Defining Issues | December 2019

FASB’s proposals would affect several Topics to clarify, correct errors in and make improvements to the Codification.

The proposals 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.


Proposed ASU

  • All entities

Relevant dates

  • November 26, 2019 – FASB issued proposed ASU
  • December 26, 2019 – Comments due on proposed ASU

Key impacts

The FASB is proposing to clarify, correct errors in, and make improvement to several Codification Topics, including proposals to:

  • Remove references to various Concepts Statements within the Codification.
  • Improve consistency of the Codification by including all disclosure guidance in the appropriate Disclosure Sections.
  • Align the contractual term to measure expected credit losses for a net investment in a lease under the new credit losses standard (ASC 326) to be consistent with the lease term determined under the new leases standard (ASC 842).
  • Clarify the applicability of the portfolio exception to nonfinancial items accounted for as derivatives.
  • Clarify that nonpublic business entities are subject to the fair value option disclosures.
  • Clarify that when an entity regains control of financial assets sold, an allowance for credit losses should be recorded in accordance with Topic 326. 

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