2024 FASB Review for Industry (Course Id 2275)

The objective of this course is to inform the reader of the various changes affecting accounting and financial reporting, as well as a review and recall of existing accounting standards. Topics include a summary of newly issued FASB statements,  the new standard on the allowance for credit losses, post-implementation issues involving the new lease standard, discussion of accounting and financial reporting issues in the post-COVID-19 economy including impact of high inflation and interest rates, accounting and disclosures for 2024 issues related to the Employee Retention Credit (ERC) and Pass-Through Entity (PTE) tax, newly issued accounting standards updates (ASUs), and more.  

NASBA QAS - Text - NASBA Registry - 2275

Chapter 1
The New Allowance for Credit Losses: ASU 2016-13 Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments - 2024

• Recognize examples of assets that are and are not subject to the ASC 326-20 expected credit loss model
• Recognize the model that ASU 2016-13 uses to deal with credit losses
• Recall how an entity should present the allowance for credit losses on the balance sheet
• Identify how credit losses should be recorded under new ASU 2016-13
• Recognize some of the disclosures required by ASU 2016-13
• Identify examples of entities that are under common control
• Identify how a decline in fair value of a held-to-maturity debt security should be handled under GAAP
• Recognize the new impairment model for available-for-sale debt securities under ASC 326-30
• Identify how an entity should implement the ASU 2016-13 rules

Chapter 2
Accounting and Financial Disclosures for the Employee Retention Credit (ERC) and the Pass-Through Entity (PTE) Tax - 2024

• Recognize the type of expense that is the basis for measuring the amount of the ERC.
• Identify where to present the ERC in the statement of income using the ASC 958 conditional contribution model.
• Recognize where to present the ERC in the statement of income using the IAS 20 grant model.
• Recognize the proper presentation of the ERC in a tax-basis statement of income.
• Identify how to account for an ERC filing in 2023.
• Recognize a technique that has been attempted to circumvent the SALT deduction limitation.
• Identify how to account for the PTE tax in an entity’s financial statements.
• Recognize the requirements for recording deferred state income taxes with respect to the PTE tax election.
• Identify disclosures that should be made for the PTE tax.

Chapter 3
The New Lease Standard: ASU 2016-02 and Other Amendments Post-Implementation Issues - 2024

• Recognize a key change made to GAAP by the new lease standard
• Identify a type of lease that exists for a lessee under ASU 2016-02
• Recall a type of lease for which the ASU 2016-02 rules do not apply
• Identify some of the types of benefits a lessee can obtain from a leased asset
• Identify a threshold for a lease term to be considered a major part of an asset’s remaining economic life
• Recognize who an entity might not want to use the risk-free rate to compute the present value of lease payments
• Identify how a lessee should account for initial direct costs
• Recognize items that are and are not components of a lease term
• Recall the method a lessee should use to record interest expense on a lease obligation
• Identify some types of leases for a lessor
• Recall how a lessor should initially account for initial direct costs for a lease in certain instances
• Identify how a lessor should account for lease payments received on the income statement for an operating lease
• Recall how a lessor should classify certain cash receipts on the statement of cash flows
• Recognize how certain existing leases are accounted for on the implementation date of ASU 2016-02
• Identify how deferred income taxes will be treated for lessees under ASU 2016-02
• Recall the potential impact that the new lease standard might have on a lessee’s EBITDA and debt-equity ratios, and
• Recall the IRS rules as when an entity should and should not capitalize a lease for tax purposes.

Chapter 4
Selected Newly Issued Accounting Standards Updates (ASUs)

• Review how to account for a joint venture
• Identify how to measure a crypto asset and record it on the balance sheet and income statement
• Recall some of the new disclosures for income taxes required by ASU 2023-09

Chapter 5
Accounting and Financial Reporting in a Post-COVID Economy - 2024

• Recognize some types of concentrations that might require disclosure under the risk and uncertainty rules
• Identify the definition of near term
• Recall the frequency in which an entity should test goodwill for impairment
• Recall how to classify business interruption insurance proceeds on the financial statements
• Recognize the relationship a change in interest rates has on real estate values
• Identify the benchmark used to determine going concern
• Recognize how to report on going concern in an engagement
• Identify a method that can be used to measure variable consideration revenue
• Recognize an example of a construction-type contract
• Identify an advantage of remote auditing
• Recognize a reason to justify using LIFO for GAAP. and
• Identify whether the LIFO IPIC approach is acceptable for GAAP.

