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The 2018 objectives for FASB include assisting companies with accounting implementation challenges on four important standards—revenue recognition, leases, credit losses, and hedging—Financial Accounting Standards Board Chairman Russell Golden told Bloomberg Tax.
Additionally, FASB will initiate or advance new projects relating to accounting for life insurance, distinguishing liabilities from equity, and improving segment reporting, Golden said in a video interview Dec. 4.
See video here: https://www.bna.com/goldens-goals-revenue-m73014473177/
Golden said the revenue recognition standard is “ready to go with an on time implementation beginning in 2018.” Approximately one month from the effective date of the new standard, this news could be viewed with relief, or anxiety, depending on where companies stand with their implementation efforts.
Golden, speaking at the American Institute of CPAs’ National Conference on Current SEC and PCAOB Developments, also addressed the effects of pending tax changes on financial reporting.
“The accounting standard is clear, deferred tax assets, or deferred tax liabilities are measured at the appropriate effective tax rate,” he told Bloomberg Tax “As there is a change in the effective tax rate, that will impact the companies deferred tax assets and liabilities.”
The deferred tax assets and liabilities currently on a company’s financial statements are measured at the 35 percent corporate tax rate. If the tax rate changes to 21 percent, or the rate in the final bill, a company will need to re-measure those deferred tax assets and liabilities. Re-measurement may effect a company’s financial statements.
Golden said that the recent FASB action to proceed with three updates to the lease standard—including easements, comparative period reporting, and bifurcation of lessor revenue—constituted “substantial changes that we believe will reduce the cost associated with the transition, but will not impact the information to investors.”
He added that “the board dealt with nine issues and decided to make changes to three topics, and we did not think the other topics needed to be changed. At this time, we believe this will help with a smooth and timely transition for the leasing standard in 2019.”
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