03/09/2023 11:15 AM EST
Checklist Name :
Page 1 / 1816
2022 report
Client Reporting Entity : BioStem Technologies, Inc.
CIK :
1658678
Checklist Type :
GAAP Checklist
Fiscal Year/Quarter :
2022/Year End
Period End Date :
12/31/2022
Prepared By :
Reviewed By :
CHECKLIST DISCLAIMER
CHECKLIST DISCLAIMER
The Deloitte & Touche LLP (“Deloitte & Touche”) Checklist Tool may be of assistance in an evaluation of whether an entity has
considered the applicable guidance set forth in the FASB Accounting Standards Codification, certain SEC regulations, or Staff
Accounting Bulletins. Use of the Checklist is subject to the following terms:
Users that are Public Audit Clients
Audit clients that are subject to SEC rules & regulations should obtain audit committee (or equivalent) pre-approval for Deloitte
Accounting Research Tool (DART) subscriptions. Similarly, audit clients that are subject to other regulators, local laws, established
{bylaws} &/or protocols that require audit committee (or equivalent) pre-approval for subscriptions should obtain such preapprovals for DART. If your company is audited by a member of the Deloitte network, you may subscribe to DART if you have
already obtained such applicable approvals. If you have any questions about this topic, please contact your Deloitte engagement
team or email dart@deloitte.com.
All Users
The Checklist is provided solely for information purposes for the User’s internal use and should not be provided to any other
person or entity.
Much of the material included in the Checklist refers directly to FASB Accounting Standards Codification, certain SEC regulations,
or Staff Accounting Bulletins, and Deloitte & Touche is not the author thereof. Deloitte & Touche is not responsible for the
reliability of any material pertaining to such information. Although changes to the FASB Accounting Standards Codification, certain
SEC regulations, or Staff Accounting Bulletins may have occurred subsequent to the date the Checklist was prepared, Deloitte &
Touche does not have any obligation to update the Checklist. There are no claims, promises, or guarantees about the accuracy,
completeness, adequacy, or compliance of the Checklist with authoritative guidance generally accepted in the United States of
America. The User must assess the suitability of the Checklist for its own purposes.
The Checklists provided in the tool are not a substitute for the User’s understanding of the FASB Accounting Standards
Codification, certain SEC regulations, Staff Accounting Bulletins and the exercise of judgement. The User is presumed to have a
thorough understanding of the rules, regulations, and interpretations of the FASB, SEC and their staff and should refer to those
rules, regulations, and interpretations, as necessary, in considering particular items in the checklist. The checklists within the tool
have been written in general terms and therefore cannot be expected to cover specific situations. The User acknowledges and
agrees that the content and information contained in the Checklists within the tool should not be, and is not, a substitute for the
professional judgement of a Certified Public Accountant (“CPA”), nor should it be used as a basis for making any decision, taking
any action or refraining from taking any action that may affect the User. Before making any decision, taking any action or
refraining from taking any action that may affect the User, a CPA or other qualified professional advisor should be consulted.
Neither the provision of the Checklist, nor the User’s use of the Checklist, constitutes an audit, review or any other attestation
services by Deloitte & Touche. Deloitte & Touche is not offering to perform or performing any professional services or rendering
any advice by reason of the Checklist. In particular, the use of the Checklist does not obligate Deloitte & Touche to issue an
attestation report or form or provide an opinion, report or any other form of assurance on any financial statements of the User or
any other entity. In no event shall the User state or imply that Deloitte & Touche has endorsed any accounting policies or practices.
The Checklist is not the system of record for Users; upon completion Users are responsible for retaining a copy of the final
checklist for the User’s records. Deloitte & Touche accepts no duty of care to, and shall not be responsible for any loss sustained
by, any person who uses, takes any action or refrains from taking any action based on the use of Checklist, which shall be at the
User’s sole risk.
03/09/2023 11:15 AM EST
Topi c > Subtopi c > Secti on > Subsecti on
Page 2 / 1816
YES
NO
N/A
Comments
Presentation > 205 Presentation of Financial Statements > 10 Overall > 45 Other Presentation > General
Has the entity included the appropriate comparative financial
statements? [ASC 205-10-45-1 through 45-4]
FASB Codification:
>
Comparative Financial Statements
45-1
{The presentation of comparative financial statements in annual and other reports enhances the usefulness of such reports and
brings out more clearly the nature and trends of current changes affecting the entity. Such presentation emphasizes the fact that
statements for a series of periods are far more significant than those for a single period and that the accounts for one period are but an
installment of what is essentially a continuous history. [ARB 43, paragraph Ch. 2A Par. 1] }
45-1A
{A full set of financial statements for a period shall show all of the following: [FAS 130, paragraph 9] }
a.
{Financial position at the end of the period [FAS 130, paragraph 9] }
b.
{Earnings (net income) for the period, [FAS 130, paragraph 9] }{(which may be presented as a separate statement or within a
continuous statement of comprehensive income [see paragraph 220-10-45-1A]) [ASU 2011-05, paragraph 12] }
c.
{Comprehensive income (total nonowner changes in equity) for the period [FAS 130, paragraph 9] }{in one statement or two
separate but consecutive statements (if the reporting entity is required to report comprehensive income, see paragraph 220-1015-3) [ASU 2011-05, paragraph 12] }
d.
{Cash flows during the period [FAS 130, paragraph 9] }
e.
{Investments by and distributions to owners during the period. [FAS 130, paragraph 9] }
45-2
{In any one year it is ordinarily desirable that the statement of financial position, the income statement, and the statement of
changes in equity be presented for one or more preceding years, as well as for the current year. [ARB 43, paragraph Ch. 2A Par. 2] }
45-3
{Prior-year figures shown for comparative purposes shall in fact be comparable with those shown for the most recent period.
Any exceptions to comparability shall be clearly brought out as described in Topic 250. [ARB 43, paragraph Ch. 2A Par. 3] }
45-4
{Notes to financial statements, explanations, and accountants' reports containing qualifications that appeared on the statements
for the preceding years shall be repeated, or at least referred to, in the comparative statements to the extent that they continue to be of
significance. [ARB 43, paragraph Ch. 2A Par. 2] }
Pending Content:
Transition Date: (P) December 16, 2020; (N) December 16, 2021 Transition Guidance 105-10-65-6
105-10-65-6{Notes to financial statements, explanations, and accountants' reports containing qualifications that appeared on the
statements for the preceding years shall be repeated, or at least referred to, in the comparative statements to the extent that they
continue to be of significance. [ARB 43, paragraph Ch. 2A Par. 2] }{(See paragraph 205-10-50-2.) [ASU 2020-10, paragraph 4] }
03/09/2023 11:15 AM EST
Page 3 / 1816
Consideration Points:
The pending content resulting from the issuance of ASU 2020-10 amended paragraph 205-10-45-4 and added paragraph
205-10-50-2. For 1) public business entities, 2) not-for-profit entities that have issued, or are a conduit bond obligor for,
securities that are traded, listed, or quoted on an exchange or an over-the-counter market, and 3) an employee benefit plan
that files or furnishes financial statements with or to the SEC, the amendments in ASU 2020-10 are effective for annual
periods after December 15, 2020. For all other entities, the amendments in ASU 2020-10 are effective for annual periods
beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022. Early
application of the amendments in this Update is permitted for: 1) public business entities, 2) not-for-profit entities that
have issued, or are a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-thecounter market, and 3) an employee benefit plan that files or furnishes financial statements with or to the SEC for any
annual or interim period for which financial statements have not been issued. For all other entities, early application of the
amendments is permitted for any annual or interim period for which financial statements are available to be issued. The
amendments in this Update should be applied retrospectively. An entity should apply the amendments at the beginning of
the period that includes the adoption date.
Presentation > 205 Presentation of Financial Statements > 10 Overall > 50 Disclosure > General
Is information adequately disclosed to explain changes that affect
the period-to-period comparability of financial statements? [ASC
205-10-50-1] To the extent they continue to be of significance, has
the entity appropriately repeated or at least referred to, notes to
financial statements, explanations, and accountants’ reports
containing qualifications that appeared on the statements for the
preceding years? [ASC 205-10-50-2]
FASB Codification:
>
Changes Affecting Comparability
50-1
{If, because of reclassifications or for other reasons, changes have occurred in the manner of or basis for presenting
corresponding items for two or more periods, information shall be furnished that will explain the change. This procedure is in
conformity with the well recognized principle that any change in practice that affects comparability of financial statements shall be
disclosed. [ARB 43, paragraph Ch. 2A Par. 2] }
50-2
Pending Content:
Transition Date: (P) December 16, 2020; (N) December 16, 2021 Transition Guidance 105-10-65-6
105-10-65-6{Notes to financial statements, explanations, and accountants' reports containing qualifications that appeared on the
statements for the preceding years shall be repeated, or at least referred to, in the comparative statements to the extent that they
continue to be of significance. [ARB 43, paragraph Ch. 2A Par. 2] }{(See paragraph 205-10-45-4.) [ASU 2020-10, paragraph 4] }
Consideration Points:
The pending content resulting from the issuance of ASU 2020-10 amended paragraph 205-10-45-4 and added paragraph
205-10-50-2. For 1) public business entities, 2) not-for-profit entities that have issued, or are a conduit bond obligor for,
securities that are traded, listed, or quoted on an exchange or an over-the-counter market, and 3) an employee benefit plan
that files or furnishes financial statements with or to the SEC, the amendments in ASU 2020-10 are effective for annual
periods after December 15, 2020. For all other entities, the amendments in ASU 2020-10 are effective for annual periods
beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022. Early
application of the amendments in this Update is permitted for: 1) public business entities, 2) not-for-profit entities that
have issued, or are a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-thecounter market, and 3) an employee benefit plan that files or furnishes financial statements with or to the SEC for any
annual or interim period for which financial statements have not been issued. For all other entities, early application of the
amendments is permitted for any annual or interim period for which financial statements are available to be issued. The
amendments in this Update should be applied retrospectively. An entity should apply the amendments at the beginning of
the period that includes the adoption date.
Presentation > 205 Presentation of Financial Statements > 20 Discontinued Operations > 45 Other Presentation >
General
03/09/2023 11:15 AM EST
Page 4 / 1816
Is the entity in compliance with the guidance in ASC 205-20-45-1?
FASB Codification:
45-1
[Paragraph superseded by Accounting Standards Update No. 2014-08 superseded by Accounting Standards Update]
Does the entity have a discontinued operation that meets either one
of the following characteristics? (1) A component (or group of
components) of an entity that has been disposed of or meets the
criteria to be classified as held for sale and represents a strategic
shift that has or will have a major effect on an entity’s operations
and financial results; or (2) A business (or non-profit activity) that
meets all of the criteria to be classified as held for sale on the date
of acquisition. Entities should consider the guidance in paragraphs
205-20-45-1A through 1G when making this determination.
Certain requirements in this guidance may require periodic
reconsideration (e.g., guidance in paragraph 205-20-45-1E)..
FASB Codification:
>
What Is a Discontinued Operation?
45-1A
{A discontinued operation may include a component of an entity or a group of components of an entity, or a business or
nonprofit activity. [ASU 2014–08, paragraph 9] }
> >
A Discontinued Operation Comprising a Component or a Group of Components of an Entity
45-1B
{A disposal of a component of an entity or a group of components of an entity shall be reported in discontinued operations if
the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when any of
the following occurs: [ASU 2014–08, paragraph 9] }
a.
{The component of an entity or group of components of an entity meets the criteria in paragraph 205-20-45-1E to be classified
as held for sale. [ASU 2014-08, paragraph 9] }
b.
{The component of an entity or group of components of an entity is disposed of by sale. [ASU 2014-08, paragraph 9] }
c.
{The component of an entity or group of components of an entity is disposed of other than by sale in accordance with paragraph
360-10-45-15 (for example, by abandonment or in a distribution to owners in a spinoff). [ASU 2014-08, paragraph 9] }
45-1C
{Examples of a strategic shift that has (or will have) a major effect on an entity’s operations and financial results could include
a disposal of a major geographical area, a major line of business, a major equity method investment, or other major parts of an entity
(see paragraphs 205-20-55-83 through 55-101 for Examples). [ASU 2014–08, paragraph 9] }
> >
45-1D
A Discontinued Operation Comprising a Business or Nonprofit Activity
{A business or nonprofit activity that, on acquisition, meets the criteria in paragraph 205-20-45-1E to be classified as held for
sale is a discontinued operation. [ASU 2014–08, paragraph 9] }{If the one-year requirement in paragraph 205-20-45-1E(d) is met
(except as permitted by paragraph 205-20-45-1G), a business or nonprofit activity shall be classified as held for sale as a discontinued
operation at the acquisition date if the other criteria in paragraph 205-20-45-1E are probable of being met within a short period
following the acquisition (usually within three months). [ASU 2015-10, paragraph 7] }
> >
45-1E
Initial Criteria for Classification of Held for Sale
{A component of an entity or a group of components of an entity, or a business or nonprofit activity (the entity to be sold), shall
be classified as held for sale in the period in which all of the following criteria are met: [ASU 2014–08, paragraph 9] }
03/09/2023 11:15 AM EST
a.
Page 5 / 1816
{Management, having the authority to approve the action, commits to a plan to sell the entity to be sold. [ASU 2014-08,
paragraph 9] }
b.
{The entity to be sold is available for immediate sale in its present condition subject only to terms that are usual and customary
for sales of such entities to be sold. (See Examples 5 through 7 [paragraphs 360-10-55-37 through 55-42], which illustrate
when that criterion would be met.) [ASU 2014-08, paragraph 9] }
c.
{An active program to locate a buyer or buyers and other actions required to complete the plan to sell the entity to be sold have
been initiated. [ASU 2014-08, paragraph 9] }
d.
{The sale of the entity to be sold is probable, and transfer of the entity to be sold is expected to qualify for recognition as a
completed sale, within one year, except as permitted by paragraph 205-20-45-1G. (See Example 8 [paragraph 360-10-55-43],
which illustrates when that criterion would be met.) [ASU 2014-08, paragraph 9] }
e.
{The entity to be sold is being actively marketed for sale at a price that is reasonable in relation to its current fair value. The
price at which an entity to be sold is being marketed is indicative of whether the entity currently has the intent and ability to sell
the entity to be sold. A market price that is reasonable in relation to fair value indicates that the entity to be sold is available for
immediate sale, whereas a market price in excess of fair value indicates that the entity to be sold is not available for immediate
sale. [ASU 2014-08, paragraph 9] }
f.
{Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan
will be withdrawn. [ASU 2014-08, paragraph 9] }
45-1F
{If at any time the criteria in paragraph 205-20-45-1E are no longer met (except as permitted by paragraph 205-20-45-1G),
an entity to be sold that is classified as held for sale shall be reclassified as held and used and measured in accordance with paragraph
360-10-35-44. [ASU 2014–08, paragraph 9] }
45-1G
{Events or circumstances beyond an entity’s control may extend the period required to complete the sale of an entity to be sold
beyond one year. An exception to the one-year requirement in paragraph 205-20-45-1E(d) shall apply in the following situations in
which those events or circumstances arise: [ASU 2014–08, paragraph 9] }
a.
{If at the date that an entity commits to a plan to sell an entity to be sold, the entity reasonably expects that others (not a buyer)
will impose conditions on the transfer of the entity to be sold that will extend the period required to complete the sale and both of
the following conditions are met: [ASU 2014-08, paragraph 9] }
1.
{Actions necessary to respond to those conditions cannot be initiated until after a firm purchase commitment is obtained.
[ASU 2014-08, paragraph 9] }
2.
{A firm purchase commitment is probable within one year. (See Example 9 [paragraph 360-10-55-44], which illustrates
that situation.) [ASU 2014-08, paragraph 9] }
b.
{If an entity obtains a firm purchase commitment and, as a result, a buyer or others unexpectedly impose conditions on the
transfer of an entity to be sold previously classified as held for sale that will extend the period required to complete the sale and
both of the following conditions are met: [ASU 2014-08, paragraph 9] }
1.
{Actions necessary to respond to the conditions have been or will be timely initiated. [ASU 2014-08, paragraph 9] }
2.
{A favorable resolution of the delaying factors is expected. (See Example 10 [paragraph 360-10-55-46], which illustrates
that situation.) [ASU 2014-08, paragraph 9] }
c.
{If during the initial one-year period, circumstances arise that previously were considered unlikely and, as a result, an entity to
03/09/2023 11:15 AM EST
Page 6 / 1816
be sold previously classified as held for sale is not sold by the end of that period and all of the following conditions are met:
[ASU 2014-08, paragraph 9] }
1.
{During the initial one-year period, the entity initiated actions necessary to respond to the change in circumstances. [ASU
2014-08, paragraph 9] }
2.
{The entity to be sold is being actively marketed at a price that is reasonable given the change in circumstances. [ASU
2014-08, paragraph 9] }
3.
{The criteria in paragraph 205-20-45-1E are met. (See Example 11 [paragraph 360-10-55-48], which illustrates that
situation.) [ASU 2014-08, paragraph 9] }
45-2
[Paragraph superseded by Accounting Standards Update No. 2014-08 superseded by Accounting Standards Update]
Consideration Points:
Section 205-20-45 has been updated as the result of the issuance of ASU 2014-08. The pending content resulting from the
issuance of this ASU has added paragraphs 205-20-45-1A through 1G; (2) superseded paragraph 205-20-45-2, and (3)
amended or added paragraphs 205-20-45-3 through 45-9. Public business entities are required to apply the new ASU
prospectively to all disposals (or classifications as held for sale) that occur in annual periods (and interim periods therein)
beginning on or after December 15, 2014. For all other entities, the new ASU is effective prospectively for annual periods
beginning on or after December 15, 2014, and interim periods thereafter. Early adoption is permitted for any annual or
interim period for which an entity’s financial statements have not yet been previously issued (public business entities) or
made available for issuance (all other entities). Additionally, Section 225-20-45 has been updated as the result of the
issuance of ASU 2015-01. The pending content resulting from the issuance of this ASU amended paragraph 225-20-45-3A.
The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after
December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the
amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided
that the guidance is applied from the beginning of the fiscal year of adoption.
Is the entity in compliance with the presentation guidance included
within paragraphs ASC 205-20-45-3 through 45-3C? NOTE:
Entities should only consider the guidance in ASC 205-20-45-3C
upon the adoption of ASU 2014-08.
Consideration Points:
Section 205-20-45 has been updated as the result of the issuance of ASU 2014-08. The pending content resulting from the
issuance of this ASU has amended paragraphs 205-20-45-3 through 45-3B and added paragraph 205-20-45-3C. Public
business entities are required to apply the new ASU prospectively to all disposals (or classifications as held for sale) that
occur in annual periods (and interim periods therein) beginning on or after December 15, 2014. For all other entities, the
new ASU is effective prospectively for annual periods beginning on or after December 15, 2014, and interim periods
thereafter. Early adoption is permitted for any annual or interim period for which an entity’s financial statements have not
yet been previously issued (public business entities) or made available for issuance (all other entities).
Is the entity in compliance with the presentation guidance included
within paragraphs ASC 205-20-45-4 through 45-5?
Consideration Points:
Section 205-20-45 has been updated as the result of the issuance of ASU 2014-08. The pending content resulting from the
issuance of this ASU has amended paragraphs 205-20-45-4 and 45-5. Public business entities are required to apply the new
ASU prospectively to all disposals (or classifications as held for sale) that occur in annual periods (and interim periods
therein) beginning on or after December 15, 2014. For all other entities, the new ASU is effective prospectively for annual
periods beginning on or after December 15, 2014, and interim periods thereafter. Early adoption is permitted for any annual
or interim period for which an entity’s financial statements have not yet been previously issued (public business entities)
or made available for issuance (all other entities).
Is the entity in compliance with the guidance in ASC 205-20-45:
Statement in Which Net Income Is Reported?
03/09/2023 11:15 AM EST
Page 7 / 1816
FASB Codification:
>
Statement in Which Net Income Is Reported
45-3
{The statement in which net income of a business entity is reported or the statement of activities of a not-for-profit entity (NFP)
for current and prior periods shall report the results of operations of the [FAS 144, paragraph 43] }{discontinued operation, including
any gain or loss recognized in accordance with paragraph 205-20-45-3C, in the period in which a discontinued operation either has
been disposed of or is classified as held for sale. [ASU 2014–08, paragraph 9] }
45-3A
{The results of all discontinued operations, less applicable income taxes (benefit), shall be reported as a separate component of
income. For example, the results of all discontinued operations may be reported in the statement where net income of a business entity
is reported as follows. [FAS 144, paragraph 43] }
[FAS 144, paragraph 43]
45-3B
{A gain or loss recognized on the disposal (or loss recognized on classification as held for sale) shall be presented separately
on the face of the statement where net income is reported or disclosed in the notes to financial statements (see paragraph 205-20-501(b)). [FAS 144, paragraph 43] }
45-3C
{A gain or loss recognized on the disposal (or loss recognized on classification as held for sale) of a discontinued operation
shall be calculated in accordance with the guidance in other Subtopics. For example, if a discontinued operation is within the scope of
Topic 360 on property, plant, and equipment, an entity shall follow the guidance in paragraphs 360-10-35-37 through 35-45 and
360-10-40-5 for calculating the gain or loss recognized on the disposal (or loss on classification as held for sale) of the discontinued
operation. [ASU 2014–08, paragraph 9] }
45-4
{Adjustments to amounts previously reported in discontinued operations in a prior period shall be presented separately in the
current period in [FAS 144, paragraph 44] }{the discontinued operations section of the statement where net income is reported. [ASU
2014–08, paragraph 10] }
45-5
a.