Chapter 6
Current Developments: Accounting and Financial Reporting - 2024

• Identify the goal of the FASB’s Disaggregation-Income Statement Expenses project
• Recognize one of the characteristics of a multi-employer pension plan
• Recognize the impact that life expectancy has on the amount of a pension liability
• Identify the shift in the types of retirement plans over the past decade
• Recall an example of a financial instrument subject to the concentration of credit risk disclosure
• Identify the requirements of the SEC’s ESC disclosures
• Recall the general GAAP rule for management’s evaluation of going concern
• Recognize the VIE accounting alternative for leases under common control in ASU 2018-17
• Recognize when a state might be able to charge sales tax under the Wayfair decision
• Review the accounting for a net operating loss, and
• Recall the rule for deductibility of interest in IRC 163(j).

Chapter 1 - The New Allowance for Credit Losses: ASU 2016-13 Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments - 2024

I.  Objective

II. Background

A. Existing GAAP- Incurred Loss Model

B. New ASC 326, Financial Instruments- Credit Losses

C. Recent FASB ASUs Targeted at ASC 326’s Credit Losses

III. ASU 2016-13 Amendments

IV. ASC 326-20 Expected Credit Loss Model

A. Overall Scope of ASC 326-20

B. General Amendments to ASC 326-20 Made by ASU 2016-13

C. New Expected Credit Loss Model

D. Subsequent Measurement -Reporting Changes in Expected Credit Losses

E. Financial Statement Presentation of Allowance Balance and Activity

F. Loans and Trade Receivables- Common Control

G. Examples from ASU 2016-13

H. Financial Assets Secured by Collateral

I. Purchased Financial Assets With Credit Deterioration   NEW per ASC 326-10

V. Held-to-Maturity Debt Securities- ASC 326-20

A. Basic GAAP Rules- Debt Securities-ASC 320

B. Held-to-Maturity (HTM) Debt Securities and ASC 326-20

C. HTM Debt Securities and the Expected Credit Loss Model  in ASC 326-20

D. Investments in Certificates of Deposit (CDs) and Money Market Accounts

VI. Available-For-Sale Debt Securities- Impairment- ASC 326-30

VII. Implementation of ASU 2016-13

Sample Disclosures- ASU 2016-13

Chapter 2 - Accounting and Financial Disclosures for the Employee Retention Credit (ERC) and the Pass-Through Entity (PTE) Tax - 2024

I.  Introduction

II. Accounting -Financial Disclosures for the Employee Retention Credit (ERC)

A. Overview

B. GAAP Accounting for the ERC

C. OPTION 1: ASC 958-605- Not-for-Profit Entities: Revenue Recognition

D. OPTION 2: IAS 20, Accounting for Government Grants and Disclosure of Government Assistance

E. Disclosures for the ERC

F. Tax-Basis Financial Statements and the ERC

G. Filing for the ERC in 2023 or 2024 Prior to April 2025 ERC Deadline

H. Accounting for Dubious ERC Claims- IRS Withdrawal Program- 2024

III. Accounting - Financial Disclosures for the Pass-Through Entity (PTE) Tax

A. Overview

B. Use of the Pass-Through Entity (PTE) Tax Election

C. GAAP Accounting and Disclosures- PTE Tax

D. GAAP Accounting Rules for the PTE Tax

E. GAAP Disclosures for the PTE Tax

F. PTE Tax and Tax-Basis Financial Statements

Chapter 3 - The New Lease Standard: ASU 2016-02 and Other Amendments: Post-Implementation Issues - 2024

