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I would suggest changes in revenue recognition,leases and financial instrumentation. These are three you simply can’t delay
on. They are being heavily debated and you need to understand how they
affect your entity or clients you serve early to ensure you’re prepared
The FASB and IASB (Boards) will issue a single standard for revenue recognition, expected to be released during the summer of 2013, which would converge U.S. GAAP and IFRS and apply to all industries and transactions. The standard will eliminate the transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. This standard has the potential to affect every entity’s day-to-day accounting and, possibly, the way business is executed through contracts with customers.
The Boards tentatively decided that public entities will be required to apply the revenue recognition standard for annual and interim reporting periods beginning on or after January 1, 2017. Early adoption is prohibited for public entities. Nonpublic entities will be required to apply the revenue standard for annual and interim reporting periods beginning after January 1, 2018. Nonpublic entities may also elect to apply the revenue recognition standard for periods beginning after January 1, 2017 (the same as public entities but not earlier).
The Boards tentatively decided that the revenue recognition standard could be applied retrospectively including any combination of practical expedients discussed, or recognize the cumulative effect of initially applying the new revenue recognition standard as an adjustment to the opening balance of retained earnings in the year of initial application.Leases
This project’s intent is to address widespread concern that many lease obligations are not recorded on the balance sheet and that the current accounting for leases does not represent the economics of all lease transactions. The FASB and IASB previously agreed that leases should be recorded on the balance sheet, but have continued to discuss the classification and pattern of expenses in the income statement. In a decision reached June 13, 2012, the Boards decided on an approach in which some lease contracts would be accounted for using an approach similar to that proposed in the 2010 leases Exposure Draft and some leases would be accounted for using an approach that results in a straight-line lease expense. The Boards plan to release an Exposure Draft in the Q4 2012; however, the leasing industry is a significant business globally and it may provide political pressures that affect the final standard. There are already political discussions being held that could raise more questions on the proposed direction of this project. One may expect the debate on this standard to continue to be heated as entities examine the provisions and understand its application. More insight will become available as to when to expect the final standard once the re-exposed standard is posted and comments begin to come in, but many speculate a final standard may be issued in mid-2013. Assuming a 2013 issuance, the earliest effective date is likely 2016.
Accounting for financial instruments has been deemed the highest priority of both the FASB and IASB because of the role it played in the recent financial crisis. However, it is an extremely complex area without an easy solution making it difficult to predict what may happen and when. The topic has been divided into the following parts:
- Classification and measurement
Please let me know if you need any clarification. I'm always happy to answer your questions.
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