Featured Podcast
New in this edition is a podcast featuring Steven Vertucci, Audit Partner. Steven discusses one of the FASB updates featured in this newsletter, Topic 350, which pertains to the simplification of the test for goodwill impairment. Steven also provides information on who this update affects and when it will go into effect. Please see below for the full summary of the Topic 350 update.
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March 2017
We are pleased to release MaloneBailey's March 2017 newsletter highlighting recent SEC and FASB updates and proposals. Please note that the updates provided in this newsletter are not a comprehensive list. We have selected the updates and proposals that we believe may be of relevance to you. Our goal is to provide you with resources to keep you informed of the ever-changing rules and regulations related to regulatory and accounting matters.
We encourage you to visit the SEC and FASB 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. You can find a list of MaloneBailey partners and their contact information at the end of this newsletter.
For easy navigation, please refer to the 'In This Issue' section, which contains a hyperlinked table of contents of rule regulation proposals and updates that may affect you. We invite you to visit our website to review archived versions of this newsletter containing past SEC and FASB updates and proposals.
The MaloneBailey Team
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In This Issue
SEC Updates & Proposals
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 FASB Accounting Standards Update No. 2017-04 - Intangibles - Goodwill and Other
(Topic 350): Simplifying the Test for Goodwill Impairment
Click on the video below to hear Steven Vertucci, Audit Partner, explain Topic 350, as well as who is affected by this update and when it will go into effect.
Summary -
The FASB has issued Accounting Standards Update (ASU) No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.
To simplify the subsequent measurement of goodwill, the amendments eliminate Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable.
The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary.
The amendments should be applied on a prospective basis. The nature of and reason for the change in accounting principle should be disclosed upon transition.
A public business entity that is a U.S. Securities and Exchange Commission (SEC) filer should adopt the amendments for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019.
A public business entity that is not an SEC filer should adopt the amendments for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2020.
All other entities, including not-for-profit entities, which adopt the amendments should do so for their annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2021.
Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.
For more information, click here.
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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FASB Accounting Standards Update No. 2017-03 - Accounting Changes and Error Corrections (Topic 250) and Investments - Equity Method and Joint Ventures (Topic 323)
Summary -
The FASB has issued ASU No. 2017-03, Accounting Changes and Error Corrections (Topic 250) and Investments - Equity Method and Joint Ventures (Topic 323): Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings. The amendments add paragraph 250-10-S99-6 which includes the text of "SEC Staff Announcement: Disclosure of the Impact That Recently Issued Accounting Standards Will Have on the Financial Statements of a Registrant When Such Standards Are Adopted in a Future Period (in accordance with Staff Accounting Bulletin [SAB] Topic 11.M)."
For more information, click here.
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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FASB Proposed Accounting Standards Update 2017-210 - Inventory (Topic 330)-Disclosure Framework - Changes to the Disclosure Requirements for Inventory
Summary
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The FASB has issued a proposed ASU, Inventory (Topic 330): Disclosure Framework - Changes to the Disclosure Requirements for Inventory, with comments due by March 13, 2017. The proposal would increase inventory disclosure requirements for all reporting organizations, including:
- Changes in inventory that are not related to the ordinary course of manufacturing, purchasing, or selling inventory;
- Inventory disaggregated by major components;
- Inventory disaggregated by measurement basis; and
- Qualitative description of costs capitalized.
For companies and other organizations applying the retail inventory method of measuring inventory, the proposal includes qualitative and quantitative disclosure of the critical assumptions used to measure that inventory. For companies and organizations applying the last-in, first-out (LIFO) method of measuring inventory, the proposal includes disclosure of the excess of replacement cost or current cost over the LIFO inventory amount and the effect on net income of any LIFO liquidations.
For organizations subject to segment reporting, there is an interim and annual requirement to disclose inventory in total and by major component for each reportable segment if that information is regularly reviewed by the chief operating decision maker.
For more information, click here.
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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FASB Proposed Accounting Standards Update 2017-200 - Debt (Topic 470) - Simplifying the Classification of Debt in a Classified Balance Sheet (Current versus Noncurrent)
Summary -
The FASB has issued a proposed Accounting Standards Update, Debt (Topic 470): Simplifying the Classification of Debt in a Classified Balance Sheet (Current versus Noncurrent), with comments due by May 5, 2017. The proposal is intended to improve financial reporting by simplifying guidance used to determine whether debt should be classified as current or noncurrent in a classified balance sheet. The proposed amendments would replace the existing, fact-specific guidance with an overarching, cohesive principle for debt classification that focuses on a borrower's contractual rights and obligations that exist as of the reporting date.
Under the proposal, a borrower would continue to classify its debt as noncurrent when a violation of a debt covenant has been waived, if a borrower receives a waiver before the financial statements are issued (or are available to be issued) and the waiver meets certain conditions.
For more information, click here.
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Summary -
The SEC has issued a final rule, Adoption of Updated EDGAR Filer Manual. This final rule includes revisions to the Electronic Data Gathering, Analysis, and Retrieval System (EDGAR) Filer Manual and related rules to reflect updates to the EDGAR system. The updates are being made primarily to support an upgrade to the passphrase authentication process and update the recommended Internet browser language for all EDGAR websites.
This final rule is effective upon publication in the Federal Register.
For more information, click here.
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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SEC Issues Staff View, Reconsideration of Pay Ratio Rule Implementation by Acting SEC Chairman, Michael S. Piwowar
Summary -
SEC Acting Chair Michael S. Piwowar issued a statement seeking public comment on any unexpected challenges that issuers have experienced as they prepare for compliance with the SEC's pay ratio disclosure rule and whether relief is needed. The SEC adopted the pay ratio disclosure rule in August 2015 to implement Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The rule requires a public company to disclose the ratio of the median of the annual total compensation of all employees to the annual total compensation of the chief executive officer.
In addition, Mr. Piwowar directed the SEC staff to reconsider the implementation of the pay ratio disclosure rule based on any public comments that are submitted and to determine as promptly as possible whether additional guidance or relief may be appropriate.
For more information, click here.
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Summary -
SEC Acting Chair Michael S. Piwowar directed the SEC staff to reconsider whether the 2014 guidance on the conflict minerals rule is still appropriate and whether any additional relief is appropriate. This was announced by Mr. Piwowar in a public statement.
According to the statement, in April 2014, the Court of Appeals for the D.C. Circuit held that a portion of the disclosure required by the SEC's Conflict Minerals Rule violated the First Amendment. Shortly thereafter, the then-Director of the Division of Corporation Finance issued guidance regarding compliance with the rule in light of the court's decision and the Commission issued an order staying the effect of the compliance date for those portions of the rule found to be unconstitutional. The case was subsequently remanded to the district court for further consideration. The litigation remains ongoing and the SEC staff's guidance remains in effect.
In the interim, the temporary transition period provided for in the rule has expired. The reporting period beginning January 1, 2017, is the first reporting period for which no issuer falls within the terms of that transition period. In light of this, as well as the unexpected duration of the litigation, Acting SEC Chair Piwowar directed the SEC staff to consider whether the 2014 guidance is still appropriate and whether any additional relief is appropriate in the interim.
Mr. Piwowar encourages interested parties to submit detailed comments and request that they be submitted within the next 45 days.
For more information, click
here.
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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