{Examples of circumstances in which those types of adjustments may arise include the following: [FAS 144, paragraph 44] }
{The resolution of contingencies that arise pursuant to the terms of the disposal transaction, such as the resolution of purchase
price adjustments and indemnification issues with the purchaser [FAS 144, paragraph 44] }
b.
{The resolution of contingencies that arise from and that are directly related to the operations of the discontinued operation
before its disposal, such as environmental and product warranty obligations retained by the seller [FAS 144, paragraph 44] }
c.
{The settlement of employee benefit plan obligations (pension, postemployment benefits other than pensions, and other
postemployment benefits), provided that the settlement is directly related to the disposal transaction. [FAS 144, paragraph 44] }
03/09/2023 11:15 AM EST
Page 8 / 1816
{A settlement is directly related to the disposal transaction if there is a demonstrated direct cause-and-effect relationship and the
settlement occurs no later than one year following the disposal transaction, unless it is delayed by events or circumstances
beyond an entity’s control (see paragraph 205-20-45-1G). [FAS 144, paragraph 44] }
> >
Allocation of Interest to Discontinued Operations
45-6
{Interest on debt that is to be assumed by the buyer and interest on debt that is required to be repaid as a result of a disposal
transaction shall be allocated to discontinued operations. [EITF 87-24, paragraph DISCUSSION] }
45-7
{The allocation to discontinued operations of other consolidated interest that is not directly attributable to or related to other
operations of the entity is permitted but not required. Other consolidated interest that cannot be attributed to other operations of the
entity is allocated based on the ratio of net assets to be sold or discontinued less debt that is required to be paid as a result of the
disposal transaction to the sum of total net assets of the consolidated entity plus consolidated debt other than the following: [EITF 8724, paragraph DISCUSSION] }
a.
{Debt of the discontinued operation that will be assumed by the buyer [EITF 87-24, paragraph DISCUSSION] }
b.
{Debt that is required to be paid as a result of the disposal transaction [EITF 87-24, paragraph DISCUSSION] }
c.
{Debt that can be directly attributed to other operations of the entity. [EITF 87-24, paragraph DISCUSSION] }
45-8
{This allocation assumes a uniform ratio of consolidated debt to equity for all operations (unless the assets to be sold are
atypical—for example, a finance company—in which case a normal debt-equity ratio for that type of business may be used). [EITF 8724, paragraph DISCUSSION] }{If allocation based on net assets would not provide meaningful results, then the entity shall allocate
interest to the discontinued operations based on debt that can be identified as specifically attributed to those operations. [EITF 87-24,
paragraph DISCUSSION] }{This guidance applies to income statement presentation of both continuing and discontinued operations
(including the presentation of the gain or loss on disposal of a component of an entity). [EITF 87-24, paragraph DISCUSSION] }{A
decision as to interest allocation shall be applied consistently to all discontinued operations. [EITF 87-24, paragraph DISCUSSION] }
> >
Allocation of Overhead to Discontinued Operations
45-9
{General corporate overhead shall not be allocated to discontinued operations. [EITF 87-24, paragraph DISCUSSION] }
Is the entity in compliance with the guidance in ASC 205-20-45:
Allocation of Interest to Discontinued Operations?
03/09/2023 11:15 AM EST
Page 9 / 1816
FASB Codification:
>
Allocation of Interest to Discontinued Operations
45-6
{Interest on debt that is to be assumed by the buyer and interest on debt that is required to be repaid as a result of a disposal
transaction shall be allocated to discontinued operations. [EITF 87-24, paragraph DISCUSSION] }
45-7
{The allocation to discontinued operations of other consolidated interest that is not directly attributable to or related to other
operations of the entity is permitted but not required. Other consolidated interest that cannot be attributed to other operations of the
entity is allocated based on the ratio of net assets to be sold or discontinued less debt that is required to be paid as a result of the
disposal transaction to the sum of total net assets of the consolidated entity plus consolidated debt other than the following: [EITF 8724, paragraph DISCUSSION] }
a.
{Debt of the discontinued operation that will be assumed by the buyer [EITF 87-24, paragraph DISCUSSION] }
b.
{Debt that is required to be paid as a result of the disposal transaction [EITF 87-24, paragraph DISCUSSION] }
c.
{Debt that can be directly attributed to other operations of the entity. [EITF 87-24, paragraph DISCUSSION] }
45-8
{This allocation assumes a uniform ratio of consolidated debt to equity for all operations (unless the assets to be sold are
atypical—for example, a finance company—in which case a normal debt-equity ratio for that type of business may be used). [EITF 8724, paragraph DISCUSSION] }{If allocation based on net assets would not provide meaningful results, then the entity shall allocate
interest to the discontinued operations based on debt that can be identified as specifically attributed to those operations. [EITF 87-24,
paragraph DISCUSSION] }{This guidance applies to income statement presentation of both continuing and discontinued operations
(including the presentation of the gain or loss on disposal of a component of an entity). [EITF 87-24, paragraph DISCUSSION] }{A
decision as to interest allocation shall be applied consistently to all discontinued operations. [EITF 87-24, paragraph DISCUSSION] }
Is the entity in compliance with the guidance in ASC 205-20-45:
Allocation of Overhead to Discontinued Operations?
FASB Codification:
>
Allocation of Overhead to Discontinued Operations
45-9
{General corporate overhead shall not be allocated to discontinued operations. [EITF 87-24, paragraph DISCUSSION] }
Presentation > 205 Presentation of Financial Statements > 20 Discontinued Operations > 50 Disclosure > General
Is the entity in compliance with the guidance in ASC 205-20-50:
Disclosures Required for All Types of Discontinued Operations?
03/09/2023 11:15 AM EST
Page 10 / 1816
FASB Codification:
>
Disclosures Required for All Types of Discontinued Operations
50-1
{The following shall be disclosed in the notes to financial statements that cover the period in which a discontinued operation
either has been disposed of or is classified as held for sale under the requirements of paragraph 205-20-45-1E: [FAS 144,
paragraph 47] }
a.
{A description of both of the following: [FAS 144, paragraph 47] }
b.
1.
{The facts and circumstances leading to the disposal or expected disposal [FAS 144, paragraph 47] }
2.
{The expected manner and timing of that disposal. [FAS 144, paragraph 47] }
{If not separately presented on the face of the statement where net income is reported (or statement of activities for a not-forprofit entity) as part of discontinued operations (see paragraph 205-20-45-3B), the gain or loss recognized in accordance with
paragraph 205-20-45-3C. [ASU 2014–08, paragraph 11] }
c.
[Subparagraph superseded by Accounting Standards Update No. 2014-08 superseded by Accounting Standards Update]
d.
{If applicable, the segment(s) in which the discontinued operation is reported under Topic 280 on segment reporting. [FAS 144,
paragraph 47] }
50-2
[Paragraph superseded by Accounting Standards Update No. 2014-08 superseded by Accounting Standards Update]
Consideration Points:
Section 205-20-50 has been updated as the result of the issuance of ASU 2014-08. The pending content resulting from the
issuance of this ASU amended paragraph 205-20-50-1 Public business entities are required to apply the new ASU
prospectively to all disposals (or classifications as held for sale) that occur in annual periods (and interim periods therein)
beginning on or after December 15, 2014. For all other entities, the new ASU is effective prospectively for annual periods
beginning on or after December 15, 2014, and interim periods thereafter. Early adoption is permitted for any annual or
interim period for which an entity’s financial statements have not yet been previously issued (public business entities) or
made available for issuance (all other entities).
Is the entity in compliance with the guidance in ASC 205-20-50:
Change to a Plan of Sale?
FASB Codification:
>
Change to a Plan of Sale
50-3
{An entity may change its plan of sale as addressed in paragraph 360-10-35-44 or paragraph 360-10-35-45. In the period in
which the decision is made to change the plan for selling the discontinued operation, an entity shall disclose in the notes to financial
statements a description of the facts and circumstances leading to the decision to change that plan and the change’s effect on the results
of operations for the period and any prior periods presented. [FAS 144, paragraph 48] }
> >
50-3A
Adjustments to Previously Reported Amounts
{The nature and amount of adjustments to amounts previously reported in discontinued operations that are directly related to
the disposal of a discontinued operation in a prior period shall be disclosed [FAS 144, paragraph 44] }{(see paragraph 205-20-45-5
for examples of circumstances in which those types of adjustments may arise). [ASU 2014–08, paragraph 11] }
50-4
[Paragraph superseded by Accounting Standards Update No. 2014-08 superseded by Accounting Standards Update]
03/09/2023 11:15 AM EST
Page 11 / 1816
Consideration Points:
Section 205-20-50 has been updated as the result of the issuance of ASU 2014-08. The pending content resulting from the
issuance of this ASU amended paragraph 205-20-50-3 and added paragraph 205-20-50-3A. Public business entities are
required to apply the new ASU prospectively to all disposals (or classifications as held for sale) that occur in annual periods
(and interim periods therein) beginning on or after December 15, 2014. For all other entities, the new ASU is effective
prospectively for annual periods beginning on or after December 15, 2014, and interim periods thereafter. Early adoption is
permitted for any annual or interim period for which an entity’s financial statements have not yet been previously issued
(public business entities) or made available for issuance (all other entities).
Has the entity provided the disclosures required by ASC 205-20-504A about its significant continuing involvement with a discontinued
operation after the disposal date? [ASC 205-20-50-4A]
FASB Codification:
50-4A
{An entity shall disclose information about its significant continuing involvement with a discontinued operation after the
disposal date. Examples of continuing involvement with a discontinued operation after the disposal date include a supply and
distribution agreement, a financial guarantee, an option to repurchase a discontinued operation, and an equity method investment in the
discontinued operation. The disclosures are required until the results of operations of the discontinued operation in which an entity
retains significant continuing involvement are no longer presented separately as discontinued operations in the statement where net
income is reported (or statement of activities for a not-for-profit entity). [ASU 2014–08, paragraph 11] }
Consideration Points:
Section 205-20-50 has been updated as the result of the issuance of ASU 2014-08. The pending content resulting from the
issuance of this ASU added paragraphs 205-20-50-4A and 4B. Public business entities are required to apply the new ASU
prospectively to all disposals (or classifications as held for sale) that occur in annual periods (and interim periods therein)
beginning on or after December 15, 2014. For all other entities, the new ASU is effective prospectively for annual periods
beginning on or after December 15, 2014, and interim periods thereafter. Early adoption is permitted for any annual or
interim period for which an entity’s financial statements have not yet been previously issued (public business entities) or
made available for issuance (all other entities).
Has the entity provided the disclosures required by ASC 205-20-504B about its significant continuing involvement with a discontinued
operation after the disposal date? [ASC 205-20-50-4B]
03/09/2023 11:15 AM EST
Page 12 / 1816
FASB Codification:
50-4B
{An entity shall disclose the following in the notes to financial statements for each discontinued operation in which the entity
retains significant continuing involvement after the disposal date: [ASU 2014–08, paragraph 11] }
a.
{A description of the nature of the activities that give rise to the continuing involvement. [ASU 2014-08, paragraph 11] }
b.
{The period of time during which the involvement is expected to continue. [ASU 2014-08, paragraph 11] }
c.
{For all periods presented, both of the following: [ASU 2014-08, paragraph 11] }
1.
{The amount of any cash inflows or outflows from or to the discontinued operation after the disposal transaction [ASU 201408, paragraph 11] }
2.
{Revenues or expenses presented, if any, in continuing operations after the disposal transaction that before the disposal
transaction were eliminated in consolidated financial statements as intra-entity transactions. [ASU 2014-08, paragraph 11]
}
d.
{For a discontinued operation in which an entity retains an equity method investment after the disposal (the investee),
information that enables users of financial statements to compare the financial performance of the entity from period to period
assuming that the entity held the same equity method investment in all periods presented in the statement where net income is
reported (or statement of activities for a not-for-profit entity). The disclosure shall include all of the following until the
discontinued operation is no longer reported separately in discontinued operations: [ASU 2014-08, paragraph 11] }
1.
{For each period presented in the statement where net income is reported (or statement of activities for a not-for-profit
entity) after the period in which the discontinued operation was disposed of, the pretax income of the investee in which the
entity retains an equity method investment [ASU 2014-08, paragraph 11] }
2.
{The entity’s ownership interest in the discontinued operation before the disposal transaction [ASU 2014-08, paragraph 11]
}
3.
{The entity’s ownership interest in the investee after the disposal transaction [ASU 2014-08, paragraph 11] }
4.
{The entity’s share of the income or loss of the investee in the period(s) after the disposal transaction and the line item in
the statement where net income is reported (or statement of activities for a not-for-profit entity) that includes the income or
loss. [ASU 2014-08, paragraph 11] }
Consideration Points:
Section 205-20-50 has been updated as the result of the issuance of ASU 2014-08. The pending content resulting from the
issuance of this ASU added paragraphs 205-20-50-4A and 4B. Public business entities are required to apply the new ASU
prospectively to all disposals (or classifications as held for sale) that occur in annual periods (and interim periods therein)
beginning on or after December 15, 2014. For all other entities, the new ASU is effective prospectively for annual periods
beginning on or after December 15, 2014, and interim periods thereafter. Early adoption is permitted for any annual or
interim period for which an entity’s financial statements have not yet been previously issued (public business entities) or
made available for issuance (all other entities).
Is the entity in compliance with the guidance in ASC 205-20-50:
Disclosures Required for a Discontinued Operation Comprising a
Component or Group of Components of an Entity?
FASB Codification:
03/09/2023 11:15 AM EST
>
Page 13 / 1816
Disclosures Required for a Discontinued Operation Comprising a Component or Group of Components of an Entity
50-5A
{Paragraphs 205-20-50-5B through 50-5D provide disclosures required for discontinued operations that meet the criteria in
paragraphs 205-20-45-1B through 45-1C except for a discontinued operation that was an equity method investment before the
disposal. For disclosures required for discontinued operations that were equity method investments before the disposal, see paragraph
205-20-50-7. [ASU 2014–08, paragraph 12] }
50-5B
{An entity shall disclose, to the extent not presented on the face of the financial statements as part of discontinued operations,
all of the following in the notes to financial statements: [ASU 2014–08, paragraph 12] }
a.
{The pretax profit or loss (or change in net assets for a not-for-profit entity) of the discontinued operation for the periods in which
the results of operations of the discontinued operation are presented in the statement where net income is reported (or statement
of activities for a not-for-profit entity). [ASU 2014-08, paragraph 12] }
b.
{The major classes of line items constituting the pretax profit or loss (or change in net assets for a not-for-profit entity) of the
discontinued operation (for example, revenue, cost of sales, depreciation and amortization, and interest expense) for the periods
in which the results of operations of the discontinued operation are presented in the statement where net income is reported (or
statement of activities for a not-for-profit entity). [ASU 2014-08, paragraph 12] }
c.
{Either of the following: [ASU 2014-08, paragraph 12] }
1.
{The total operating and investing cash flows of the discontinued operation for the periods in which the results of operations
of the discontinued operation are presented in the statement where net income is reported (or statement of activities for a
not-for-profit entity) [ASU 2014-08, paragraph 12] }
2.
{The depreciation, amortization, capital expenditures, and significant operating and investing noncash items of the
discontinued operation for the periods in which the results of operations of the discontinued operation are presented in the
statement where net income is reported (or statement of activities for a not-for-profit entity). [ASU 2014-08, paragraph 12]
}
d.
{If the discontinued operation includes a noncontrolling interest, the pretax profit or loss (or change in net assets for a not-forprofit entity) attributable to the parent for the periods in which the results of operations of the discontinued operation are
presented in the statement where net income is reported (or statement of activities for a not-for-profit entity). [ASU 2014-08,
paragraph 12] }
e.
{The carrying amount(s) of the major classes of assets and liabilities included as part of a discontinued operation classified as
held for sale for the period in which the discontinued operation is classified as held for sale and all prior periods presented in the
statement of financial position. Any loss recognized on the discontinued operation classified as held for sale in accordance with
paragraphs 205-20-45-3B through 45-3C shall not be allocated to the major classes of assets and liabilities of the discontinued
operation. [ASU 2014-08, paragraph 12] }
50-5C
{If an entity provides the disclosures required by paragraph 205-20-50-5B(a), (b), and (e) in the notes to financial
statements, the entity shall disclose the following: [ASU 2014–08, paragraph 12] }
a.
{For the initial period in which the disposal group is classified as held for sale and for all prior periods presented in the
statement of financial position, a reconciliation of both of the following: [ASU 2014-08, paragraph 12] }
1.
{The amounts disclosed in paragraph 205-20-50-5B(e) [ASU 2014-08, paragraph 12] }
2.
{Total assets and total liabilities of the disposal group classified as held for sale that are presented separately on the face of
the statement of financial position. If the disposal group includes assets and liabilities that are not part of the discontinued
operation, an entity shall present those assets and liabilities in line items in the reconciliations that are separate from the
assets and liabilities of the discontinued operation (see paragraph 205-20-55-102 for an Example). [ASU 2014-08,
paragraph 12] }
03/09/2023 11:15 AM EST
b.
Page 14 / 1816
{For the periods in which the results of operations of the discontinued operation are reported in the statement where net income
is reported (or statement of activities for a not-for-profit entity), a reconciliation of both of the following: [ASU 2014-08,
paragraph 12] }
1.
{The amounts disclosed in paragraph 205-20-50-5B(a) and (b) [ASU 2014-08, paragraph 12] }
2.
{The after-tax profit or loss from discontinued operations presented on the face of the statement where net income is
reported (or statement of activities for a not-for-profit entity) (see paragraph 205-20-55-103 for an Example). [ASU 201408, paragraph 12] }
50-5D
{For purposes of the reconciliation in paragraph 205-20-50-5C(a) or (b), an entity may aggregate the amounts that are not
considered major and present them as one line item in the reconciliation. [ASU 2014–08, paragraph 12] }
50-6
[Paragraph superseded by Accounting Standards Update No. 2014-08 superseded by Accounting Standards Update]
Consideration Points:
Section 205-20-50 has been updated as the result of the issuance of ASU 2014-08. The pending content resulting from the
issuance of this ASU added paragraphs 205-20-50-5A through 5D. Public business entities are required to apply the new
ASU prospectively to all disposals (or classifications as held for sale) that occur in annual periods (and interim periods
therein) beginning on or after December 15, 2014. For all other entities, the new ASU is effective prospectively for annual
periods beginning on or after December 15, 2014, and interim periods thereafter. Early adoption is permitted for any annual
or interim period for which an entity’s financial statements have not yet been previously issued (public business entities)
or made available for issuance (all other entities).
Is the entity in compliance with the guidance in ASC 205-20-50:
Disclosures Required for a Discontinued Operation Comprising an
Equity Method Investment?
FASB Codification:
>
Disclosures Required for a Discontinued Operation Comprising an Equity Method Investment
50-7
{For an equity method investment that meets the criteria in paragraphs 205-20-45-1B through 45-1C, an entity shall disclose
summarized information about the assets, liabilities, and results of operations of the investee if that information was disclosed in
financial reporting periods before the disposal in accordance with paragraph 323-10-50-3(c). [ASU 2014–08, paragraph 12] }
Consideration Points:
Section 205-20-50 has been updated as the result of the issuance of ASU 2014-08. The pending content resulting from the
issuance of this ASU added paragraph 205-20-50-7. Public business entities are required to apply the new ASU
prospectively to all disposals (or classifications as held for sale) that occur in annual periods (and interim periods therein)
beginning on or after December 15, 2014. For all other entities, the new ASU is effective prospectively for annual periods
beginning on or after December 15, 2014, and interim periods thereafter. Early adoption is permitted for any annual or
interim period for which an entity’s financial statements have not yet been previously issued (public business entities) or
made available for issuance (all other entities).
Presentation > 205 Presentation of Financial Statements > 30 Liquidation Basis of Accounting > 25 Recognition >
General
03/09/2023 11:15 AM EST
Page 15 / 1816
Is the entity in compliance with the guidance in ASC 205-30-25-1?
Note: An entity shall prepare financial statements in accordance
with ASC 205-30 when (1) liquidation is imminent and (2) the
liquidation does not follow a plan that was specified in the entity’s
governing documents at its inception. The guidance in ASC 205-2025-2 and 25-3 should be considered when addressing this question.
ASC 205-20-25-2 Liquidation is imminent when either of the
following occurs: a.
A plan for liquidation has been approved by
the person or persons with the authority to make such a plan
effective, and the likelihood is remote that any of the following will
occur: 1.
Execution of the plan will be blocked by other parties
(for example, those with shareholder rights) 2.
return from liquidation. b.
The entity will
A plan for liquidation is imposed by
other forces (for example, involuntary bankruptcy), and the
likelihood is remote that the entity will return from liquidation.
ASC 205-20-25-3 An entity shall presume that its plan of
liquidation does not follow a plan that was specified in the entity’s
governing documents at its inception if the entity is forced to
dispose of its assets in exchange for consideration that is not
commensurate with the fair value of those assets. Other aspects of
the entity’s plan of liquidation also might differ from a plan that
was specified in the entity’s governing documents at its inception
(for example, the date at which liquidation shall commence).
However, those factors should be considered in determining whether
to apply the liquidation basis of accounting only to the extent that
they affect whether the entity expects to receive consideration in
exchange for its assets that is not commensurate with fair value.
FASB Codification:
25-1
{An entity shall prepare financial statements in accordance with the requirements of this Subtopic when liquidation is imminent
unless the liquidation follows a plan for liquidation that was specified in the entity’s governing documents at the entity’s inception.
