FASB proposes technical corrections and changes
FASB proposed technical corrections and minor changes to its Accounting Standards Codification on Thursday that are designed to respond to suggestions from stakeholders and make incremental improvements to GAAP.
The proposal includes simplifications and minor changes to guidance on insurance and troubled debt restructuring that would result in numerous changes to the ASC. FASB does not expect the changes to affect current accounting practice or result in significant costs.
Under the proposal:
- Amended, selected insurance guidance would use the term “participating insurance” consistently in places where the current relevant guidance interchangeably uses terms “participating contract,” “participating insurance contract,” and “participating insurance.”
- The term “reinsurance receivable” would be used consistently in places where the current guidance interchangeably uses “reinsurance receivable” and “reinsurance recoverable” in Topic 825, Financial Instruments, and Topic 944, Financial Services—Insurance.
- The term “debt” would be removed from the Master Glossary. The current definition was codified from guidance that was specific to troubled debt restructuring. The use of the current definition would be restricted to use in Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors, and Subtopic 470-60, Debt—Troubled Debt Restructurings by Debtors.
- An amendment to Subtopic 360-20, Property, Plant, and Equipment—Real Estate Sales, would correct the guidance to include the final decision of the Emerging Issue Task Force that loans insured under the Federal Housing Administration and the Veterans Administration do not have to be fully insured by those programs to recognize profit using the full accrual method.
- An amendment to Topic 820, Fair Value Measurement, would clarify the difference between an “approach” and a “technique” related to that topic. The amendment also would require an entity to disclose when there has been a change in a valuation “approach” and/or a valuation “technique.” Read more on the Journal of Accountancy.