is most consistent with the measurement principles used in measuring the corresponding amounts in the public entity’s consolidated financial statements.
  5. Require that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.
  6. Require that a public entity that has a single reportable segment provide all the disclosures required by the amendments in the ASU and all existing segment disclosures in Topic 280.


For more information, click here.


© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method


Summary - This ASU is effective for public business entities for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted for all entities in any interim period. 


These amendments allow reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. The ASU responds to stakeholder feedback that the proportional amortization method provides investors and other allocators of capital with a better understanding of the returns from investments that are made primarily for the purpose of receiving income tax credits and other income tax benefits.


For more information, click here.


© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Leases (Topic 842): Common Control Arrangements 


Summary - This ASU is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been made available for issuance. If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period. Transition can be done either retrospectively or prospectively.


These amendments provide private companies and not-for-profit organizations that are not conduit bond obligors with a practical expedient to use the written terms and conditions of a common control arrangement to determine whether a lease exists and, if so, the classification of and accounting for that lease.


In addition, the ASU requires all entities (i.e., including public companies) to amortize leasehold improvements associated with common control leases over the useful life to the common control group.


For more information, click here.


© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions


Summary - ASU No. 2022-03 is effective for public business entities for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2023. Early adoption is permitted. For all other entities, it is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2024. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance.


These amendments clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.


For more information, click here.


© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Extra Crunch

AICPA: The Rise of GenAI


Summary - The AICPA whitepaper provides an in-depth analysis of the rapid emergence and transformative impact of generative AI on the accounting and finance sectors, highlighting potential applications, challenges, and future implications for the industry.


To access the AICPA's whitepaper on this topic and to learn more, please click here.


About MaloneBailey, LLP

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