[ASU 2013-07, paragraph 3] }
Consideration Points:
Subtopic 205-30 has been added as the result of the issuance of ASU 2013-07, resulting in the addition of paragraphs 20530-25-1 through 25-3. The amendments are effective for annual reporting periods beginning after December 15, 2013, and
interim reporting periods therein. Early adoption is permitted. Entities that use the liquidation basis of accounting as of the
effective date in accordance with other Topics (for example, terminating employee benefit plans) should continue to apply
the guidance in those other Topics until they have completed liquidation.
Has the entity recognized individually or in the aggregate those
items it had not previously recognized (e.g. trademarks) but expects
to either sell in liquidation or use to settle liabilities?
FASB Codification:
25-4
{When using the liquidation basis of accounting, an entity shall recognize other items that it previously had not recognized (for
example, trademarks) but that it expects to either sell in liquidation or use to settle liabilities. Those items may be recognized in the
aggregate. [ASU 2013-07, paragraph 3] }
03/09/2023 11:15 AM EST
Page 16 / 1816
Consideration Points:
Subtopic 205-30 has been added as the result of the issuance of ASU 2013-07, resulting in the addition of paragraph 20530-25-4. The amendments are effective for annual reporting periods beginning after December 15, 2013, and interim
reporting periods therein. Early adoption is permitted. Entities that use the liquidation basis of accounting as of the
effective date in accordance with other Topics (for example, terminating employee benefit plans) should continue to apply
the guidance in those other Topics until they have completed liquidation.
Has the entity recognized liabilities in accordance with the
applicable recognition provisions?
NOTE: Entities should consider
the recognition provisions within all ASC Topics, including
paragraph ASC 405-20-40-1 when applying this guidance.
FASB Codification:
25-5
{An entity shall recognize liabilities in accordance with the recognition provisions of other Topics that otherwise would apply to
those liabilities, including paragraph 405-20-40-1. [ASU 2013-07, paragraph 3] }
Consideration Points:
Subtopic 205-30 has been added as the result of the issuance of ASU 2013-07, resulting in the addition of paragraphs 20530-25-5. The amendments are effective for annual reporting periods beginning after December 15, 2013, and interim
reporting periods therein. Early adoption is permitted. Entities that use the liquidation basis of accounting as of the
effective date in accordance with other Topics (for example, terminating employee benefit plans) should continue to apply
the guidance in those other Topics until they have completed liquidation.
Has the entity accrued estimated costs to dispense of assets or
other items that it expects to sell in liquidation and has it
presented those costs in the aggregate separately from those assets
or items?
NOTE: Per ASC 205-30-30-3, an entity shall not apply
discounting provisions in measuring the accruals for estimated
disposal costs in accordance with ASC 205-30-25-6 and expected
income/expenses in accordance with ASC 205-30-25-7.
FASB Codification:
25-6
{An entity shall accrue estimated costs to dispose of assets or other items that it expects to sell in liquidation and present those
costs in the aggregate separately from those assets or items. [ASU 2013-07, paragraph 3] }
Consideration Points:
Subtopic 205-30 has been added as the result of the issuance of ASU 2013-07, resulting in the addition of paragraph 20530-25-6. The amendments are effective for annual reporting periods beginning after December 15, 2013, and interim
reporting periods therein. Early adoption is permitted. Entities that use the liquidation basis of accounting as of the
effective date in accordance with other Topics (for example, terminating employee benefit plans) should continue to apply
the guidance in those other Topics until they have completed liquidation.
Has the entity accrued costs and income that it expects to incur or
earn through the end of its liquidation for those items that it has a
reasonable basis for estimation?
NOTE: Per ASC 205-30-30-3, an
entity shall not apply discounting provisions in measuring the
accruals for estimated disposal costs in accordance with ASC 20530-25-6 and expected income/expenses in accordance with ASC
205-30-25-7.
03/09/2023 11:15 AM EST
Page 17 / 1816
FASB Codification:
25-7
{An entity shall accrue costs and income that it expects to incur or earn (for example, payroll costs or income from preexisting
orders that the entity expects to fulfill during liquidation) through the end of its liquidation if and when it has a reasonable basis for
estimation. [ASU 2013-07, paragraph 3] }
Consideration Points:
Subtopic 205-30 has been added as the result of the issuance of ASU 2013-07, resulting in the addition of paragraph 20530-25-7. The amendments are effective for annual reporting periods beginning after December 15, 2013, and interim
reporting periods therein. Early adoption is permitted. Entities that use the liquidation basis of accounting as of the
effective date in accordance with other Topics (for example, terminating employee benefit plans) should continue to apply
the guidance in those other Topics until they have completed liquidation.
Presentation > 205 Presentation of Financial Statements > 30 Liquidation Basis of Accounting > 30 Initial
Measurement > General
Has the entity measured assets to reflect the estimated amount of
cash or other consideration that it expects to collect in settling or
disposing of those assets in liquidation?
FASB Codification:
30-1
{An entity shall measure assets to reflect the estimated amount of cash or other consideration that it expects to collect in settling
or disposing of those assets in carrying out its plan for liquidation. In some cases, fair value may approximate the amount that an
entity expects to collect. However, an entity shall not presume this to be true for all assets. [ASU 2013-07, paragraph 3] }
Consideration Points:
Subtopic 205-30 has been added as the result of the issuance of ASU 2013-07, resulting in the addition of paragraph 20530-30-1. The amendments are effective for annual reporting periods beginning after December 15, 2013, and interim
reporting periods therein. Early adoption is permitted. Entities that use the liquidation basis of accounting as of the
effective date in accordance with other Topics (for example, terminating employee benefit plans) should continue to apply
the guidance in those other Topics until they have completed liquidation.
Has the entity measured liabilities in accordance with the
measurement provisions of other Topics that otherwise would apply
to those liabilities in accordance with ASC 205-30-30-2?
NOTE: Applying those other Topics, an entity shall adjust its
liabilities to reflect changes in assumptions that are a result of the
entity’s decision to liquidate (for example, timing of payments).
However, an entity shall not anticipate being legally released from
being the primary obligor under a liability, either judicially or by the
creditor.
FASB Codification:
30-2
{An entity shall measure liabilities in accordance with the measurement provisions of other Topics that otherwise would apply to
those liabilities (excluding the accrual of estimated disposal costs as described in paragraph 205-30-25-6 and expected income and
expenses as described in paragraph 205-30-25-7). In applying those other Topics, an entity shall adjust its liabilities to reflect changes
in assumptions that are a result of the entity’s decision to liquidate (for example, timing of payments). However, an entity shall not
anticipate being legally released from being the primary obligor under a liability, either judicially or by the creditor. [ASU 2013-07,
paragraph 3] }
03/09/2023 11:15 AM EST
Page 18 / 1816
Consideration Points:
Subtopic 205-30 has been added as the result of the issuance of ASU 2013-07, resulting in the addition of paragraph 20530-30-2. The amendments are effective for annual reporting periods beginning after December 15, 2013, and interim
reporting periods therein. Early adoption is permitted. Entities that use the liquidation basis of accounting as of the
effective date in accordance with other Topics (for example, terminating employee benefit plans) should continue to apply
the guidance in those other Topics until they have completed liquidation.
Presentation > 205 Presentation of Financial Statements > 30 Liquidation Basis of Accounting > 35 Subsequent
Measurement > General
At each reporting date, has the entity re-measured its assets, other
items it expects to sell, liabilities and the accruals of disposal or
other costs or income to reflect the actual or estimated change in
carrying value since the previous reporting date?
FASB Codification:
35-1
{At each reporting date, an entity shall remeasure its assets and other items it expects to sell that it had not previously
recognized (for example, trademarks), liabilities (if required under the relevant Topic for those liabilities), and the accruals of disposal
or other costs or income to reflect the actual or estimated change in carrying value since the previous reporting date in accordance with
paragraphs 205-30-30-1 through 30-3. [ASU 2013-07, paragraph 3] }
Consideration Points:
Subtopic 205-30 has been added as the result of the issuance of ASU 2013-07, resulting in the addition of paragraph 20530-35-1. The amendments are effective for annual reporting periods beginning after December 15, 2013, and interim
reporting periods therein. Early adoption is permitted. Entities that use the liquidation basis of accounting as of the
effective date in accordance with other Topics (for example, terminating employee benefit plans) should continue to apply
the guidance in those other Topics until they have completed liquidation.
Presentation > 205 Presentation of Financial Statements > 30 Liquidation Basis of Accounting > 45 Other Presentation
> General
Has the entity that applied the liquidation basis of accounting
prepared a statement of net assets in liquidation and a statement of
changes in net assets in liquidation?
FASB Codification:
45-1
{At a minimum, an entity that applies the liquidation basis of accounting shall prepare the following: [ASU 2013-07,
paragraph 3] }
a.
{A statement of net assets in liquidation [ASU 2013-07, paragraph 3] }
b.
{A statement of changes in net assets in liquidation. [ASU 2013-07, paragraph 3] }
Consideration Points:
Subtopic 205-30 has been added as the result of the issuance of ASU 2013-07, resulting in the addition of paragraph 20530-45-1. The amendments are effective for annual reporting periods beginning after December 15, 2013, and interim
reporting periods therein. Early adoption is permitted. Entities that use the liquidation basis of accounting as of the
effective date in accordance with other Topics (for example, terminating employee benefit plans) should continue to apply
the guidance in those other Topics until they have completed liquidation.
Has the liquidation basis of accounting been applied prospectively
from the day that liquidation was imminent?
03/09/2023 11:15 AM EST
Page 19 / 1816
FASB Codification:
45-2
{The liquidation basis of accounting shall be applied prospectively from the day that liquidation becomes imminent. The initial
statement of changes in net assets in liquidation shall present only changes in net assets that occurred during the period since
liquidation became imminent. [ASU 2013-07, paragraph 3] }
Consideration Points:
Subtopic 205-30 has been added as the result of the issuance of ASU 2013-07, resulting in the addition of paragraph 20530-45-2. The amendments are effective for annual reporting periods beginning after December 15, 2013, and interim
reporting periods therein. Early adoption is permitted. Entities that use the liquidation basis of accounting as of the
effective date in accordance with other Topics (for example, terminating employee benefit plans) should continue to apply
the guidance in those other Topics until they have completed liquidation.
Presentation > 205 Presentation of Financial Statements > 30 Liquidation Basis of Accounting > 50 Disclosure >
General
Has the entity made all disclosures in accordance with paragraph
205-30-50-1?
FASB Codification:
50-1
{An entity shall make all disclosures required by other Topics that are relevant to understanding the entity’s statement of net
assets in liquidation and statement of changes in net assets in liquidation. The disclosures shall convey information about the
amount of cash or other consideration that an entity expects to collect and the amount that the entity is obligated or expects to be
obligated (in the case of the accruals described in paragraphs 205-30-25-6 through 25-7) to pay during the course of liquidation.
[ASU 2013-07, paragraph 3] }
Consideration Points:
Subtopic 205-30 has been added as the result of the issuance of ASU 2013-07, resulting in the addition of paragraph 20530-50-1. The amendments are effective for annual reporting periods beginning after December 15, 2013, and interim
reporting periods therein. Early adoption is permitted. Entities that use the liquidation basis of accounting as of the
effective date in accordance with other Topics (for example, terminating employee benefit plans) should continue to apply
the guidance in those other Topics until they have completed liquidation.
Has the entity disclosed that the financial statements are prepared
using the liquidation basis of accounting, including the facts and
circumstances surrounding the adoption of the liquidation basis of
accounting and the entity’s determination that liquidation is
imminent? [ASC 205-30-50-2a]
Consideration Points:
Subtopic 205-30 has been added as the result of the issuance of ASU 2013-07, resulting in the addition of paragraph 20530-50-2. The amendments are effective for annual reporting periods beginning after December 15, 2013, and interim
reporting periods therein. Early adoption is permitted. Entities that use the liquidation basis of accounting as of the
effective date in accordance with other Topics (for example, terminating employee benefit plans) should continue to apply
the guidance in those other Topics until they have completed liquidation.
Has the entity disclosed its plan for liquidation including a
description of (1) the manner by which it expects to dispose of its
assets and other items it expects to sell that it had not previously
recognized as assets (for example, trademarks); (2) the manner by
which it expects to settle its liabilities; and (3)the expected date by
which the entity expects to complete its liquidation? [ASC 205-3050-2b]
03/09/2023 11:15 AM EST
Page 20 / 1816
Consideration Points:
Subtopic 205-30 has been added as the result of the issuance of ASU 2013-07, resulting in the addition of paragraph 20530-50-2. The amendments are effective for annual reporting periods beginning after December 15, 2013, and interim
reporting periods therein. Early adoption is permitted. Entities that use the liquidation basis of accounting as of the
effective date in accordance with other Topics (for example, terminating employee benefit plans) should continue to apply
the guidance in those other Topics until they have completed liquidation.
Has the entity disclosed the methods and significant assumptions
used to measure assets and liabilities, including any subsequent
changes to those methods and assumptions? [ASC 205-30-50-2c]
Consideration Points:
Subtopic 205-30 has been added as the result of the issuance of ASU 2013-07, resulting in the addition of paragraph 20530-50-2. The amendments are effective for annual reporting periods beginning after December 15, 2013, and interim
reporting periods therein. Early adoption is permitted. Entities that use the liquidation basis of accounting as of the
effective date in accordance with other Topics (for example, terminating employee benefit plans) should continue to apply
the guidance in those other Topics until they have completed liquidation.
Has the entity disclosed the type and amount of costs and income
accrued in the statement of net assets in liquidation and the period
over which those costs are expected to be paid or income earned?
[ASC 205-30-50-2d]
Consideration Points:
Subtopic 205-30 has been added as the result of the issuance of ASU 2013-07, resulting in the addition of paragraph 20530-50-2. The amendments are effective for annual reporting periods beginning after December 15, 2013, and interim
reporting periods therein. Early adoption is permitted. Entities that use the liquidation basis of accounting as of the
effective date in accordance with other Topics (for example, terminating employee benefit plans) should continue to apply
the guidance in those other Topics until they have completed liquidation.
Presentation > 205 Presentation of Financial Statements > 40 Going Concern > 50 Disclosure > General
Is the entity in compliance with the guidance in ASC 205-40-50:
Evaluating Conditions and Events That May Raise Substantial
Doubt?
03/09/2023 11:15 AM EST
Page 21 / 1816
FASB Codification:
>
Evaluating Conditions and Events That May Raise Substantial Doubt
50-1
{In connection with preparing financial statements for each annual and interim reporting period, an entity’s management shall
evaluate whether there are conditions and events, considered in the aggregate, that raise substantial doubt about an entity’s ability
to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the
date that the financial statements are available to be issued when applicable). [ASU 2014-15, paragraph 3] }
50-2
{Ordinarily, conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern relate to the
entity’s ability to meet its obligations as they become due. Accordingly, management’s evaluation of an entity’s ability to continue as a
going concern ordinarily is based on conditions and events that are relevant to an entity’s ability to meet its obligations as they become
due within one year after the date that the financial statements are issued. [ASU 2014-15, paragraph 3] }
50-3
{Management’s evaluation shall be based on relevant conditions and events that are known and reasonably knowable at the date
that the financial statements are issued. [ASU 2014-15, paragraph 3] }
50-4
{Management shall evaluate whether relevant conditions and events, considered in the aggregate, indicate that it is probable
that an entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are
issued. The evaluation initially shall not take into consideration the potential mitigating effect of management’s plans that have not
been fully implemented as of the date that the financial statements are issued (for example, plans to raise capital, borrow money,
restructure debt, or dispose of an asset that have been approved but that have not been fully implemented as of the date that the
financial statements are issued). [ASU 2014-15, paragraph 3] }
50-5
{When evaluating an entity’s ability to meet its obligations, management shall consider quantitative and qualitative information
about the following conditions and events, among other relevant conditions and events known and reasonably knowable at the date that
the financial statements are issued: [ASU 2014-15, paragraph 3] }
a.
{The entity’s current financial condition, including its liquidity sources at the date that the financial statements are issued (for
example, available liquid funds and available access to credit) [ASU 2014-15, paragraph 3] }
b.
{The entity’s conditional and unconditional obligations due or anticipated within one year after the date that the financial
statements are issued (regardless of whether those obligations are recognized in the entity’s financial statements) [ASU 2014-15,
paragraph 3] }
c.
{The funds necessary to maintain the entity’s operations considering its current financial condition, obligations, and other
expected cash flows within one year after the date that the financial statements are issued [ASU 2014-15, paragraph 3] }
d.
{The other conditions and events, when considered in conjunction with (a), (b), and (c) above, that may adversely affect the
entity’s ability to meet its obligations within one year after the date that the financial statements are issued. See paragraph 20540-55-2 for examples of those conditions and events. [ASU 2014-15, paragraph 3] }
Consideration Points:
Section 205-40-50 has been added as a result of the issuance of ASU 2014-15. The pending content resulting from the
issuance of this ASU added paragraphs 205-40-50-1 through 5. The amendments in this Update are effective for annual
periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016.
Early adoption is permitted for annual or interim periods for which the financial statements have not previously been
issued.
Is the entity in compliance with the guidance in ASC 205-40-50:
Consideration of Management’s Plans When Substantial Doubt Is
Raised?
03/09/2023 11:15 AM EST
Page 22 / 1816
FASB Codification:
>
Consideration of Management’s Plans When Substantial Doubt Is Raised
50-6
{When relevant conditions or events, considered in the aggregate, initially indicate that it is probable that an entity will be
unable to meet its obligations as they become due within one year after the date that the financial statements are issued (and
therefore they raise substantial doubt about the entity’s ability to continue as a going concern), management shall evaluate
whether its plans that are intended to mitigate those conditions and events, when implemented, will alleviate substantial doubt about
the entity’s ability to continue as a going concern. [ASU 2014-15, paragraph 3] }
50-7
{The mitigating effect of management’s plans shall be considered in evaluating whether the substantial doubt is alleviated only
to the extent that information available as of the date that the financial statements are issued indicates both of the following: [ASU
2014-15, paragraph 3] }
a.
{It is probable that management’s plans will be effectively implemented within one year after the date that the financial
statements are issued. [ASU 2014-15, paragraph 3] }
b.
{It is probable that management’s plans, when implemented, will mitigate the relevant conditions or events that raise substantial
doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are
issued. [ASU 2014-15, paragraph 3] }
50-8
{The evaluation of whether it is probable that management’s plans will be effectively implemented within one year after the
date that the financial statements are issued shall be based on the feasibility of implementation of management’s plans in light of an
entity’s specific facts and circumstances. Generally, to be considered probable of being effectively implemented, management (or others
with the appropriate authority) must have approved the plan before the date that the financial statements are issued. Paragraph 20540-55-3 provides examples of plans that management may implement and information that management should consider for each plan
in evaluating the feasibility of the plans. [ASU 2014-15, paragraph 3] }
50-9
{The mitigating effect of management’s plans that are not probable of being effectively implemented within one year after the
date that the financial statements are issued shall not be considered in evaluating whether substantial doubt about an entity’s ability to
continue as a going concern is alleviated. [ASU 2014-15, paragraph 3] }
50-10
{As required in paragraph 205-40-50-7, management shall further assess its plans that are probable of being effectively
implemented to determine whether it is probable that those plans will mitigate the conditions or events that raise substantial doubt
about an entity’s ability to continue as a going concern. In this assessment, management shall consider the expected magnitude and
timing of the mitigating effect of its plans in relation to the magnitude and timing of the relevant conditions or events that those plans
intend to mitigate. [ASU 2014-15, paragraph 3] }
50-11
{A plan to meet an entity’s obligations as they become due through liquidation (as defined in Subtopic 205-30 on the
liquidation basis of accounting) shall not be considered as part of management’s plans in evaluating whether substantial doubt is
alleviated even if liquidation is probable of occurring. [ASU 2014-15, paragraph 3] }
Consideration Points:
Section 205-40-50 has been added as a result of the issuance of ASU 2014-15. The pending content resulting from the
issuance of this ASU added paragraphs 205-40-50-6 through 11. The amendments in this Update are effective for annual
periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016.
Early adoption is permitted for annual or interim periods for which the financial statements have not previously been
issued.
Is the entity in compliance with the guidance in ASC 205-40-50:
Disclosures When Substantial Doubt Is Raised but Is Alleviated by
Management’s Plans (Substantial Doubt Does Not Exist)?
03/09/2023 11:15 AM EST
Page 23 / 1816
FASB Codification:
>
Disclosures When Substantial Doubt Is Raised but Is Alleviated by Management’s Plans (Substantial Doubt Does Not
Exist)
50-12
{If, after considering management’s plans, substantial doubt about an entity’s ability to continue as a going concern is
alleviated as a result of consideration of management’s plans, an entity shall disclose in the notes to financial statements information
that enables users of the financial statements to understand all of the following (or refer to similar information disclosed elsewhere in
the notes): [ASU 2014-15, paragraph 3] }
a.
{Principal conditions or events that raised substantial doubt about the entity’s ability to continue as a going concern (before
consideration of management’s plans) [ASU 2014-15, paragraph 3] }
b.
{Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its
obligations [ASU 2014-15, paragraph 3] }
c.
{Management’s plans that alleviated substantial doubt about the entity’s ability to continue as a going concern. [ASU 2014-15,
paragraph 3] }
Consideration Points:
Section 205-40-50 has been added as a result of the issuance of ASU 2014-15. The pending content resulting from the
issuance of this ASU added paragraph 205-40-50-12. The amendments in this Update are effective for annual periods ending
after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early adoption is
permitted for annual or interim periods for which the financial statements have not previously been issued.
