New Standards Effective in 2017Posted: June 6, 2016
The FASB has been very busy issuing new standards and EDs this year, so I wanted to take a moment and summarize those standards which will apply beginning in 2017 as of this writing.
Deferred Income Taxes:
While companies still have to separate deferred tax assets/liabilities by jurisdiction, they no longer separate deferred taxes between current and long-term; instead all deferred taxes are presented as long-term.
Transition to Equity Basis of Accounting:
Companies no longer need to go back to previous cost-based investment and retrospectively treat them as if they were equity basis accounting all along; instead equity basis accounting starts as of date you meet that status.
Any gain/loss in OCI on the costs based investment is moved to NI as of that date as well.
Companies now have an option to no longer estimate forfeitures upfront; instead they are recognized as the forfeitures occur.
The company is now allowed to purchase more shares for tax withholding without triggering liability accounting.
Excess tax benefits/expense are now part of current tax expense rather than recognized as an adjustment to equity (APIC).
Finally, the revenue recognition standard can be early adopted starting in 2017. While most companies will not elect to adopt the standard early, there will be some that adopt the standard in 2017. The rest of us will be looking at their first quarter 2017 financial statements very closely when they are issued.