I.  Background

II. Basic Concepts of ASU 2016-02

III. Scope and Scope Exceptions

IV. Identifying a Lease

V. Lessee Rules

A. Lease Classification - Lessee

B. Initial Measurement of Lease- Lessee

C. Lease Modifications - Lessee

D. Lease Payments - Lessee

E. Lease Term and Purchase Options- Lessee

F. Subsequent Reassessment of Lease Elements- Lessee

G. Short-Term Leases - Lessee

H. Subsequent Measurement and Accounting for Leases- Lessee

I. Other Recognition and Measurement Issues- Lessees

J. Financial Statement Presentation Matters- Lessee

K. Disclosures by Lessees

VI. Lessor Rules

A. Lease Classification

B. Accounting for Sales-Type Lease- Lessor

C. Accounting for a Direct Financing Lease

D. Accounting for Operating Leases- Lessor

E. Disclosure- Lessor Leases

VII. Transition and Effective Date Information

A. General- Existing Leases

B. Transition

VIII. Impact of Changes to Lease Accounting

IX. Impact of Lease Changes on Nonpublic Entities

X. Avoiding the New Lease Standard

Chapter 4 - Selected Newly Issued Accounting Standards Updates (ASUs)

I.  Accounting Standards Updates (ASUs)

Selected Accounting Standards Updates (ASUs)

ASU 2023-05: Business Combinations— Joint Venture Formations (Subtopic 805-60)- Recognition and Initial Measurement

ASU 2023-08: Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets

ASU 2023-09: Income Taxes (Topic 740)-Improvements to Income Tax Disclosures

Chapter 5 - Accounting and Financial Reporting in a Post-Covid Economy - 2024

I.  Introduction

II. Accounting and Auditing Issues Related to the Post-COVID Economy

III. Disclosure of Risks and Uncertainties- Supply-Chain Concentrations

IV. Asset Impairments- Long-Lived Assets- 2023 and 2024 Issues

A. Long-Lived Tangible Assets- Real Estate and Equipment Impairment

B. Goodwill Impairment Issues

C. Ordering of Impairment Tests

V. Write-downs, Writeups and Disclosures of Stock Market and Bond Investments

A. Debt Securities- Unrealized Gains and Losses in 2023 and 2024

B. Equity Securities- Unrealized Gains in 2023 and 2024

C. Disclosure of Stock and Debt Investment Losses After Year End

VI. Inventory Costs and Valuation Issues

A. Lower of Cost and Net Realizable Value- FIFO and Average Cost Inventories

B. Impact of Capacity on GAAP Inventory Valuations

VII. Business Interruption Insurance Recovery and Presentation- Post-COVID Damage

VIII. Going Concern in  the 2023-2024 Inflationary Economy

A. GAAP Requirements- Going Concern

B. Auditing and Review Engagement Requirements- Going Concern

IX. Joint and Several Risk- Multi-Employer Plan Obligations

X. Revenue and Contracts

A. Variable Consideration Revenue

B. Losses on Onerous Contracts- Impact of Inflation on Unrealized Losses

XI. Loan Modifications and Covenants in Light of Higher Interest Rates

XII. Remote Engagements

A. Remote Audits in 2023 and 2024

B. Accounts Receivable Confirmations

C.Physical Inventory Observations

D. Employee Fraud and the Current Internal Control Environment

XIII. LIFO in a New High-Inflation Environment

Chapter 6 - Current Developments: Accounting and Financial Reporting - 2024

I.  Latest Developments on the Accounting Front

A. Significant GAAP Changes in 2024 and Beyond

B. FASB Disaggregation-Income Statement Expenses Project- Pending as of 2024

C. The Gradual Demise of Company Pension Plans

D. Cash Concentration over FDIC-Insured Balance

E. ESG Disclosures- A Hot and Controversial Issue

F. Post-Implementation Update on Revenue Recognition Standard

G. The VIE Rules- Using ASU 2018-17 with Common Control Arrangements

H. Risk of Unrecorded Sales Tax Liabilities- Wayfair Decision

II. GAAP Income Tax Issues- 2023 and 2024

A. NOL Carryforwards and Deferred Tax Assets

B. Higher Interest Rates and the Limitation on Interest Deduction-2023 and 2024

C. Higher Tax Rates in 2023 to 2027- Reversal of TCJA Tax Benefits

Glossary