Is the entity in compliance with the guidance in ASC 205-40-50:
Disclosures When Substantial Doubt Is Raised and Is Not Alleviated
(Substantial Doubt Exists)?
03/09/2023 11:15 AM EST
Page 24 / 1816
FASB Codification:
>
Disclosures When Substantial Doubt Is Raised and Is Not Alleviated (Substantial Doubt Exists)
50-13
{If, after considering management’s plans, substantial doubt about an entity’s ability to continue as a going concern is
not alleviated, the entity shall include a statement in the notes to financial statements indicating that there is substantial doubt about
the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued.
Additionally, the entity shall disclose information that enables users of the financial statements to understand all of the following: [ASU
2014-15, paragraph 3] }
a.
{Principal conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern [ASU 201415, paragraph 3] }
b.
{Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its
obligations [ASU 2014-15, paragraph 3] }
c.
{Management’s plans that are intended to mitigate the conditions or events that raise substantial doubt about the entity’s ability
to continue as a going concern. [ASU 2014-15, paragraph 3] }
50-14
{If conditions or events continue to raise substantial doubt about an entity’s ability to continue as a going concern in subsequent
annual or interim reporting periods, the entity shall continue to provide the required disclosures in paragraphs 205-40-50-12 through
50-13 in those subsequent periods. Disclosures should become more extensive as additional information becomes available about the
relevant conditions or events and about management’s plans. An entity shall provide appropriate context and continuity in explaining
how conditions or events have changed between reporting periods. For the period in which substantial doubt no longer exists (before or
after consideration of management’s plans), an entity shall disclose how the relevant conditions or events that raised substantial doubt
were resolved. [ASU 2014-15, paragraph 3] }
Consideration Points:
Section 205-40-50 has been added as a result of the issuance of ASU 2014-15. The pending content resulting from the
issuance of this ASU added paragraphs 205-40-50-13 and 14. The amendments in this Update are effective for annual
periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016.
Early adoption is permitted for annual or interim periods for which the financial statements have not previously been
issued.
Presentation > 210 Balance Sheet > 10 Overall > 45 Other Presentation > General
Is the entity's classification of Current Assets logical and consistent
in the circumstances (i.e., 12 months from the balance sheet date
unless the operating cycle of the entity is longer)? [ASC 210-10-451 through 45-4]
FASB Codification:
>
Classification of Current Assets
45-1
{Current assets generally include all of the following: [ARB 43, paragraph Ch. 3A Par. 4] }
a.
{Cash available for current operations and items that are cash equivalents [ARB 43, paragraph Ch. 3A Par. 4] }
b.
{Inventories of merchandise, raw materials, goods in process, finished goods, operating supplies, and ordinary maintenance
material and parts [ARB 43, paragraph Ch. 3A Par. 4] }
c.
{Trade accounts, notes, and acceptances receivable [ARB 43, paragraph Ch. 3A Par. 4] }
d.
{Receivables from officers, employees, affiliates, and others, if collectible in the ordinary course of business within a year [ARB
03/09/2023 11:15 AM EST
Page 25 / 1816
43, paragraph Ch. 3A Par. 4] }
e.
{Installment or deferred accounts and notes receivable if they conform generally to normal trade practices and terms within the
business [ARB 43, paragraph Ch. 3A Par. 4] }
f.
{Marketable securities representing the investment of cash available for current operations [ARB 43, paragraph Ch. 3A Par. 4] }
g.
{Prepaid expenses such as the following: [ARB 43, paragraph Ch. 3A Par. 4] }
45-2
1.
{Insurance [ARB 43, paragraph Ch. 3A Par. 4] }
2.
{Interest [ARB 43, paragraph Ch. 3A Par. 4] }
3.
{Rents [ARB 43, paragraph Ch. 3A Par. 4] }
4.
{Taxes [ARB 43, paragraph Ch. 3A Par. 4] }
5.
{Unused royalties [ARB 43, paragraph Ch. 3A Par. 4] }
6.
{Current paid advertising service not yet received [ARB 43, paragraph Ch. 3A Par. 4] }
7.
{Operating supplies. [ARB 43, paragraph Ch. 3A Par. 4] }
{Prepaid expenses are not current assets in the sense that they will be converted into cash but in the sense that, if not paid in
advance, they would require the use of current assets during the operating cycle. An asset representing the overfunded status of a
single-employer defined benefit pension or postretirement plan shall be classified pursuant to Section 715-20-45. [ARB 43,
paragraph Ch. 3A Par. 4] }
45-3
{A one-year time period shall be used as a basis for the segregation of current assets in cases where there are several operating
cycles occurring within a year. However, if the period of the operating cycle is more than 12 months, as in, for instance, the tobacco,
distillery, and lumber businesses, the longer period shall be used. If a particular entity has no clearly defined operating cycle, the oneyear rule shall govern. [ARB 43, paragraph Ch. 3A Par. 5] }
45-4
{The concept of the nature of current assets contemplates the exclusion from that classification of such resources as the
following: [ARB 43, paragraph Ch. 3A Par. 6] }
a.
{Cash and claims to cash that are restricted as to withdrawal or use for other than current operations, are designated for
expenditure in the acquisition or construction of noncurrent assets, or are segregated for the liquidation of long-term debts. [ARB
43, paragraph Ch. 3A Par. 6] }{Even though not actually set aside in special accounts, funds that are clearly to be used in the
near future for the liquidation of long-term debts, payments to sinking funds, or for similar purposes shall also, under this
concept, be excluded from current assets. However, if such funds are considered to offset maturing debt that has properly been set
up as a current liability, they may be included within the current asset classification. [ARB 43, paragraph Ch. 3A Par. 6] }
b.
{Investments in securities (whether marketable or not) or advances that have been made for the purposes of control, affiliation,
or other continuing business advantage. [ARB 43, paragraph Ch. 3A Par. 6] }
c.
{Receivables arising from unusual transactions (such as the sale of capital assets, or loans or advances to affiliates, officers, or
employees) that are not expected to be collected within 12 months. [ARB 43, paragraph Ch. 3A Par. 6] }
d.
{Cash surrender value of life insurance policies. [ARB 43, paragraph Ch. 3A Par. 6] }
e.
{Land and other natural resources. [ARB 43, paragraph Ch. 3A Par. 6] }
03/09/2023 11:15 AM EST
Page 26 / 1816
f.
{Depreciable assets. [ARB 43, paragraph Ch. 3A Par. 6] }
g.
{Long-term prepayments that are fairly chargeable to the operations of several years, or deferred charges such as bonus
payments under a long-term lease, costs of rearrangement of factory layout or removal to a new location. [ARB 43,
paragraph Ch. 3A Par. 6] }
Consideration Points:
Refer to 45-1 for listing of items that are generally included in Current Assets and 45-4 for a listing of items that are
generally excluded. ?Section 210-10-45 has been updated as the result of the issuance of ASU 2016-01. The pending
content resulting from the issuance of this ASU amended paragraph 210-10-45-1. For public business entities, the
amendments in the ASU are effective for fiscal years beginning after December 15, 2017, including interim periods within
those fiscal years. For all other entities including not-for-profit entities and employee benefit plans within the scope of ASC
960 through ASC 965 on plan accounting, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. All entities that are not
public business entities may adopt the amendments in the ASU earlier as of the fiscal years beginning after December 15,
2017, including interim periods within those fiscal years. Early application by public business entities to financial
statements of fiscal years or interim periods that have not yet been issued or, by all other entities, that have not yet been
made available for issuance of the following amendments in this Update are permitted as of the beginning of the fiscal year
of adoption. Except for this, early adoption of the amendments is not permitted.
Is the entity's classification of Current Liabilities logical and
consistent in the circumstances (i.e., 12 months from the balance
sheet date unless the operating cycle of the entity is longer)? [ASC
210-10-45-5 through 45-12].
FASB Codification:
>
Classification of Current Liabilities
45-5
{A total of current liabilities shall be presented in classified balance sheets. [FAS 006, paragraph 15] }
45-6
{The concept of current liabilities includes estimated or accrued amounts that are expected to be required to cover expenditures
within the year for known obligations the amount of which can be determined only approximately (as in the case of provisions for
accruing bonus payments) or where the specific person or persons to whom payment will be made cannot as yet be designated (as in the
case of estimated costs to be incurred in connection with guaranteed servicing or repair of products already sold). [ARB 43,
paragraph Ch. 3A Par. 8] }
45-7
Section 470-10-45 includes guidance on various debt transactions that may result in current liability classification. These
transactions are the following:
a.
Due on demand loan agreements
b.
Callable debt agreements
c.
Short-term obligations expected to be refinanced.
> >
Obligations in the Operating Cycle
45-8
{As a balance sheet category, the classification of current liabilities generally includes obligations for items that have entered
into the operating cycle, such as the following: [ARB 43, paragraph Ch. 3A Par. 7] }
a.
{Payables incurred in the acquisition of materials and supplies to be used in the production of goods or in providing services to be
offered for sale. [ARB 43, paragraph Ch. 3A Par. 7] }
b.
{Collections received in advance of the delivery of goods or performance of services. [ARB 43, paragraph Ch. 3A Par. 7] }
{Examples of such current liabilities are obligations resulting from advance collections on ticket sales, which will normally be
liquidated in the ordinary course of business by the delivery of services. On the contrary, obligations representing long-term
03/09/2023 11:15 AM EST
Page 27 / 1816
deferments of the delivery of goods or services would not be shown as current liabilities. Examples of the latter are the issuance
of a long-term warranty or the advance receipt by a lessor of rental for the final period of a 10 year lease as a condition to
execution of the lease agreement. [ARB 43, paragraph Ch. 3A Par. 7] }
c.
{Debts that arise from operations directly related to the operating cycle, such as accruals for wages, salaries, commissions,
rentals, royalties, and income and other taxes. [ARB 43, paragraph Ch. 3A Par. 7] }
> >
Other Liabilities
45-9
{Other liabilities whose regular and ordinary liquidation is expected to occur within a relatively short period of time, usually 12
months, are also generally included, such as the following: [ARB 43, paragraph Ch. 3A Par. 7] }
a.
{Short-term debts arising from the acquisition of capital assets [ARB 43, paragraph Ch. 3A Par. 7] }
b.
{Serial maturities of long-term obligations [ARB 43, paragraph Ch. 3A Par. 7] }
c.
{Amounts required to be expended within one year under sinking fund provisions [ARB 43, paragraph Ch. 3A Par. 7] }
d.
{Agency obligations arising from the collection or acceptance of cash or other assets for the account of third persons. [ARB 43,
paragraph Ch. 3A Par. 7] }{Loans accompanied by pledge of life insurance policies would be classified as current liabilities if, by
their terms or by intent, they are to be repaid within 12 months. The pledging of life insurance policies does not affect the
classification of the asset any more than does the pledging of receivables, inventories, real estate, or other assets as collateral
for a short-term loan. However, when a loan on a life insurance policy is obtained from the insurance entity with the intent that it
will not be paid but will be liquidated by deduction from the proceeds of the policy upon maturity or cancellation, the obligation
shall be excluded from current liabilities. [ARB 43, paragraph Ch. 3A Par. 7] }
45-10
{A liability representing the underfunded status of a single-employer defined benefit pension or postretirement plan shall be
classified pursuant to Section 715-20-45. [ARB 43, paragraph Ch. 3A Par. 7] }
45-11
{If the amounts of the periodic payments of an obligation are, by contract, measured by current transactions, as for example by
rents or revenues received in the case of equipment trust certificates or by the depletion of natural resources in the case of property
obligations, the portion of the total obligation to be included as a current liability shall be that representing the amount accrued at the
balance sheet date. [ARB 43, paragraph Ch. 3A Par. 8] }
45-12
{The current liability classification is not intended to include debts to be liquidated by funds that have been accumulated in
accounts of a type not properly classified as current assets, or long-term obligations incurred to provide increased amounts of working
capital for long periods. [ARB 43, paragraph Ch. 3A Par. 8] }
Consideration Points:
Refer to 45-8 through 45-9 for items that are generally included in Current Liabilities.
Is the entity in compliance with the guidance in ASC 210-10-45:
Valuation Allowances?
03/09/2023 11:15 AM EST
Page 28 / 1816
FASB Codification:
>
Valuation Allowances
45-13
{Asset valuation allowances for losses such as those on receivables and investments [APB 12, paragraph 2] }{shall be
deducted from the assets or groups of assets to which the allowances relate. [APB 12, paragraph 3] }See paragraph 310-10-50-14 for
a related disclosure requirement.
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{Asset valuation allowances for losses such as those on receivables and investments [APB 12, paragraph 2] }{shall be
deducted from the assets or groups of assets to which the allowances relate. [APB 12, paragraph 3] }
Consideration Points:
Section 210-10-45 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU amended paragraph 210-10-45-13. For public business entities that are U.S. Securities and Exchange
Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after December 15, 2019,
including interim periods within those fiscal years. For all other public business entities, the amendments in the ASU are
effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. For all
other entities, including not-for-profit entities and employee benefit plans within the scope of ASC 960 through ASC 965 on
plan accounting, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, and interim
periods within fiscal years beginning after December 15, 2021. All entities may adopt the amendments in this Update
earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.
Presentation > 210 Balance Sheet > 10 Overall > 50 Disclosure > General
For the various classifications of inventory items included in
Current Assets, has the entity disclosed the basis upon which the
amounts are stated and, where practicable, the method of
determining the cost? [ASC 210-10-50-1]
FASB Codification:
>
Current Assets
50-1
{It is important that the amounts at which current assets are stated be supplemented by information that reveals, for the
various classifications of inventory items, the basis upon which their amounts are stated and, where practicable, indication of the
method of determining the cost—for example, average cost, first-in first-out (FIFO), last-in first-out (LIFO), and so forth. [ARB 43,
paragraph Ch. 3A Par. 9] }
Presentation > 210 Balance Sheet > 20 Offsetting > 45 Other Presentation > General
Has the entity elected to present qualifying assets and liabilities on
a net basis only if the conditions in ASC 210-20-45-1 (and related
guidance) are met? [ASC 210-20-45-1 through 45-5]
03/09/2023 11:15 AM EST
Page 29 / 1816
FASB Codification:
>
Right of Setoff Conditions
45-1
{A right of setoff exists when all of the following conditions are met: [FIN 39, paragraph 5] }
a.
{Each of two parties owes the other determinable amounts. [FIN 39, paragraph 5] }
b.
{The reporting party has the right to set off the amount owed with the amount owed by the other party. [FIN 39, paragraph 5] }
c.
{The reporting party intends to set off. [FIN 39, paragraph 5] }
d.
{The right of setoff is enforceable at law. [FIN 39, paragraph 5] }
45-2
{A debtor having a valid right of setoff may offset the related asset and liability and report the net amount. [FIN 39,
paragraph 5] }
45-3
{If the parties meet the criteria specified in paragraph 210-20-45-1, specifying currency or interest rate requirements is
unnecessary. However, if maturities differ, only the party with the nearer maturity could offset because the party with the longer term
maturity must settle in the manner that the other party selects at the earlier maturity date. [FIN 39, paragraph 44] }
45-4
{If a party does not intend to set off even though the ability to set off exists, an offsetting presentation in the statement of
financial position is not representationally faithful. [FIN 39, paragraph 45] }
45-5
{Acknowledgment of the intent to set off by the reporting party and, if applicable, demonstration of the execution of the setoff in
similar situations meet the criterion of intent. [FIN 39, paragraph 45] }
Has the entity offset securities that it purchased from a government
against taxes payable only when those securities are in substance a
prepayment of taxes? [ASC 210-20-45-6 and 45-7]
FASB Codification:
>
Offsetting Securities Against Taxes Payable
45-6
{The offset of cash or other assets against the tax liability or other amounts owing to governmental bodies shall not be
acceptable except in the circumstances described in the following paragraph. [APB 10, paragraph 7] }
45-7
{Most securities issued by governments are not by their terms designed specifically for the payment of taxes and, accordingly,
shall not be deducted from taxes payable on the balance sheet. [APB 10, paragraph 7] }{The only exception to this general principle
occurs when it is clear that a purchase of securities (acceptable for the payment of taxes) is in substance an advance payment of taxes
that will be payable in the relatively near future, so that in the special circumstances the purchase is tantamount to the prepayment of
taxes. This occurs at times, for example, as an accommodation to a local government and in some instances when governments issue
securities that are specifically designated as being acceptable for the payment of taxes of those governments. [APB 10, paragraph 7] }
If the entity has concluded that the right of setoff is enforceable by
law, has it given appropriate weight to legal constraints and also
obtained reasonable assurance that the right will be upheld in
bankruptcy? [ASC 210-20-45-8 and 45-9]
03/09/2023 11:15 AM EST
Page 30 / 1816
FASB Codification:
>
Assurance that Right of Setoff Is Enforceable in a Bankruptcy
45-8
{State laws about the right of setoff may provide results different from those normally provided by contract or as a matter of
common law. Similarly, the U.S. Bankruptcy Code imposes restrictions on or prohibitions against the right of setoff in bankruptcy under
certain circumstances. Legal constraints should be considered to determine whether the right of setoff is enforceable. [FIN 39,
paragraph 6] }
45-9
{The phrase enforceable at law encompasses the idea that the right of setoff should be upheld in bankruptcy. [EITF D-043,
paragraph ] }{The nature of support required for an assertion in financial statements that a right of setoff is enforceable at law is
subject to a cost-benefit constraint and depends on facts and circumstances. All of the information that is available, either supporting or
questioning enforceability, should be considered. Offsetting is appropriate only if the available evidence, both positive and negative,
indicates that there is reasonable assurance that the right of setoff would be upheld in bankruptcy. [EITF D-043, paragraph ] }
45-10
[Paragraph Not Used not used]
Has the entity elected to present, on a net basis, payables under
repurchase agreements and receivables under reverse repurchase
agreements only if it has a qualifying right of offset and meets other
criteria specific to these types of assets and liabilities? [ASC 21020-45-11 through 17]
03/09/2023 11:15 AM EST
Page 31 / 1816
FASB Codification:
>
Repurchase and Reverse Repurchase Agreements
45-11
{Notwithstanding the condition in paragraph 210-20-45-1(c), an entity may, but is not required to, offset amounts recognized
as payables under repurchase agreements accounted for as collateralized borrowings and amounts recognized as receivables
under reverse repurchase agreements accounted for as collateralized borrowings if all of the following conditions are met: [FIN
41, paragraph 3] }
a.
{The repurchase and reverse repurchase agreements are executed with the same counterparty. [FIN 41, paragraph 3] }
b.
{The repurchase and reverse repurchase agreements have the same explicit settlement date specified at the inception of the
agreement. [FIN 41, paragraph 3] }
c.
{The repurchase and reverse repurchase agreements are executed in accordance with a master netting arrangement. [FIN 41,
paragraph 3] }
d.
{The securities underlying the repurchase and reverse repurchase agreements exist in book entry form and can be transferred
only by means of entries in the records of the transfer system operator or securities custodian. [FIN 41, paragraph 3] }{Book
entry securities meeting the criterion in this paragraph exist only as items in accounting records maintained by a transfer system
operator. This requirement does not preclude offsetting of securities held in book entry form solely because other securities of the
same issue exist in other forms. [FIN 41, paragraph 3] }
e.
{The repurchase and reverse repurchase agreements will be settled on a securities transfer system that operates in the manner
described in paragraphs 210-20-45-14 through 45-17, and the entity must have associated banking arrangements in place as
described in those paragraphs. Cash settlements for securities transferred shall be made under established banking arrangements
that provide that the entity will need available cash on deposit only for any net amounts that are due at the end of the business
day. It must be probable that the associated banking arrangements will provide sufficient daylight overdraft or other intraday
credit at the settlement date for each of the parties. [FIN 41, paragraph 3] }{The term probable is used in this Subtopic
consistent with its use in paragraph 450-20-25-1 to mean that a transaction or event is likely to occur. [FIN 41, paragraph 3] }
f.
{The entity intends to use the same account at the clearing bank or other financial institution at the settlement date in transacting
both the cash inflows resulting from the settlement of the reverse repurchase agreement and the cash outflows in settlement of
the offsetting repurchase agreement. [FIN 41, paragraph 3] }
45-12
{The entity's choice to offset or not shall be applied consistently. Net receivables resulting from the application of this Subtopic
shall not be offset against net payables resulting from the application of this Subtopic in the statement of financial position. [FIN 41,
paragraph 3] }
45-13
{ Paragraph 210-20-45-11 does not apply to amounts recognized for other types of repurchase and reverse repurchase
agreements executed under a master netting arrangement; however, those amounts could otherwise meet the conditions of paragraph
210-20-45-1 for a right of setoff. Therefore, unless all conditions in that paragraph are met, the amount recognized under a repurchase
agreement that does not settle in accordance with all the conditions of paragraphs 210-20-45-11 through 45-17 may not be offset
against the amount recognized under a reverse repurchase agreement merely because the agreements are executed with the same
counterparty under a master netting arrangement. The gross unconditional receivables and payables recognized in the statement of
financial position related to those types of repurchase and reverse repurchase agreements provide useful information about the timing
and amount of future cash flows that would be lost if those amounts were offset. [FIN 41, paragraph 14] }
Consideration Points:
Paragraphs 45-14 through 45-17 provide guidance for one of the criteria for offsetting payables and receivables under repo
and reverse repo arrangements.
