Defining Issues | July 2018

FASB issues codification improvements

KPMG reports on the FASB’s latest Codification improvements. The amendments clarify, correct errors in, and make improvements to several Topics in the Codification.Applicability

ASU 2018-09

  • All entities

Relevant dates

  • Most of the amendments are effective iimmediately.
  • Some of the amendments are effective for annual periods in fiscal years beginning after December 15, 2018 and December 15, 2019, for public business entities and other entities, respectively.
  • Other amendments, which affect recently issued ASUs that are not effective, are effective with the original ASU.

Key impacts

The ASU clarifies, corrects errors in, and makes improvements to several Codification Topics, including to:

  • Clarify when excess tax benefits should be recognized for share-based compensation awards.
  • Remove inconsistent guidance in income tax accounting for business combinations.
  • Clarify the circumstances when derivatives may be offset.
  • Clarify the measurement of liability or equity-classified financial instruments when an identical asset is held as an asset.
  • Allow portfolios of financial instruments and nonfinancial instruments accounted for as derivatives to use the portfolio exception to valuation.

The changes are part of an ongoing FASB project to make non-substantive technical corrections, clarifications, and improvements that are not expected to have a significant effect on accounting practice or create a significant administrative cost to most entities. 



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