03/09/2023 11:15 AM EST
Page 32 / 1816
Presentation > 210 Balance Sheet > 20 Offsetting > 50 Disclosure > General
Has the entity disclosed the information required by paragraphs
210-20-50-2 through 50-5 for all derivative instruments accounted
for in accordance with Topic 815, including bifurcated embedded
derivatives, repurchase agreements and reverse repurchase
agreements, and securities borrowing and securities lending
transactions which are (1) offset in accordance with either Section
210-20-45 or Section 815-10-45 or (2) subject to an enforceable
master netting arrangement or similar agreement? [ASC 210-20-501]
FASB Codification:
50-1
{The disclosure requirements in paragraphs 210-20-50-2 through 50-5 apply to both of the following: [ASU 2011-11,
paragraph 2] }
a.
[Subparagraph superseded by Accounting Standards Update No. 2013-01 superseded by Accounting Standards Update]
b.
[Subparagraph superseded by Accounting Standards Update No. 2013-01 superseded by Accounting Standards Update]
c.
{Recognized derivative instruments accounted for in accordance with Topic 815, including bifurcated embedded derivatives,
repurchase agreements accounted for as collateralized borrowings and reverse repurchase agreements, and securities
borrowing and securities lending transactions that are offset in accordance with either Section 210-20-45 or Section 815-10-45
[ASU 2013-01, paragraph 2] }
d.
{Recognized derivative instruments accounted for in accordance with Topic 815, including bifurcated embedded derivatives,
repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are
subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in accordance
with either Section 210-20-45 or Section 815-10-45. [ASU 2013-01, paragraph 2] }
Consideration Points:
Section 210-20-50 and the corresponding paragraphs have been added by the issuance of ASU 2011-11 and, in certain
instances, updated as the result of the issuance of ASU 2013-01. The pending content from ASU 2011-11 and ASU 201301 is currently effective for all entities. An entity should provide the disclosures required by those amendments
retrospectively for all comparative periods presented.
Has the entity provided the required disclosures on the effect
or potential effect of netting arrangements on its financial position
for recognized assets and liabilities in the scope of ASC 210-20-501? [ASC 210-20-50-2 through 50-5]
FASB Codification:
50-2
{An entity shall disclose information to enable users of its financial statements to evaluate the effect or potential effect of netting
arrangements on its financial position [ASU 2011-11, paragraph 2] }{for recognized assets and liabilities within the scope of the
preceding paragraph. [ASU 2013-01, paragraph 2] }{This includes the effect or potential effect of rights of setoff associated with an
entity’s recognized assets and recognized liabilities that are in the scope of the preceding paragraph. [ASU 2011-11, paragraph 2] }
03/09/2023 11:15 AM EST
Page 33 / 1816
Consideration Points:
Section 210-20-50 and the corresponding paragraphs have been added by the issuance of ASU 2011-11 and, in certain
instances, updated as the result of the issuance of ASU 2013-01. The pending content from ASU 2011-11 and ASU 201301 is currently effective for all entities. An entity should provide the disclosures required by those amendments
retrospectively for all comparative periods presented.
Is the entity in compliance with the guidance in ASC 210-20-50-3?
FASB Codification:
50-3
{To meet the objective in the preceding paragraph, an entity shall disclose at the end of the reporting period the following
quantitative information separately for assets and liabilities that are within the scope of paragraph 210-20-50-1: [ASU 2011-11,
paragraph 2] }
a.
{The gross amounts of those recognized assets and those recognized liabilities [ASU 2011-11, paragraph 2] }
b.
{The amounts offset in accordance with the guidance in Sections 210-20-45 and 815-10-45 to determine the net amounts
presented in the statement of financial position [ASU 2011-11, paragraph 2] }
c.
{The net amounts presented in the statement of financial position [ASU 2011-11, paragraph 2] }
d.
{The amounts subject to an enforceable master netting arrangement or similar agreement not otherwise included in (b): [ASU
2011-11, paragraph 2] }
1.
{The amounts related to recognized financial instruments and other derivative instruments that either: [ASU 2011-11,
paragraph 2] }
i.
{Management makes an accounting policy election not to offset. [ASU 2011-11, paragraph 2] }
ii. {Do not meet some or all of the guidance in either Section 210-20-45 or Section 815-10-45. [ASU 2011-11,
paragraph 2] }
2.
e.
{The amounts related to financial collateral (including cash collateral). [ASU 2011-11, paragraph 2] }
{The net amount after deducting the amounts in (d) from the amounts in (c). [ASU 2011-11, paragraph 2] }
Consideration Points:
Paragraphs ASC 210-20-50-2 through 50-5 have been added as the result of the issuance of ASU 2011-11. The pending
content from ASU 2011-11 is effective for fiscal years beginning on or after January 1, 2013, and interim periods within
those annual periods. An entity should provide the disclosures required by those amendments retrospectively for all
comparative periods presented.
Is the entity in compliance with the guidance in ASC 210-20-50-4?
FASB Codification:
50-4
{The information required by the preceding paragraph shall be presented in a tabular format, separately for assets and
liabilities, unless another format is more appropriate. The total amount disclosed in accordance with paragraph 210-20-50-3(d) for an
instrument shall not exceed the amount disclosed in accordance with paragraph 210-20-50-3(c) for that instrument. [ASU 2011-11,
paragraph 2] }
03/09/2023 11:15 AM EST
Page 34 / 1816
Consideration Points:
Paragraphs ASC 210-20-50-2 through 50-5 have been added as the result of the issuance of ASU 2011-11. The pending
content from ASU 2011-11 is effective for fiscal years beginning on or after January 1, 2013, and interim periods within
those annual periods. An entity should provide the disclosures required by those amendments retrospectively for all
comparative periods presented.
Is the entity in compliance with the guidance in ASC 210-20-50-5?
FASB Codification:
50-5
{An entity shall provide a description of the rights of setoff associated with an entity’s recognized assets and recognized
liabilities subject to an enforceable master netting arrangement or similar agreement disclosed in accordance with paragraph 210-2050-3(d), including the nature of those rights. [ASU 2011-11, paragraph 2] }
Consideration Points:
Paragraphs ASC 210-20-50-2 through 50-5 have been added as the result of the issuance of ASU 2011-11. The pending
content from ASU 2011-11 is effective for fiscal years beginning on or after January 1, 2013, and interim periods within
those annual periods. An entity should provide the disclosures required by those amendments retrospectively for all
comparative periods presented.
In instances where the disclosures required by paragraphs 210-2050-1 through 50-5 have been made in more than a single note to the
financial statements, has the entity cross-referenced the
information as required by paragraph 210-20-50-6? [ASC 210-2050-6]
FASB Codification:
50-6
{If the information required by paragraphs 210-20-50-1 through 50-5 is disclosed in more than a single note to the financial
statements, an entity shall cross-reference between those notes. [ASU 2011-11, paragraph 2] }
Consideration Points:
Paragraph ASC 210-20-50-6 has been added as the result of the issuance of ASU 2011-11. The pending content from ASU
2011-11 is effective for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods.
An entity should provide the disclosures required by those amendments retrospectively for all comparative periods
presented.
Presentation > 220 Income Statement—Reporting Comprehensive Income > 10 Overall > 45 Other Presentation >
General
Has the entity reported comprehensive income in accordance with
ASC 220-10-45-1?
FASB Codification:
45-1
{This Subtopic requires an entity to report comprehensive income [FAS 130, paragraph 5] }{either in a single continuous
financial statement or in two separate but consecutive financial statements. [ASU 2011-05, paragraph 8] }
If the entity reports comprehensive income in a single, continuous
financial statement, has it appropriately included, as applicable, the
items within ASC 220-10-45-1A?
03/09/2023 11:15 AM EST
Page 35 / 1816
FASB Codification:
45-1A
{An entity reporting comprehensive income in a single continuous financial statement shall present its components in two
sections, net income and other comprehensive income. If applicable, an entity shall present the following in that financial statement:
[ASU 2011-05, paragraph 8] }
a.
{A total amount for net income together with the components that make up net income. [FAS 130, paragraph 15] }
b.
{A total amount for other comprehensive income together with the components that make up other comprehensive income. [ASU
2011-05, paragraph 8] }{As indicated in paragraph 220-10-15-3, an entity that has no items of other comprehensive income in
any period presented is not required to report comprehensive income. [FAS 130, paragraph 15] }
c.
{Total comprehensive income. [ASU 2011-05, paragraph 8] }
If the entity is reporting comprehensive income in two separate,
but consecutive statements, has it appropriately presented the
items included in ASC 220-10-45-1B?
FASB Codification:
45-1B
{An entity reporting comprehensive income in two separate but consecutive statements shall present the following: [ASU 2011-
05, paragraph 8] }
a.
{Components of and the total for net income in the statement of net income [ASU 2011-05, paragraph 8] }
b.
{Components of and the total for other comprehensive income as well as a total for comprehensive income in the statement of
comprehensive income, which shall be presented immediately after the statement of net income. A reporting entity shall begin
the second statement with net income. [ASU 2011-05, paragraph 8] }
In accordance with ASC 220-10-45-1C, has the entity appropriately
presented all items that meet the definition of comprehensive
income for the period in which those items are recognized, in either
a single continuous statement of comprehensive income or in a
statement of net income and statement of other comprehensive
income?
FASB Codification:
45-1C
{An entity shall present, either in a single continuous statement of comprehensive income or in a statement of net income and
statement of other comprehensive income, all items that meet the definition of comprehensive income for the period in which those
items are recognized. [ASU 2011-05, paragraph 8] }{Components included in other comprehensive income shall be classified based on
their nature. [FAS 130, paragraph 17] }For related guidance, see paragraphs 220-10-45-10A through 45-10B.
Has the entity appropriately considered the guidance for the terms
comprehensive income and other comprehensive income included in
ASC 220-10-45-4?
FASB Codification:
45-4
{This Subtopic does not require that an entity use the terms comprehensive income or other comprehensive income in its
financial statements, even though those terms are used throughout this Subtopic. [FAS 130, paragraph 10] }
03/09/2023 11:15 AM EST
Page 36 / 1816
If an entity has an outstanding noncontrolling interest,
have amounts for both net income and comprehensive income
attributable to the parent and net income and comprehensive
income attributable to the noncontrolling interest in a less-thanwholly-owned subsidiary been appropriately reported in accordance
with ASC 220-10-45-5?
FASB Codification:
45-5
{Paragraph 810-10-50-1A(a) states that, if an entity has an outstanding noncontrolling interest, amounts for both net income
and comprehensive income attributable to the parent and net income and comprehensive income attributable to the noncontrolling
interest in a less-than-wholly-owned subsidiary shall be reported in the financial statement(s) in which net income and comprehensive
income are presented in addition to presenting consolidated net income and comprehensive income. [FAS 130, paragraph 14] }{For
more guidance, see paragraph 810-10-50-1A(c). [ASU 2011-05, paragraph 8] }
Has the entity appropriately presented items included in net
income in accordance with ASC 220-10-45-7?
FASB Codification:
45-7
{Items included in net income are presented in various components. Those components can include items of income from
continuing operations and discontinued operations. This Subtopic does not change those components or other requirements for reporting
the results of operations included in net income. [FAS 130, paragraph 16] }
Consideration Points:
Section 225-20-45 has been updated as the result of the issuance of ASU 2015-01. The pending content resulting from the
issuance of this ASU amended paragraph 225-20-45-7. The amendments in this Update are effective for fiscal years, and
interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the
amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented
in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the
fiscal year of adoption.
Has the entity appropriately determined what items to include in
other comprehensive income, in accordance with the guidance in
ASC 220-10-45-10A?
FASB Codification:
45-10A
Items of other comprehensive income include the following:
a.
{Foreign currency translation adjustments (see paragraph 830-30-45-12) [FAS 130, paragraph 39] }
b.
{Gains and losses on foreign currency transactions that are designated as, and are effective as, economic hedges of a net
investment in a foreign entity, commencing as of the designation date (see paragraph 830-20-35-3(a)) [FAS 130, paragraph 39]
}
c.
{Gains and losses on intra-entity foreign currency transactions that are of a long-term-investment nature (that is, settlement is not
planned or anticipated in the foreseeable future), when the entities to the transaction are consolidated, combined, or accounted
for by the equity method in the reporting entity's financial statements (see paragraph 830-20-35-3(b)) [FAS 130, paragraph 39]
}
d.
{Gains and losses (effective portion) on derivative instruments that are designated as, and qualify as, cash flow hedges (see
paragraph 815-20-35-1(c)) [FAS 133, paragraph 18] }
03/09/2023 11:15 AM EST
e.
Page 37 / 1816
{Unrealized holding gains and losses on available-for-sale debt securities (see paragraph 320-10-45-1) [FAS 130,
paragraph 39] }
f.
{Unrealized holding gains and losses that result from a debt security being transferred into the available-for-sale category from
the held-to-maturity category (see paragraph 320-10-35-10(c)) [FAS 130, paragraph 39] }
g.
{Amounts recognized in other comprehensive income for debt securities classified as available-for-sale and held-to-maturity
related to an other-than-temporary impairment recognized in accordance with Section 320-10-35 if a portion of the impairment
was not recognized in earnings [FAS 130, paragraph 17] }
h.
{Subsequent decreases (if not an other-than-temporary impairment) or increases in the fair value of available-for-sale debt
securities previously written down as impaired (see paragraph 320-10-35-18) [FAS 130, paragraph 39] }
i.
{Gains or losses associated with pension or other postretirement benefits (that are not recognized immediately as a component of
net periodic benefit cost) (see paragraph 715-20-50-1(j)) [FAS 130, paragraph 17] }
j.
{Prior service costs or credits associated with pension or other postretirement benefits (see paragraph 715-20-50-1(j)) [FAS
130, paragraph 17] }
k.
{Transition assets or obligations associated with pension or other postretirement benefits (that are not recognized immediately as
a component of net periodic benefit cost) (see paragraph 715-20-50-1(j)). [FAS 130, paragraph 17] }
l.
{Changes in fair value attributable to instrument-specific credit risk of liabilities for which the fair value option is elected (see
paragraph 825-10-45-5). [ASU 2016-01, paragraph 8] }
{Additional classifications or additional items within current classifications may result from future accounting standards. [FAS 130,
paragraph 17] }
Pending Content:
Transition Date: (P) December 16, 2018; (N) December 16, 2020 Transition Guidance 815-20-65-3
815-20-65-3Items of other comprehensive income include the following:
a.
{Foreign currency translation adjustments (see paragraph 830-30-45-12) [FAS 130, paragraph 39] }
b.
{Gains and losses on foreign currency transactions that are designated as, and are effective as, economic hedges of a net
investment in a foreign entity, commencing as of the designation date (see paragraph 830-20-35-3(a)) [FAS 130, paragraph 39]
}
c.
{Gains and losses on intra-entity foreign currency transactions that are of a long-term-investment nature (that is, settlement is not
planned or anticipated in the foreseeable future), when the entities to the transaction are consolidated, combined, or accounted
for by the equity method in the reporting entity's financial statements (see paragraph 830-20-35-3(b)) [FAS 130, paragraph 39]
}
d.
{Gains and losses on derivative instruments that are designated as, and qualify as, cash flow hedges (see paragraph 815-20-351(c)) [FAS 133, paragraph 18] }
dd. {For derivatives that are designated in qualifying hedging relationships, the difference between changes in fair value of the
excluded components and the initial value of the excluded components recognized in earnings under a systematic and rational
method in accordance with paragraphs 815-20-25-83A and 815-35-35-5A [ASU 2017-12, paragraph 4] }
e.
{Unrealized holding gains and losses on available-for-sale debt securities (see paragraph 320-10-45-1) [FAS 130,
03/09/2023 11:15 AM EST
Page 38 / 1816
paragraph 39] }
f.
{Unrealized holding gains and losses that result from a debt security being transferred into the available-for-sale category from
the held-to-maturity category (see paragraph 320-10-35-10(c)) [FAS 130, paragraph 39] }
g.
{Amounts recognized in other comprehensive income for debt securities classified as available-for-sale and held-to-maturity
related to an other-than-temporary impairment recognized in accordance with Section 320-10-35 if a portion of the impairment
was not recognized in earnings [FAS 130, paragraph 17] }
h.
{Subsequent decreases (if not an other-than-temporary impairment) or increases in the fair value of available-for-sale debt
securities previously written down as impaired (see paragraph 320-10-35-18) [FAS 130, paragraph 39] }
i.
{Gains or losses associated with pension or other postretirement benefits (that are not recognized immediately as a component of
net periodic benefit cost) (see paragraph 715-20-50-1(j)) [FAS 130, paragraph 17] }
j.
{Prior service costs or credits associated with pension or other postretirement benefits (see paragraph 715-20-50-1(j)) [FAS
130, paragraph 17] }
k.
{Transition assets or obligations associated with pension or other postretirement benefits (that are not recognized immediately as
a component of net periodic benefit cost) (see paragraph 715-20-50-1(j)). [FAS 130, paragraph 17] }
l.
{Changes in fair value attributable to instrument-specific credit risk of liabilities for which the fair value option is elected (see
paragraph 825-10-45-5). [ASU 2016-01, paragraph 8] }
{Additional classifications or additional items within current classifications may result from future accounting standards. [FAS 130,
paragraph 17] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1Items of other comprehensive income include the following:
a.
{Foreign currency translation adjustments (see paragraph 830-30-45-12) [FAS 130, paragraph 39] }
b.
{Gains and losses on foreign currency transactions that are designated as, and are effective as, economic hedges of a net
investment in a foreign entity, commencing as of the designation date (see paragraph 830-20-35-3(a)) [FAS 130, paragraph 39]
}
c.
{Gains and losses on intra-entity foreign currency transactions that are of a long-term-investment nature (that is, settlement is not
planned or anticipated in the foreseeable future), when the entities to the transaction are consolidated, combined, or accounted
for by the equity method in the reporting entity's financial statements (see paragraph 830-20-35-3(b)) [FAS 130, paragraph 39]
}
d.
{Gains and losses on derivative instruments that are designated as, and qualify as, cash flow hedges (see paragraph 815-20-351(c)) [FAS 133, paragraph 18] }
dd. {For derivatives that are designated in qualifying hedging relationships, the difference between changes in fair value of the
excluded components and the initial value of the excluded components recognized in earnings under a systematic and rational
method in accordance with paragraphs 815-20-25-83A and 815-35-35-5A [ASU 2017-12, paragraph 4] }
e.
{Unrealized holding gains and losses on available-for-sale debt securities (see paragraph 326-30-35-2) [FAS 130,
paragraph 39] }
03/09/2023 11:15 AM EST
f.
Page 39 / 1816
{Unrealized holding gains and losses that result from a debt security being transferred into the available-for-sale category from
the held-to-maturity category (see paragraph 320-10-35-10(c)) [FAS 130, paragraph 39] }
g.
[Subparagraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update] .
h.
[Subparagraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update] .
i.
{Gains or losses associated with pension or other postretirement benefits (that are not recognized immediately as a component of
net periodic benefit cost) (see paragraph 715-20-50-1(j)) [FAS 130, paragraph 17] }
j.
{Prior service costs or credits associated with pension or other postretirement benefits (see paragraph 715-20-50-1(j)) [FAS
130, paragraph 17] }
k.
{Transition assets or obligations associated with pension or other postretirement benefits (that are not recognized immediately as
a component of net periodic benefit cost) (see paragraph 715-20-50-1(j)). [FAS 130, paragraph 17] }
l.
{Changes in fair value attributable to instrument-specific credit risk of liabilities for which the fair value option is elected (see
paragraph 825-10-45-5). [ASU 2016-01, paragraph 8] }
{Additional classifications or additional items within current classifications may result from future accounting standards. [FAS 130,
paragraph 17] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2024 Transition Guidance 944-40-65-2
944-40-65-2Items of other comprehensive income include the following:
a.
{Foreign currency translation adjustments (see paragraph 830-30-45-12) [FAS 130, paragraph 39] }
b.
{Gains and losses on foreign currency transactions that are designated as, and are effective as, economic hedges of a net
investment in a foreign entity, commencing as of the designation date (see paragraph 830-20-35-3(a)) [FAS 130, paragraph 39]
}
c.
{Gains and losses on intra-entity foreign currency transactions that are of a long-term-investment nature (that is, settlement is not
planned or anticipated in the foreseeable future), when the entities to the transaction are consolidated, combined, or accounted
for by the equity method in the reporting entity's financial statements (see paragraph 830-20-35-3(b)) [FAS 130, paragraph 39]
}
d.
{Gains and losses on derivative instruments that are designated as, and qualify as, cash flow hedges (see paragraph 815-20-351(c)) [FAS 133, paragraph 18] }
dd. {For derivatives that are designated in qualifying hedging relationships, the difference between changes in fair value of the
excluded components and the initial value of the excluded components recognized in earnings under a systematic and rational
method in accordance with paragraphs 815-20-25-83A and 815-35-35-5A [ASU 2017-12, paragraph 4] }
e.
{Unrealized holding gains and losses on available-for-sale debt securities (see paragraph 326-30-35-2) [FAS 130,
paragraph 39] }
f.
{Unrealized holding gains and losses that result from a debt security being transferred into the available-for-sale category from
the held-to-maturity category (see paragraph 320-10-35-10(c)) [FAS 130, paragraph 39] }
03/09/2023 11:15 AM EST
Page 40 / 1816
g.
[Subparagraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update] .
h.
[Subparagraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update] .
i.
{Gains or losses associated with pension or other postretirement benefits (that are not recognized immediately as a component of
net periodic benefit cost) (see paragraph 715-20-50-1(j)) [FAS 130, paragraph 17] }
j.
{Prior service costs or credits associated with pension or other postretirement benefits (see paragraph 715-20-50-1(j)) [FAS
130, paragraph 17] }
k.
{Transition assets or obligations associated with pension or other postretirement benefits (that are not recognized immediately as
a component of net periodic benefit cost) (see paragraph 715-20-50-1(j)). [FAS 130, paragraph 17] }
l.
{Changes in fair value attributable to instrument-specific credit risk of liabilities for which the fair value option is elected (see
paragraph 825-10-45-5). [ASU 2016-01, paragraph 8] }
m. {The effect of changes in the discount rates used to measure traditional and limited-payment long-duration insurance contracts
(see paragraph 944-40-35-6A(b)(1)). [ASU 2018-12, paragraph 22] }
n.
{The effect of changes in the fair value of a market risk benefit attributable to a change in the instrument-specific credit risk
(see paragraph 944-40-35-8A). [ASU 2018-12, paragraph 22] }
{Additional classifications or additional items within current classifications may result from future accounting standards. [FAS 130,
paragraph 17] }
Consideration Points:
Section 220-10-45 has been updated as the result of the issuance of ASU 2016-01. The pending content resulting from the
issuance of this ASU amended paragraph 220-10-45-10A. For public business entities, the amendments in the ASU are
effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. For all
other entities including not-for-profit entities and employee benefit plans within the scope of ASC 960 through ASC 965 on
plan accounting, the amendments in the ASU are effective for fiscal years beginning after December 15, 2018, and interim
periods within fiscal years beginning after December 15, 2019. All entities that are not public business entities may adopt
the amendments in the ASU earlier as of the fiscal years beginning after December 15, 2017, including interim periods
within those fiscal years. Early application by public business entities to financial statements of fiscal years or interim
periods that have not yet been issued or, by all other entities, that have not yet been made available for issuance of the
following amendments in this Update are permitted as of the beginning of the fiscal year of adoption. Except for this, early
adoption of the amendments is not permitted. ASU 2017-12: Section 220-10-45 has been updated as the result of the
issuance of ASU 2017-12. The pending content resulting from the issuance of this ASU amended paragraph 220-10-4510A. For public business entities, the amendments in this Update are effective for fiscal years beginning after December
15, 2018, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years
beginning after December 15, 2019, and interim periods beginning after December 15, 2020. Early application is permitted
in any interim period after issuance of the Update. ASU 2018-12 Section 220-10-45 has been updated as a result of the
issuance of ASU 2018-12. The pending content resulting from the issuance of this ASU amended paragraph 220-10-45-10A.
For public business entities, the amendments in this ASU are effective for fiscal years, and interim periods within those
fiscal years, beginning after December 15, 2020. For all other entities, the amendments are effective for fiscal years
beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early
application of the amendments is permitted. Refer to paragraph 944-40-65-2 for transition guidance.
Has the entity appropriately excluded from comprehensive income
the items listed in ASC 220-10-45-10B?
03/09/2023 11:15 AM EST
Page 41 / 1816
FASB Codification:
45-10B
a.
None of the following items qualify as an item of comprehensive income:
{Changes [FAS 130, paragraph 39] }{ in equity during a period resulting from investments by owners and distributions to
owners [FAS 130, paragraph 8] }
b.
{Items required to be reported as direct adjustments to paid-in capital, retained earnings, or other nonincome equity accounts
such as the following types of transactions: [FAS 130, paragraph 5] }
1.
{A reduction of shareholders’ equity related to employee stock ownership plans (see paragraph 718-740-25-5) [FAS 130,
paragraph 110] }
2.
{Recognition of tax benefits related to deductible temporary differences and carryforwards arising from a quasireorganization as defined in Subtopic 852-20 (see paragraph 852-740-45-3) [ASU 2018-09, paragraph 3] }
3.
{Net cash settlement resulting from a change in value of a contract [FAS 130, paragraph 118] }{ that gives the entity a
choice of net cash settlement or settlement in its own shares (see paragraph 815-40-25-4(b)(2)). [FAS 130,
paragraph 118] }
Is the entity in compliance with the guidance in ASC 220-10-45:
Presentation of Income Tax Effects?
FASB Codification:
>
Presentation of Income Tax Effects
45-11
{An entity shall present components of other comprehensive income in the statement in which other comprehensive income is
reported either net of related tax effects or before related tax effects with one amount shown for the aggregate income tax expense or
benefit related to the total of other comprehensive income items. [FAS 130, paragraph 24] }
45-12
{An entity shall present the amount of income tax expense or benefit allocated to each component of other comprehensive
income, including reclassification adjustments, in the statement in which those components are presented or disclose it in the notes
to the financial statements. Example 1 (see paragraphs 220-10-55-7 through 55-8B) illustrates the alternative formats for disclosing
the tax effects related to the components of other comprehensive income. [FAS 130, paragraph 25] }
Pending Content:
Transition Date: (P) December 16, 2020; (N) December 16, 2021 Transition Guidance 105-10-65-6
105-10-65-6{An entity shall present the amount of income tax expense or benefit allocated to each component of other comprehensive
income, including reclassification adjustments, in the statement in which those components are presented or disclose it in the notes
to financial statements. Example 1 (see paragraphs 220-10-55-7 through 55-8B) illustrates the alternative formats for disclosing the
tax effects related to the components of other comprehensive income. [FAS 130, paragraph 25] }{(See paragraph 220-10-50-4.) [ASU
2020-10, paragraph 6] }
45-12A
{H.R.1, An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal
Year 2018 (Tax Cuts and Jobs Act), reduced the U.S. federal corporate income tax rate and made other changes to U.S. federal tax law.
An entity may elect to reclassify the income tax effects of the Tax Cuts and Jobs Act on items within accumulated other comprehensive
income to retained earnings. If an entity does not elect to reclassify the income tax effects of the Tax Cuts and Jobs Act, it shall provide
the disclosures in paragraph 220-10-50-3. If an entity elects to reclassify the income tax effects of the Tax Cuts and Jobs Act, the
amount of that reclassification shall include the following: [ASU 2018-02, paragraph 2] }
a.
{The effect of the change in the U.S. federal corporate income tax rate on the gross deferred tax amounts and related valuation
allowances, if any, at the date of enactment of the Tax Cuts and Jobs Act related to items remaining in accumulated other
comprehensive income. The effect of the change in the U.S. federal corporate income tax rate on gross valuation allowances that
were originally charged to income from continuing operations shall not be included. [ASU 2018-02, paragraph 2] }
03/09/2023 11:15 AM EST
b.
Page 42 / 1816
{Other income tax effects of the Tax Cuts and Jobs Act on items remaining in accumulated other comprehensive income that an
entity elects to reclassify, subject to the disclosures in paragraph 220-10-50-2(b). [ASU 2018-02, paragraph 2] }
45-13
> >
[Paragraph superseded by Accounting Standards Update No. 2011-05 superseded by Accounting Standards Update]
Reporting Accumulated Other Comprehensive Income
45-14
{The total of other comprehensive income for a period shall be transferred to a component of equity that is presented
separately from retained earnings and additional paid-in capital in a statement of financial position at the end of an accounting period.
A descriptive title such as accumulated other comprehensive income shall be used for that component of equity. [FAS 130,
paragraph 26] }
45-14A
{An entity shall present, either on the face of the financial statements or as a separate disclosure in the notes, the changes in
the accumulated balances for each component of other comprehensive income included in that separate component of equity, as required
in paragraph 220-10-45-14. In addition to the presentation of changes in accumulated balances, an entity shall [FAS 130,
paragraph 26] }{present separately for each component of other comprehensive income, current period reclassifications out of
accumulated other comprehensive income and other amounts of current-period other comprehensive income. Both before-tax and net-oftax presentations are permitted provided the entity complies with the requirements in paragraph 220-10-45-12. [ASU 2013-02,
paragraph 2] }{Paragraph 220-10-55-15 illustrates the disclosure of changes in accumulated balances for components of other
comprehensive income as a separate disclosure in the notes to financial statements. [ASU 2011-05, paragraph 8] }
Pending Content:
Transition Date: (P) December 16, 2020; (N) December 16, 2021 Transition Guidance 105-10-65-6
105-10-65-6
Editor's Note: The content of paragraph 220-10-45-14A will change upon transition, together with a change in the heading noted
below.
> > Reporting Changes and Certain Income Tax Effects within Accumulated Other Comprehensive Income
{An entity shall present, either on the face of the financial statements or as a separate disclosure in the notes, the changes in the
accumulated balances for each component of other comprehensive income included in that separate component of equity, as required in
paragraph 220-10-45-14. In addition to the presentation of changes in accumulated balances, an entity shall [FAS 130, paragraph 26]
}{present separately for each component of other comprehensive income, current period reclassifications out of accumulated other
comprehensive income and other amounts of current-period other comprehensive income. Both before-tax and net-of-tax presentations
are permitted provided the entity complies with the requirements in paragraph 220-10-45-12. [ASU 2013-02, paragraph 2] }
{Paragraph 220-10-55-15 illustrates the disclosure of changes in accumulated balances for components of other comprehensive income
as a separate disclosure in the notes to financial statements. [ASU 2011-05, paragraph 8] }{(See paragraph 220-10-50-5.) [ASU
2020-10, paragraph 8] }
03/09/2023 11:15 AM EST
Page 43 / 1816
Consideration Points:
Section 220-10-45 has been updated as a result of the issuance of ASU 2018-02. The pending content resulting from the
issuance of this ASU added paragraph 220-10-45-12A. The amendments in this ASU are effective for all entities for fiscal
years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the amendments
in this ASU is permitted, including adoption in any interim period, (1) for public business entities for reporting periods for
which financial statements have not yet been issued and (2) for all other entities for reporting periods for which financial
statements have not yet been made available for issuance. The amendments in this ASU should be applied either in the
period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal
corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The pending content resulting from the issuance of
ASU 2020-10 amended paragraph 220-10-45-12 and added paragraph 220-10-50-4. For 1) public business entities, 2) notfor-profit entities that have issued, or are a conduit bond obligor for, securities that are traded, listed, or quoted on an
exchange or an over-the-counter market, and 3) an employee benefit plan that files or furnishes financial statements with or
to the SEC, the amendments in ASU 2020-10 are effective for annual periods after December 15, 2020. For all other
entities, the amendments in ASU 2020-10 are effective for annual periods beginning after December 15, 2021, and interim
periods within annual periods beginning after December 15, 2022. Early application of the amendments in this Update is
permitted for: 1) public business entities, 2) not-for-profit entities that have issued, or are a conduit bond obligor for,
securities that are traded, listed, or quoted on an exchange or an over-the-counter market, and 3) an employee benefit plan
that files or furnishes financial statements with or to the SEC for any annual or interim period for which financial
statements have not been issued. For all other entities, early application of the amendments is permitted for any annual or
interim period for which financial statements are available to be issued. The amendments in this Update should be applied
retrospectively. An entity should apply the amendments at the beginning of the period that includes the adoption date.
Has the entity presented comprehensive income in accordance with
the guidance outlined within this paragraph? [ASC 220-10-45-14]
FASB Codification:
45-14
{The total of other comprehensive income for a period shall be transferred to a component of equity that is presented
separately from retained earnings and additional paid-in capital in a statement of financial position at the end of an accounting period.
A descriptive title such as accumulated other comprehensive income shall be used for that component of equity. [FAS 130,
paragraph 26] }
Has the entity appropriately presented, either on the face of the
financial statements or as a separate disclosure in the notes, the
changes in the accumulated balances for each component of other
comprehensive income included in that separate component of
equity, as required in paragraph 220-10-45-14? Has the entity
appropriately presented separately for each component of other
comprehensive income, current period reclassifications out of
accumulated other comprehensive income and other amounts of
current-period other comprehensive income (Both before-tax and
net-of-tax presentations are permitted provided the entity complies
with the requirements in paragraph 220-10-45-12)?
03/09/2023 11:15 AM EST
Page 44 / 1816
FASB Codification:
45-14A
{An entity shall present, either on the face of the financial statements or as a separate disclosure in the notes, the changes in
the accumulated balances for each component of other comprehensive income included in that separate component of equity, as required
in paragraph 220-10-45-14. In addition to the presentation of changes in accumulated balances, an entity shall [FAS 130,
paragraph 26] }{present separately for each component of other comprehensive income, current period reclassifications out of
accumulated other comprehensive income and other amounts of current-period other comprehensive income. Both before-tax and net-oftax presentations are permitted provided the entity complies with the requirements in paragraph 220-10-45-12. [ASU 2013-02,
paragraph 2] }{Paragraph 220-10-55-15 illustrates the disclosure of changes in accumulated balances for components of other
comprehensive income as a separate disclosure in the notes to financial statements. [ASU 2011-05, paragraph 8] }
Pending Content:
Transition Date: (P) December 16, 2020; (N) December 16, 2021 Transition Guidance 105-10-65-6
105-10-65-6
Editor's Note: The content of paragraph 220-10-45-14A will change upon transition, together with a change in the heading noted
below.
> > Reporting Changes and Certain Income Tax Effects within Accumulated Other Comprehensive Income
{An entity shall present, either on the face of the financial statements or as a separate disclosure in the notes, the changes in the
accumulated balances for each component of other comprehensive income included in that separate component of equity, as required in
paragraph 220-10-45-14. In addition to the presentation of changes in accumulated balances, an entity shall [FAS 130, paragraph 26]
}{present separately for each component of other comprehensive income, current period reclassifications out of accumulated other
comprehensive income and other amounts of current-period other comprehensive income. Both before-tax and net-of-tax presentations
are permitted provided the entity complies with the requirements in paragraph 220-10-45-12. [ASU 2013-02, paragraph 2] }
{Paragraph 220-10-55-15 illustrates the disclosure of changes in accumulated balances for components of other comprehensive income
as a separate disclosure in the notes to financial statements. [ASU 2011-05, paragraph 8] }{(See paragraph 220-10-50-5.) [ASU
2020-10, paragraph 8] }
Consideration Points:
The pending content resulting from the issuance of ASU 2020-10 amended paragraph 220-10-45-14A and its related
heading and the heading preceding paragraph 220-10-50-1 and added paragraph 220-10-50-5. For 1) public business
entities, 2) not-for-profit entities that have issued, or are a conduit bond obligor for, securities that are traded, listed, or
quoted on an exchange or an over-the-counter market, and 3) an employee benefit plan that files or furnishes financial
statements with or to the SEC, the amendments in ASU 2020-10 are effective for annual periods after December 15, 2020.
For all other entities, the amendments in ASU 2020-10 are effective for annual periods beginning after December 15, 2021,
and interim periods within annual periods beginning after December 15, 2022. Early application of the amendments in this
Update is permitted for: 1) public business entities, 2) not-for-profit entities that have issued, or are a conduit bond obligor
for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market, and 3) an employee benefit
plan that files or furnishes financial statements with or to the SEC for any annual or interim period for which financial
statements have not been issued. For all other entities, early application of the amendments is permitted for any annual or
interim period for which financial statements are available to be issued. The amendments in this Update should be applied
retrospectively. An entity should apply the amendments at the beginning of the period that includes the adoption date.
Has the entity presented separately for each component of other
comprehensive income (1) current period reclassifications out of
accumulated other comprehensive income and (2) other amounts of
current-period other comprehensive income? (ASC 220-10-45-14A)
Consideration Points:
Section 220-10-45 has been updated as the result of the issuance of ASU 2013-02. For public entities, the amendments are
effective for reporting periods beginning after December 15, 2012. For nonpublic entities, the amendments are effective for
reporting periods beginning after December 15, 2013. The amendments should be applied prospectively and early adoption
is permitted.
03/09/2023 11:15 AM EST
Page 45 / 1816
Have reclassification adjustments been made to avoid double
counting and are these adjustments presented in accordance with
ASC 220-10-45-15 through 45-16?
FASB Codification:
45-15
{Reclassification adjustments shall be made to avoid double counting of items in comprehensive income that are presented as
part of net income for a period that also had been presented as part of other comprehensive income in that period or earlier periods.
[FAS 130, paragraph 18] }{For example, gains on investment securities that were realized and included in net income of the current
period that also had been included in other comprehensive income as unrealized holding gains in the period in which they arose must
be deducted through other comprehensive income of the period in which they are included in net income to avoid including them in
comprehensive income twice (see paragraph 320-10-40-2). [FAS 130, paragraph 18] }{Example 3 (see paragraphs 220-10-55-18
through 55-27) illustrates the presentation of reclassification adjustments in accordance with this paragraph. [ASU 2011-05,
paragraph 8] }
Consideration Points:
Is the entity in compliance with the guidance in ASC 220-10-4516?
FASB Codification:
45-16
{An entity shall determine reclassification adjustments for each component of other comprehensive income, except as noted in
the following paragraph. The requirement for a reclassification adjustment for foreign currency translation adjustments is limited to
translation gains and losses realized upon sale or upon complete or substantially complete liquidation of an investment in a foreign
entity (see paragraphs 830-30-40-1 through 40-1A). [FAS 130, paragraph 19] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{An entity shall determine reclassification adjustments for each component of other comprehensive income. The requirement
for a reclassification adjustment for foreign currency translation adjustments is limited to translation gains and losses realized upon sale
or upon complete or substantially complete liquidation of an investment in a foreign entity (see paragraphs 830-30-40-1 through 401A). [FAS 130, paragraph 19] }
Consideration Points:
Section 220-10-45 has been updated as the result of the issuance of ASU 2013-05. The pending content resulting from the
issuance of this ASU amended paragraph 220-10-45-16 to include a cross reference to the guidance included in ASC 830-3040-1A. For public companies the amendments are effective for fiscal years, and interim reporting periods within those
years, beginning after December 15, 2013. For nonpublic entities the amendments are effective for the first annual period
beginning after December 15, 2014, and interim and annual periods thereafter. The amendments should be applied
prospectively to derecognition events occurring after the effective date. Prior periods should not be adjusted. Early adoption
is permitted. If an entity elects to early adopt the amendments, it should apply them as of the beginning of the entity’s
fiscal year of adoption. The other pending content within this section is currently effective for all entities.
Has the entity appropriately provided information about the effects
on net income of significant amounts reclassified out of each
component of accumulated other comprehensive income if those
amounts all are required under other Topics to be reclassified to net
income in their entirety in the same reporting period? An entity
shall provide this information together, in one location, in either of
the following ways: a. On the face of the statement where net
income is presented b. As a separate disclosure in the notes to the
financial statements.
03/09/2023 11:15 AM EST
Page 46 / 1816
FASB Codification:
45-17
{An entity shall separately provide information about the effects on net income of significant amounts reclassified out of each
component of accumulated other comprehensive income if those amounts all are required under other Topics to be reclassified to net
income in their entirety in the same reporting period. An entity shall provide this information together, in one location, in either of the
following ways: [ASU 2013-02, paragraph 2] }
a.
{On the face of the statement where net income is presented [ASU 2013-02, paragraph 2] }
b.
{As a separate disclosure in the notes to the financial statements. [ASU 2013-02, paragraph 2] }
{The following paragraph describes the information requirements for presentation on the face of the statements where net income is
presented, and paragraph 220-10-45-17B describes the information requirements for disclosure in the notes to the financial
statements. [ASU 2013-02, paragraph 2] }
Pending Content:
Transition Date: (P) December 16, 2020; (N) December 16, 2021 Transition Guidance 105-10-65-6
105-10-65-6{An entity shall separately provide information about the effects on net income of significant amounts reclassified out of
each component of accumulated other comprehensive income if those amounts all are required under other Topics to be reclassified to
net income in their entirety in the same reporting period. An entity shall provide this information together, in one location, in either of
the following ways: [ASU 2013-02, paragraph 2] }
a.
{On the face of the statement where net income is presented [ASU 2013-02, paragraph 2] }
b.
{As a separate disclosure in the notes to financial statements. [ASU 2013-02, paragraph 2] }
{Paragraph 220-10-45-17A describes the information requirements for presentation on the face of the statements where net income is
presented, and [ASU 2013-02, paragraph 2] }{paragraph 220-10-50-6 [ASU 2020-10, paragraph 10] }{ describes the information
requirements for disclosure in the notes to financial statements. [ASU 2013-02, paragraph 2] }
Consideration Points:
The pending content resulting from the issuance of ASU 2020-10 amended paragraphs 220-10-45-17 through 45-17A, 22010-55-15, and 220-10-55-17E, superseded paragraph 220-10-45-17B, and added paragraph 220-10-50-6. For 1) public
business entities, 2) not-for-profit entities that have issued, or are a conduit bond obligor for, securities that are traded,
listed, or quoted on an exchange or an over-the-counter market, and 3) an employee benefit plan that files or furnishes
financial statements with or to the SEC, the amendments in ASU 2020-10 are effective for annual periods after December
15, 2020. For all other entities, the amendments in ASU 2020-10 are effective for annual periods beginning after December
15, 2021, and interim periods within annual periods beginning after December 15, 2022. Early application of the
amendments in this Update is permitted for: 1) public business entities, 2) not-for-profit entities that have issued, or are a
conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market, and 3) an
employee benefit plan that files or furnishes financial statements with or to the SEC for any annual or interim period for
which financial statements have not been issued. For all other entities, early application of the amendments is permitted
for any annual or interim period for which financial statements are available to be issued. The amendments in this Update
should be applied retrospectively. An entity should apply the amendments at the beginning of the period that includes the
adoption date.
03/09/2023 11:15 AM EST
Page 47 / 1816
If an entity chooses to present information about the effects of
significant amounts reclassified out of accumulated other
comprehensive income on net income, on the face of the statement
where net income is presented, has the entity appropriately
presented parenthetically by component of other comprehensive
income the effect of significant reclassification amounts on the
respective line items of net income? Has the entity also
appropriately presented parenthetically the aggregate tax effect of
all significant reclassifications on the line item for income tax
benefit or expense in the statement where net income is
presented? NOTE - If an entity chooses to use a separate line item
or items in the income statement to present significant pension
cost components or other postretirement benefit cost components
reclassified out of accumulated other comprehensive income, it
shall no longer be required to present those pension cost
components or other postretirement benefit cost components
parenthetically.
FASB Codification:
45-17A
{If an entity chooses to present information about the effects of significant amounts reclassified out of accumulated other
comprehensive income on net income, on the face of the statement where net income is presented, the entity shall present
parenthetically by component of other comprehensive income the effect of significant reclassification amounts on the respective line
items of net income. An entity also shall present parenthetically the aggregate tax effect of all significant reclassifications on the line
item for income tax benefit or expense in the statement where net income is presented. [ASU 2013-02, paragraph 2] }{However, if an
entity chooses to use a separate line item or items in the income statement to present significant pension cost components or other
postretirement benefit cost components reclassified out of accumulated other comprehensive income, it shall no longer be required to
present those pension cost components or other postretirement benefit cost components parenthetically. [ASU 2017-07, paragraph 11] }
{If an entity is unable to identify the line item of net income affected by any significant amount reclassified out of accumulated other
comprehensive income in a reporting period (including when all reclassifications for the period are not to net income in their entirety),
the entity must follow the guidance in paragraph 220-10-45-17B. Paragraph 220-10-55-17F provides an example of presentation of
the effect of reclassification on the face of the statement where net income is presented. [ASU 2013-02, paragraph 2] }
Pending Content:
Transition Date: (P) December 16, 2020; (N) December 16, 2021 Transition Guidance 105-10-65-6
105-10-65-6{If an entity chooses to present information about the effects of significant amounts reclassified out of accumulated other
comprehensive income on net income, on the face of the statement where net income is presented, the entity shall present
parenthetically by component of other comprehensive income the effect of significant reclassification amounts on the respective line
items of net income. An entity also shall present parenthetically the aggregate tax effect of all significant reclassifications on the line
item for income tax benefit or expense in the statement where net income is presented. [ASU 2013-02, paragraph 2] }{However, if an
entity chooses to use a separate line item or items in the income statement to present significant pension cost components or other
postretirement benefit cost components reclassified out of accumulated other comprehensive income, it shall no longer be required to
present those pension cost components or other postretirement benefit cost components parenthetically. [ASU 2017-07, paragraph 11] }
{If an entity is unable to identify the line item of net income affected by any significant amount reclassified out of accumulated other
comprehensive income in a reporting period (including when all reclassifications for the period are not to net income in their entirety),
the entity must follow the guidance in [ASU 2013-02, paragraph 2] }{paragraph 220-10-50-6. [ASU 2020-10, paragraph 10] }
{Paragraph 220-10-55-17F provides an example of presentation of the effect of reclassification on the face of the statement where net
income is presented. [ASU 2013-02, paragraph 2] }
03/09/2023 11:15 AM EST
Page 48 / 1816
Consideration Points:
The pending content resulting from the issuance of ASU 2020-10 amended paragraphs 220-10-45-17 through 45-17A, 22010-55-15, and 220-10-55-17E, superseded paragraph 220-10-45-17B, and added paragraph 220-10-50-6. For 1) public
business entities, 2) not-for-profit entities that have issued, or are a conduit bond obligor for, securities that are traded,
listed, or quoted on an exchange or an over-the-counter market, and 3) an employee benefit plan that files or furnishes
financial statements with or to the SEC, the amendments in ASU 2020-10 are effective for annual periods after December
15, 2020. For all other entities, the amendments in ASU 2020-10 are effective for annual periods beginning after December
15, 2021, and interim periods within annual periods beginning after December 15, 2022. Early application of the
amendments in this Update is permitted for: 1) public business entities, 2) not-for-profit entities that have issued, or are a
conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market, and 3) an
employee benefit plan that files or furnishes financial statements with or to the SEC for any annual or interim period for
which financial statements have not been issued. For all other entities, early application of the amendments is permitted
for any annual or interim period for which financial statements are available to be issued. The amendments in this Update
should be applied retrospectively. An entity should apply the amendments at the beginning of the period that includes the
adoption date. ASU 2017-07: Section 220-10-45 has been updated as the result of the issuance of ASU 2017-07. The
pending content resulting from the issuance of this ASU amended paragraph 220-10-45-17A. The amendments are effective
for public business entities for annual periods beginning after December 15, 2017, including interim periods within those
annual periods. For other entities, the amendments are effective for annual periods beginning after December 15, 2018, and
interim periods within annual periods beginning after December 15, 2019. Early adoption is permitted as of the beginning
of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance.
The amendments should be applied retrospectively for the presentation service cost component and the other components
of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively, on and
after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic
postretirement benefit in assets.
If the entity elects to present the effects of significant amounts
reclassified out of AOCI on net income in the notes to the financial
statements, is it in compliance with the guidance in ASC 220-1045-17B? [ASC 220-10-45-17B]
FASB Codification:
45-17B
{If an entity chooses to present information about significant amounts reclassified out of accumulated other comprehensive
income in the notes to the financial statements or is required to do so by the preceding paragraph, it shall present the significant
amounts by each component of accumulated other comprehensive income and provide a subtotal of each component of comprehensive
income. The subtotals for each component shall agree with the requirements in paragraph 220-10-45-14A. Both before-tax and net-oftax presentations are permitted provided the entity complies with the requirements in paragraph 220-10-45-12. For each significant
reclassification amount, the entity shall identify, for those amounts that are required under other Topics to be reclassified to net income
in their entirety in the same reporting period, each line item affected by the reclassification on the statement where net income is
presented. For any significant reclassification for which other Topics do not require that reclassification to net income in its entirety in
the same reporting period, the entity shall cross-reference to the note where additional details about the effect of the reclassifications
are disclosed. Paragraph 220-10-55-17E provides an example of a note presentation in a tabular format of the effect of
reclassifications out of accumulated other comprehensive income. [ASU 2013-02, paragraph 2] }
Pending Content:
Transition Date: (P) December 16, 2020; (N) December 16, 2021 Transition Guidance 105-10-65-6
105-10-65-6 [Paragraph superseded by Accounting Standards Update No. 2020-10 superseded by Accounting Standards Update]
Consideration Points:
Section 220-10-45 has been updated as the result of the issuance of ASU 2013-02. The pending content resulting from the
issuance of this ASU amended paragraph 220-10-45-17 and added paragraphs 220-10-45-17A and 17B. For public
entities, the amendments are effective for reporting periods beginning after December 15, 2012. For nonpublic entities, the
amendments are effective for reporting periods beginning after December 15, 2013. The amendments should be applied
prospectively and early adoption is permitted.
As applicable, has the entity appropriately included the item(s) in
ASC 220-10-45-18 in the condensed financial statements for the
interim period?
03/09/2023 11:15 AM EST
Page 49 / 1816
FASB Codification:
45-18
{Subtopic 270-10 clarifies the application of accounting principles and reporting practices to interim financial information,
including interim financial statements and summarized interim financial data of publicly traded companies issued for external reporting
purposes. An entity shall report a total for comprehensive income in condensed financial statements of interim [FAS 130,
paragraph 27] }{periods in a single continuous statement or in two consecutive statements. [ASU 2011-12, paragraph 3] }
Consideration Points:
[NOTE - NO CONSIDERATION POINT AT THIS TIME]
If the entity is considered a publicly traded company, is it in
compliance with the guidance in ASC 220-10-45-18A? [ASC 22010-45-18A]
FASB Codification:
45-18A
{Publicly traded companies must meet the reporting requirements in this Subtopic at each reporting period. Companies
shall follow the guidance in Subtopic 270-10 for the level of detail required for condensed financial statements for interim-period
financial statements. [ASU 2013-02, paragraph 2] }
Consideration Points:
Section 220-10-45 has been updated as the result of the issuance of ASU 2013-02. The pending content resulting from the
issuance of this ASU added paragraph 220-10-45-18A and 18B, which describes the interim reporting requirements for
public entities (paragraph 220-10-45-18A) and nonpublic entities (paragraph 220-10-45-18B). For public entities, the
amendments are effective for reporting periods beginning after December 15, 2012. For nonpublic entities, the amendments
are effective for reporting periods beginning after December 15, 2013. The amendments should be applied prospectively and
early adoption is permitted.
If the entity is considered a nonpublic company, is it in compliance
with the guidance in ASC 220-10-45-18B? [ASC 220-10-45-18B]
FASB Codification:
45-18B
{Nonpublic entities must meet the reporting requirements in this Subtopic at each reporting period, except for the
requirements in paragraphs 220-10-45-17 through 45-17B. Nonpublic entities are not required to meet the requirements in
paragraphs 220-10-45-17 through 45-17B for interim reporting periods but are required to meet them for annual reporting periods.
[ASU 2013-02, paragraph 2] }
Consideration Points:
Section 220-10-45 has been updated as the result of the issuance of ASU 2013-02. The pending content resulting from the
issuance of this ASU added paragraph 220-10-45-18A and 18B, which describes the interim reporting requirements for
public entities (paragraph 220-10-45-18A) and nonpublic entities (paragraph 220-10-45-18B). For public entities, the
amendments are effective for reporting periods beginning after December 15, 2012. For nonpublic entities, the amendments
are effective for reporting periods beginning after December 15, 2013. The amendments should be applied prospectively and
early adoption is permitted.
Presentation > 220 Income Statement—Reporting Comprehensive Income > 10 Overall > 50 Disclosure > General
Is the entity in compliance with the guidance in ASC 220-10-50-1?
03/09/2023 11:15 AM EST
Page 50 / 1816
FASB Codification:
50-1
{An entity shall disclose a description of the accounting policy for releasing income tax effects from accumulated other
comprehensive income. [ASU 2018-02, paragraph 3] }
Pending Content:
Transition Date: (P) December 16, 2020; (N) December 16, 2021 Transition Guidance 105-10-65-6
105-10-65-6
Editor's Note: The heading preceding paragraph 220-10-50-1 will be amended upon transition as noted below. The content of the
paragraph will not change.
> Disclosing Changes and Certain Income Tax Effects within Accumulated Other Comprehensive Income
{An entity shall disclose a description of the accounting policy for releasing income tax effects from accumulated other comprehensive
income. [ASU 2018-02, paragraph 3] }
Is the entity in compliance with the guidance in ASC 220-10-50-2?
FASB Codification:
50-2
{An entity that elects to reclassify the income tax effects of H.R.1, An Act to Provide for Reconciliation Pursuant to Titles II and V
of the Concurrent Resolution on the Budget for Fiscal Year 2018 (Tax Cuts and Jobs Act), in accordance with paragraph 220-10-45-12A
shall disclose in the period of adoption both of the following: [ASU 2018-02, paragraph 3] }
a.
{A statement that an election was made to reclassify the income tax effects of the Tax Cuts and Jobs Act from accumulated other
comprehensive income to retained earnings [ASU 2018-02, paragraph 3] }
b.
{A description of other income tax effects related to the application of the Tax Cuts and Jobs Act that are reclassified from
accumulated other comprehensive income to retained earnings, if any (see paragraph 220-10-45-12A(b)). [ASU 2018-02,
paragraph 3] }
Is the entity in compliance with the guidance in ASC 220-10-50-3?
FASB Codification:
50-3
{An entity that does not elect to reclassify the income tax effects of the Tax Cuts and Jobs Act in accordance with paragraph 220-
10-45-12A shall disclose in the period of adoption a statement that an election was not made to reclassify the income tax effects of the
Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings. [ASU 2018-02, paragraph 3] }
Has the entity appropriately presented the amount of income tax
expense or benefit allocated to each component of other
comprehensive income, including reclassification adjustments, in
the statement in which those components are presented or disclose
it in the notes to financial statements?
03/09/2023 11:15 AM EST
Page 51 / 1816
FASB Codification:
50-4
Pending Content:
Transition Date: (P) December 16, 2020; (N) December 16, 2021 Transition Guidance 105-10-65-6
105-10-65-6{An entity shall present the amount of income tax expense or benefit allocated to each component of other comprehensive
income, including reclassification adjustments, in the statement in which those components are presented or disclose it in the notes
to financial statements. Example 1 (see paragraphs 220-10-55-7 through 55-8B) illustrates the alternative formats for disclosing the
tax effects related to the components of other comprehensive income. [FAS 130, paragraph 25] }{(See paragraph 220-10-45-12.)
[ASU 2020-10, paragraph 6] }
Consideration Points:
The pending content resulting from the issuance of ASU 2020-10 amended paragraph 220-10-45-12 and added paragraph
220-10-50-4. For 1) public business entities, 2) not-for-profit entities that have issued, or are a conduit bond obligor for,
securities that are traded, listed, or quoted on an exchange or an over-the-counter market, and 3) an employee benefit plan
that files or furnishes financial statements with or to the SEC, the amendments in ASU 2020-10 are effective for annual
periods after December 15, 2020. For all other entities, the amendments in ASU 2020-10 are effective for annual periods
beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022. Early
application of the amendments in this Update is permitted for: 1) public business entities, 2) not-for-profit entities that
have issued, or are a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-thecounter market, and 3) an employee benefit plan that files or furnishes financial statements with or to the SEC for any
annual or interim period for which financial statements have not been issued. For all other entities, early application of the
amendments is permitted for any annual or interim period for which financial statements are available to be issued. The
amendments in this Update should be applied retrospectively. An entity should apply the amendments at the beginning of
the period that includes the adoption date.
Has the entity appropriately presented, either on the face of the
financial statements or as a separate disclosure in the notes, the
changes in the accumulated balances for each component of other
comprehensive income included in that separate component of
equity, as required in paragraph 220-10-45-14? Has the entity
appropriately presented separately for each component of other
comprehensive income, current period reclassifications out of
accumulated other comprehensive income and other amounts of
current-period other comprehensive income (Both before-tax and
net-of-tax presentations are permitted provided the entity complies
with the requirements in paragraph 220-10-45-12)?
FASB Codification:
50-5
Pending Content:
Transition Date: (P) December 16, 2020; (N) December 16, 2021 Transition Guidance 105-10-65-6
105-10-65-6{An entity shall present, either on the face of the financial statements or as a separate disclosure in the notes, the changes
in the accumulated balances for each component of other comprehensive income included in that separate component of equity, as
required in paragraph 220-10-45-14. In addition to the presentation of changes in accumulated balances, an entity shall [FAS 130,
paragraph 26] }{present separately for each component of other comprehensive income, current period reclassifications out of
accumulated other comprehensive income and other amounts of current-period other comprehensive income. Both before-tax and net-oftax presentations are permitted provided the entity complies with the requirements in paragraph 220-10-45-12. [ASU 2013-02,
paragraph 2] }{Paragraph 220-10-55-15 illustrates the disclosure of changes in accumulated balances for components of other
comprehensive income as a separate disclosure in the notes to financial statements. [ASU 2011-05, paragraph 8] }{(See paragraph
220-10-45-14A.) [ASU 2020-10, paragraph 8] }
03/09/2023 11:15 AM EST
Page 52 / 1816
Consideration Points:
The pending content resulting from the issuance of ASU 2020-08 amended paragraph 220-10-45-14A and its related
heading and the heading preceding paragraph 220-10-50-1 and added paragraph 220-10-50-5. For 1) public business
entities, 2) not-for-profit entities that have issued, or are a conduit bond obligor for, securities that are traded, listed, or
quoted on an exchange or an over-the-counter market, and 3) an employee benefit plan that files or furnishes financial
statements with or to the SEC, the amendments in ASU 2020-10 are effective for annual periods after December 15, 2020.
For all other entities, the amendments in ASU 2020-10 are effective for annual periods beginning after December 15, 2021,
and interim periods within annual periods beginning after December 15, 2022. Early application of the amendments in this
Update is permitted for: 1) public business entities, 2) not-for-profit entities that have issued, or are a conduit bond obligor
for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market, and 3) an employee benefit
plan that files or furnishes financial statements with or to the SEC for any annual or interim period for which financial
statements have not been issued. For all other entities, early application of the amendments is permitted for any annual or
interim period for which financial statements are available to be issued. The amendments in this Update should be applied
retrospectively. An entity should apply the amendments at the beginning of the period that includes the adoption date.
Is the entity in compliance with the guidance in ASC 220-10-50-6?
FASB Codification:
50-6
Pending Content:
Transition Date: (P) December 16, 2020; (N) December 16, 2021 Transition Guidance 105-10-65-6
105-10-65-6{If an entity chooses to disclose information about significant amounts reclassified out of accumulated other comprehensive
income in the notes to financial statements or is required to do so by paragraph 220-10-45-17A, it shall disclose the significant
amounts by each component of accumulated other comprehensive income and provide a subtotal of each component of comprehensive
income. The subtotals for each component shall agree with the requirements in paragraph 220-10-45-14A. Both before-tax and net-oftax presentations are permitted provided the entity complies with the requirements in paragraph 220-10-45-12. For each significant
reclassification amount, the entity shall identify, for those amounts that are required under other Topics to be reclassified to net income
in their entirety in the same reporting period, each line item affected by the reclassification on the statement where net income is
presented. For any significant reclassification for which other Topics do not require that reclassification to net income in its entirety in
the same reporting period, the entity shall cross-reference to the note where additional details about the effect of the reclassifications
are disclosed. Paragraph 220-10-55-17E provides an example of a note presentation in a tabular format of the effect of
reclassifications out of accumulated other comprehensive income. [ASU 2013-02, paragraph 2] }{(See paragraph 220-10-45-17B.)
[ASU 2020-10, paragraph 10] }
Consideration Points:
The pending content resulting from the issuance of ASU 2020-10 amended paragraphs 220-10-45-17 through 45-17A, 22010-55-15, and 220-10-55-17E, superseded paragraph 220-10-45-17B, and added paragraph 220-10-50-6. For 1) public
business entities, 2) not-for-profit entities that have issued, or are a conduit bond obligor for, securities that are traded,
listed, or quoted on an exchange or an over-the-counter market, and 3) an employee benefit plan that files or furnishes
financial statements with or to the SEC, the amendments in ASU 2020-10 are effective for annual periods after December
15, 2020. For all other entities, the amendments in ASU 2020-10 are effective for annual periods beginning after December
15, 2021, and interim periods within annual periods beginning after December 15, 2022. Early application of the
amendments in this Update is permitted for: 1) public business entities, 2) not-for-profit entities that have issued, or are a
conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market, and 3) an
employee benefit plan that files or furnishes financial statements with or to the SEC for any annual or interim period for
which financial statements have not been issued. For all other entities, early application of the amendments is permitted
for any annual or interim period for which financial statements are available to be issued. The amendments in this Update
should be applied retrospectively. An entity should apply the amendments at the beginning of the period that includes the
adoption date.
Presentation > 220 Income Statement—Reporting Comprehensive Income > 20 Unusual or Infrequently Occurring
Items > 45 Other Presentation > General
Is the entity in compliance with the guidance in ASC 220-20-45:
Presentation of Unusual or Infrequently Occurring Items?
03/09/2023 11:15 AM EST
Page 53 / 1816
FASB Codification:
>
Presentation of Unusual or Infrequently Occurring Items
45-1
{A material event or transaction that [APB 30, paragraph 26] }{an entity considers to be of an unusual nature or of a type
that indicates infrequency of occurrence or both [ASU 2015-01, paragraph 6] }{shall be reported as a separate component of income
from continuing operations. [APB 30, paragraph 26] }{The nature and financial effects of each event or transaction shall be [APB 30,
paragraph 26] }{presented as a separate component of income from continuing operations [ASU 2015-01, paragraph 6] }{or,
alternatively, disclosed in notes to financial statements (see paragraph 220-20-50-1). [APB 30, paragraph 26] }{ Gains or losses of a
similar nature that are not individually material shall be aggregated. Such items shall not be reported on the face of the income
statement net of income taxes. [APB 30, paragraph 26] }{ Similarly, the EPS effects of those items shall not be presented on the face
of the income statement. [APB 30, paragraph 26] }
Presentation > 220 Income Statement—Reporting Comprehensive Income > 20 Unusual or Infrequently Occurring
Items > 50 Disclosure > General
Is the entity in compliance with the guidance in ASC 220-20-50:
Unusual or Infrequently Occurring Items?
FASB Codification:
>
Unusual or Infrequently Occurring Items
50-1
{The nature and financial effects of each event or transaction that is unusual in nature or occurs infrequently [APB 30,
paragraph 26] }{or both shall be presented as a separate component of income from continuing operations or, alternatively, disclosed in
notes to the financial statements. [ASU 2015-01, paragraph 7] }
Presentation > 220 Income Statement—Reporting Comprehensive Income > 30 Business Interruption Insurance > 45
Other Presentation > General
Is the entity in compliance with the guidance in ASC 220-30-45-1?
FASB Codification:
45-1
{An entity may choose how to classify business interruption insurance recoveries in the statement of operations, as long as
that classification is not contrary to existing generally accepted accounting principles (GAAP). [EITF 01-13, paragraph DISCUSSION] }
Presentation > 220 Income Statement—Reporting Comprehensive Income > 30 Business Interruption Insurance > 50
Disclosure > General
Is the entity in compliance with the guidance in ASC 220-30-50-1?
FASB Codification:
50-1
{The following information shall be disclosed in the notes to financial statements in the period(s) in which business
interruption insurance recoveries are recognized: [EITF 01-13, paragraph DISCUSSION] }
a.
{The nature of the event resulting in business interruption losses [EITF 01-13, paragraph DISCUSSION] }
b.
{The aggregate amount of business interruption insurance recoveries recognized during the period and the line item(s) in the
statement of operations in which those recoveries are classified. [EITF 01-13, paragraph DISCUSSION] }
03/09/2023 11:15 AM EST
Page 54 / 1816
Presentation > 230 Statement of Cash Flows > 10 Overall > 45 Other Presentation > General
Is the statement of cash flows presented in the proper format, does
it include the required content, and are descriptive terms and
explanations used? [ASC 230-10-45-1 through 45-6]
FASB Codification:
>
Form and Content
45-1
{A statement of cash flows shall report the cash effects during a period of an entity's operations, its investing transactions, and
its financing transactions. [FAS 095, paragraph 6] }
45-2
{A reconciliation of net income and net cash flow from operating activities, which generally provides information about the net
effects of operating transactions and other events that affect net income and operating cash flows in different periods, also shall be
provided. [FAS 095, paragraph 6] }
45-3
{Financial statements shall not report an amount of cash flow per share. Neither cash flow nor any component of it is an
alternative to net income as an indicator of an entity's performance, as reporting per-share amounts might imply. [FAS 095,
paragraph 33] }{Reporting a contractually determined per-unit amount, [FAS 095, paragraph 125] }{such as a per unit amount of cash
flow distributable under the terms of a partnership agreement or other agreement between an entity and its owners, [FAS 095,
paragraph 125] }{is not the same as reporting a cash flow per-share amount intended to provide information useful to all investors and
creditors and thus is not precluded by this Subtopic. [FAS 095, paragraph 125] }
> >
Cash and Cash Equivalents
45-4
{A statement of cash flows shall explain the change during the period in the total of cash, cash equivalents, [FAS 095,
paragraph 7] }{and amounts generally described as restricted cash or restricted cash equivalents. [ASU 2016-18, paragraph 3] }{The
statement shall use descriptive terms such as cash or cash and cash equivalents rather than ambiguous terms such as funds. [FAS 095,
paragraph 7] }{When cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents are
presented in more than one line item within the statement of financial position, an entity shall provide the disclosures required in
paragraph 230-10-50-8. [ASU 2016-18, paragraph 3] }
45-5
{Cash purchases and sales of items commonly considered to be cash equivalents generally are part of the entity's cash
management activities rather than part of its operating, investing, and financing activities, and details of those transactions need not
be reported in a statement of cash flows. [FAS 095, paragraph 9] }{In addition, transfers between cash, cash equivalents, and amounts
generally described as restricted cash or restricted cash equivalents are not part of the entity’s operating, investing, and financing
activities, and details of those transfers are not reported as cash flow activities in the statement of cash flows. [ASU 2016-18,
paragraph 3] }
45-6
{Not all investments that qualify are required to be treated as cash equivalents. An entity shall establish a policy concerning
which short-term, highly liquid investments that satisfy the definition of cash equivalents are treated as cash equivalents. For example,
an entity having banking operations might decide that all investments that qualify except for those purchased for its trading account will
be treated as cash equivalents, while an entity whose operations consist largely of investing in short-term, highly liquid investments
might decide that all those items will be treated as investments rather than cash equivalents. [FAS 095, paragraph 10] }
> >
Gross and Net Cash Flows
45-7
{Generally, information about the gross amounts of cash receipts and cash payments during a period is more relevant than
information about the net amounts of cash receipts and payments. However, the net amount of related receipts and payments provides
sufficient information not only for cash equivalents, as noted in paragraph 230-10-45-5, but also for certain other classes of cash flows
specified in paragraphs 230-10-45-8 through 45-9 and paragraph 230-10-45-28. [FAS 095, paragraph 11] }
45-8
{For certain items, the turnover is quick, the amounts are large, and the maturities are short. For certain other items, such as
demand deposits of a bank and customer accounts payable of a broker-dealer, the entity is substantively holding or disbursing cash on
behalf of its customers. Only the net changes during the period in assets and liabilities with those characteristics need be reported
because knowledge of the gross cash receipts and payments related to them may not be necessary to understand the entity's operating,
investing, and financing activities. [FAS 095, paragraph 12] }
03/09/2023 11:15 AM EST
45-9
Page 55 / 1816
{Providing that the original maturity of the asset or liability is three months or less, [FAS 095, paragraph 13] }{cash receipts
and payments pertaining to any of the following qualify for net reporting for the reasons stated in the preceding paragraph: [FAS 095,
paragraph 13] }
a.
{Investments (other than cash equivalents) [FAS 095, paragraph 13] }
b.
{Loans receivable [FAS 095, paragraph 13] }
c.
{Debt. [FAS 095, paragraph 13] }
{For purposes of this paragraph, amounts due on demand are considered to have maturities of three months or less. For convenience,
credit card receivables of financial services operations—generally, receivables resulting from cardholder charges that may, at the
cardholder's option, be paid in full when first billed, usually within one month, without incurring interest charges and that do not stem
from the entity's sale of goods or services—also are considered to be loans with original maturities of three months or less. [FAS 095,
paragraph 13] }
Are cash receipts and cash payments classified properly as
investing, financing or operating activities? [ASC 230-10-45-10
through 45-27]
FASB Codification:
>
Classification
45-10
{A statement of cash flows shall classify cash receipts and cash payments as resulting from investing, financing, or operating
activities. [FAS 095, paragraph 14] }
> >
Cash Flows from Investing Activities
45-11
{Cash flows from purchases, sales, and maturities of available-for-sale debt securities shall be classified as cash flows from
investing activities and reported gross in the statement of cash flows. [FAS 102, paragraph 8] }
45-12
a.
{All of the following are cash inflows from investing activities: [FAS 095, paragraph 16] }
{Receipts from collections or sales of loans made by the entity and of other entities' debt instruments (other than cash
equivalents, certain debt instruments that are acquired specifically for resale as discussed in paragraph 230-10-45-21, [FAS
095, paragraph 16] }{and certain donated debt instruments received by not-for-profit entities (NFPs) as discussed in paragraph
230-10-45-21A) [ASU 2012-05, paragraph 2] }{and collections on a transferor’s beneficial interests in a securitization of the
transferor’s trade receivables [ASU 2016-15, paragraph 20] }
b.
{Receipts from sales of equity instruments of other entities (other than certain equity instruments carried in a trading account as
described in paragraph 230-10-45-18 [FAS 095, paragraph 16] }{and certain donated equity instruments received by NFPs as
discussed in paragraph 230-10-45-21A) [ASU 2012-05, paragraph 2] }{and from returns of investment in those instruments
[FAS 095, paragraph 16] }
c.
{Receipts from sales of property, plant, and equipment and other productive assets [FAS 095, paragraph 16] }
d.
[Subparagraph Not Used not used]
e.
{Receipts from sales of loans that were not specifically acquired for resale. [FAS 102, paragraph 9] }{That is, if loans were
acquired as investments, cash receipts from sales of those loans shall be classified as investing cash inflows regardless of a
change in the purpose for holding those loans. [FAS 102, paragraph 9] }
{For purposes of this paragraph, receipts from disposing of loans, debt or equity instruments, or property, plant, and equipment include
directly related proceeds of insurance settlements, such as the proceeds of insurance on a building that is damaged or destroyed. [FAS
03/09/2023 11:15 AM EST
Page 56 / 1816
095, paragraph 16] }
45-13
a.
{All of the following are cash outflows for investing activities: [FAS 095, paragraph 17] }
{Disbursements for loans made by the entity and payments to acquire debt instruments of other entities (other than cash
equivalents and certain debt instruments that are acquired specifically for resale as discussed in paragraph 230-10-45-21) [FAS
095, paragraph 17] }
b.
{Payments to acquire equity instruments of other entities (other than certain equity instruments carried in a trading account as
described in paragraph 230-10-45-18) [FAS 095, paragraph 17] }
c.
{Payments at the time of purchase or soon before or after purchase to acquire property, plant, and equipment and other
productive assets, [FAS 095, paragraph 17] }{including interest capitalized as part of the cost of those assets. [FAS 095,
paragraph 17] }{Generally, only advance payments, the down payment, or other amounts paid at the time of purchase or soon
before or after purchase of property, plant, and equipment and other productive assets are investing cash outflows. However,
incurring directly related debt to the seller is a financing transaction (see paragraphs 230-10-45-14 through 45-15), and
subsequent payments of principal on that debt thus are financing cash outflows. [FAS 095, paragraph 17] }
d.
{Payments made soon after the acquisition date of a business combination by an acquirer to settle a contingent consideration
liability. [ASU 2016-15, paragraph 9] }
> >
Cash Flows from Financing Activities
45-14
{All of the following are cash inflows from financing activities: [FAS 095, paragraph 19] }
a.
{Proceeds from issuing equity instruments [FAS 095, paragraph 19] }
b.
{Proceeds from issuing bonds, mortgages, notes, and from other short- or long-term borrowing [FAS 095, paragraph 19] }
c.
{Receipts from contributions and investment income that by donor stipulation are restricted for the purposes of acquiring,
constructing, or improving property, plant, equipment, or other long-lived assets or establishing or increasing a donor-restricted
endowment fund [FAS 095, paragraph 19] }
d.
{Proceeds received from derivative instruments that include financing elements at inception, [FAS 095, paragraph 19] }{whether
the proceeds were received at inception or over the term of the derivative instrument, [FAS 095, paragraph 19] }{other than a
financing element inherently included in an at-the-market derivative instrument with no prepayments [FAS 095, paragraph 19] }
e.
[Subparagraph superseded by Accounting Standards Update No. 2016-09 superseded by Accounting Standards Update] .
45-15
a.
{All of the following are cash outflows for financing activities: [FAS 095, paragraph 20] }
{Payments of dividends or other distributions to owners, including outlays to reacquire the entity's equity instruments. [FAS 095,
paragraph 20] }{Cash paid to a tax authority by a grantor when withholding shares from a grantee’s award for tax-withholding
purposes shall be considered an outlay to reacquire the entity’s equity instruments. [ASU 2016-09, paragraph 44] }
b.
{Repayments of amounts borrowed, [FAS 095, paragraph 20] }{including the portion of the repayments made to settle zerocoupon debt instruments that is attributable to the principal or the portion of the repayments made to settle other debt
instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing that is
attributable to the principal. [ASU 2016-15, paragraph 6] }
c.
{Other principal payments to creditors who have extended long-term credit. [FAS 095, paragraph 20] }{See paragraph 230-1045-13(c), which indicates that most principal payments on seller-financed debt directly related to a purchase of property, plant,
and equipment or other productive assets are financing cash outflows. [FAS 095, paragraph 20] }
03/09/2023 11:15 AM EST
d.
Page 57 / 1816
{Distributions to counterparties of derivative instruments that include financing elements at inception, [FAS 095, paragraph 20] }
{other than a financing element inherently included in an at-the-market derivative instrument with no prepayments. [FAS 095,
paragraph 20] }{The distributions may be either at inception or over the term of the derivative instrument. [FAS 095,
paragraph 20] }
e.
{Payments for debt issue costs. [EITF 95-13, paragraph DISCUSSION] }
f.
{Payments, or the portion of the payments, not made soon after the acquisition date of a business combination by an acquirer to
settle a contingent consideration liability up to the amount of the contingent consideration liability recognized at the acquisition
date, including measurement-period adjustments, less any amounts paid soon after the acquisition date to settle the contingent
consideration liability. See also paragraph 230-10-45-17(ee). [ASU 2016-15, paragraph 9] }
g.
{Payments for debt prepayment or debt extinguishment costs, including third-party costs, premiums paid, and other fees paid to
lenders that are directly related to the debt prepayment or debt extinguishment, excluding accrued interest. [ASU 2016-15,
paragraph 4] }
> >
Cash Flows from Operating Activities
45-16
a.
{All of the following are cash inflows from operating activities: [FAS 095, paragraph 22] }
{Cash receipts from sales of goods or services, including receipts from collection or sale of accounts and both short- and longterm notes receivable from customers arising from those sales. [FAS 095, paragraph 22] }{The term goods includes certain
loans and other debt and equity instruments of other entities that are acquired specifically for resale, as discussed in paragraph
230-10-45-21. [FAS 095, paragraph 22] }
b.
{Cash receipts from returns on loans, other debt instruments of other entities, and equity securities—interest and dividends. [FAS
095, paragraph 22] }
c.
{All other cash receipts that do not stem from transactions defined as investing or financing activities, such as amounts received
to settle lawsuits and refunds from suppliers. [FAS 095, paragraph 22] }
45-17
a.
{All of the following are cash outflows for operating activities: [FAS 095, paragraph 23] }
{Cash payments to acquire materials for manufacture or goods for resale, including principal payments on accounts and both
short- and long-term notes payable to suppliers for those materials or goods. [FAS 095, paragraph 23] }{The term goods
includes certain loans and other debt and equity instruments of other entities that are acquired specifically for resale, as
discussed in paragraph 230-10-45-21. [FAS 095, paragraph 23] }
b.
{Cash payments to other suppliers and employees for other goods or services. [FAS 095, paragraph 23] }
c.
{Cash payments to governments for taxes, duties, fines, and other fees or penalties. [FAS 095, paragraph 23] }
d.
{Cash payments to lenders and other creditors for interest, [FAS 095, paragraph 23] }{including the portion of the payments
made to settle zero-coupon debt instruments that is attributable to accreted interest related to the debt discount or the portion of
the payments made to settle other debt instruments with coupon interest rates that are insignificant in relation to the effective
interest rate of the borrowing that is attributable to accreted interest related to the debt discount. For all other debt instruments,
an issuer shall not bifurcate cash payments to lenders and other creditors at settlement for amounts attributable to accreted
interest related to the debt discount, nor classify such amounts as cash outflows for operating activities. [ASU 2016-15,
paragraph 6] }
e.
{Cash payment made to settle an asset retirement obligation. [EITF 02-06, paragraph DISCUSSION] }
03/09/2023 11:15 AM EST
Page 58 / 1816
ee. {Cash payments, or the portion of the payments, not made soon after the acquisition date of a business combination by an
acquirer to settle a contingent consideration liability that exceed the amount of the contingent consideration liability recognized at
the acquisition date, including measurement-period adjustments, less any amounts paid soon after the acquisition date to settle
the contingent consideration liability. See also paragraph 230-10-45-15(f). [ASU 2016-15, paragraph 9] }
f.
{All other cash payments that do not stem from transactions defined as investing or financing activities, such as payments to
settle lawsuits, cash contributions to charities, and cash refunds to customers. [FAS 095, paragraph 23] }
> >
Acquisitions and Sales of Certain Securities and Loans
45-18
{Banks, brokers and dealers in securities, and other entities may carry securities and other assets in a trading account. [FAS
102, paragraph 8] }{Characteristics of trading account activities are described in Topics 255 and 940. [FAS 102, paragraph 8] }
45-19
{Cash receipts and cash payments resulting from purchases and sales of securities classified as trading debt securities
accounted for in accordance with Topic 320 [FAS 102, paragraph 8] }{and equity securities accounted for in accordance with Topic 321
[ASU 2016-01, paragraph 9] }{shall be classified pursuant to this Topic based on the nature and purpose for which the securities were
acquired. [FAS 102, paragraph 8] }
45-20
{Cash receipts and cash payments resulting from purchases and sales of other securities and other assets shall be classified as
operating cash flows if those assets are acquired specifically for resale and are carried at fair value in a trading account. [FAS 102,
paragraph 8] }
45-21
{Some loans are similar to debt securities in a trading account in that they are originated or purchased specifically for resale
and are held for short periods of time. [FAS 102, paragraph 9] }{Cash receipts and cash payments resulting from acquisitions and
sales of loans also shall be classified as operating cash flows if those loans are acquired specifically for resale and are carried at fair
value or at the lower of cost or fair value. [FAS 102, paragraph 9] }{For example, mortgage loans held for sale are required to be
reported at the lower of cost or fair value in accordance with Topic 948. [FAS 102, paragraph 9] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{Some loans are similar to debt securities in a trading account in that they are originated or purchased specifically for
resale and are held for short periods of time. [FAS 102, paragraph 9] }{Cash receipts and cash payments resulting from acquisitions
and sales of loans also shall be classified as operating cash flows if those loans are acquired specifically for resale and are carried at
fair value or at the lower of amortized cost basis or fair value. [FAS 102, paragraph 9] }{For example, mortgage loans held for sale
are required to be reported at the lower of amortized cost basis or fair value in accordance with Topic 948. [FAS 102, paragraph 9] }
45-21A
{Cash receipts resulting from the sale of donated financial assets (for example, donated debt or equity instruments) by NFPs
that upon receipt were directed without any NFP-imposed limitations for sale and were converted nearly immediately into cash shall be
classified as operating cash flows. If, however, the donor restricted the use of the contributed resource to a long-term purpose of the
nature of those described in paragraph 230-10-45-14(c), then those cash receipts meeting all the conditions in this paragraph shall be
classified as a financing activity. [ASU 2012-05, paragraph 3] }
> >
Proceeds from the Settlement of Insurance Claims
45-21B
{Cash receipts resulting from the settlement of insurance claims, excluding proceeds received from corporate-owned life
insurance policies and bank-owned life insurance policies, shall be classified on the basis of the related insurance coverage (that is, the
nature of the loss). For insurance proceeds that are received in a lump-sum settlement, an entity shall determine the classification on
the basis of the nature of each loss included in the settlement. [ASU 2016-15, paragraph 12] }
45-21C
{Cash receipts resulting from the settlement of corporate-owned life insurance policies, including bank-owned life insurance
policies, shall be classified as cash inflows from investing activities. Cash payments for premiums on corporate-owned life insurance
policies, including bank-owned life insurance policies, may be classified as cash outflows for investing activities, operating activities, or
a combination of cash outflows for investing and operating activities. [ASU 2016-15, paragraph 15] }
> >
Distributions Received from Equity Method Investees
45-21D
{When a reporting entity applies the equity method, it shall make an accounting policy election to classify distributions
received from equity method investees using either of the following approaches: [ASU 2016-15, paragraph 17] }
03/09/2023 11:15 AM EST
a.
Page 59 / 1816
{Cumulative earnings approach: Distributions received are considered returns on investment and shall be classified as cash
inflows from operating activities unless the investor’s cumulative distributions received less distributions received in prior
periods that were determined to be returns of investment exceed cumulative equity in earnings recognized by the investor (as
adjusted for amortization of basis differences). When such an excess occurs, the current-period distribution up to this excess is
considered a return of investment and shall be classified as cash inflows from investing activities. [ASU 2016-15, paragraph 17]
}
b.
{Nature of the distribution approach: Distributions received shall be classified on the basis of the nature of the activity or
activities of the investee that generated the distribution as either a return on investment (classified as a cash inflow from
operating activities) or a return of investment (classified as a cash inflow from investing activities) when such information is
available. [ASU 2016-15, paragraph 17] }
{If an entity elects to apply the nature of the distribution approach and the information to apply that approach to distributions received
from an individual equity method investee is not available to the investor, the entity shall report a change in accounting principle on a
retrospective basis by applying the cumulative earnings approach described in (a) above for that investee. In such situations, an entity
shall disclose that a change in accounting principle has occurred with respect to the affected investee(s) due to the lack of available
information and shall provide the disclosures required in paragraphs 250-10-50-1(b) and 250-10-50-2, as applicable. With either
approach described in (a) or (b) above, an entity also shall comply with the applicable accounting policy disclosure requirements in
paragraphs 235-10-50-1 through 50-6. [ASU 2016-15, paragraph 17] }
> >
More than One Class of Cash Flows
45-22
{Certain cash receipts and payments may have aspects of more than one class of cash flows. [FAS 095, paragraph 24] }{The
classification of those cash receipts and payments shall be determined first by applying specific guidance in this Topic and other
applicable Topics. In the absence of specific guidance, a reporting entity shall determine each separately identifiable source or each
separately identifiable use within the cash receipts and cash payments on the basis of the nature of the underlying cash flows, including
when judgment is necessary to estimate the amount of each separately identifiable source or use. A reporting entity shall then classify
each separately identifiable source or use within the cash receipts and payments on the basis of their nature in financing, investing, or
operating activities. [ASU 2016-15, paragraph 23] }
45-22A
{In situations in which cash receipts and payments have aspects of more than one class of cash flows and cannot be separated
by source or use (for example, when a piece of equipment is acquired or produced by an entity to be rented to others for a period of
time and then sold), the appropriate classification shall depend on the activity that is likely to be the predominant source or use of cash
flows for the item. [ASU 2016-15, paragraph 23] }
45-23
{Another example where cash receipts and payments include more than one class of cash flows involves a derivative
instrument that includes a financing element at inception, other than a financing element inherently included in an at-the-market
derivative instrument with no prepayments, because the borrower’s cash flows are associated with both the financing element and the
derivative instrument. [FAS 095, paragraph 24] }{For that derivative instrument, all cash inflows and outflows shall be considered
cash flows from financing activities by the borrower. [FAS 095, paragraph 24] }
> >
Reporting Operating, Investing, and Financing Activities
45-24
{A statement of cash flows for a period shall report net cash provided or used by operating, investing, and financing activities
and the net effect of those flows on the total of cash, cash equivalents, [FAS 095, paragraph 26] }{and amounts generally described as
restricted cash or restricted cash equivalents during the period. The statement of cash flows shall report that information [ASU 201618, paragraph 3] }{in a manner that reconciles beginning and ending [FAS 095, paragraph 26] }{totals of cash, cash equivalents, and
amounts generally described as restricted cash or restricted cash equivalents. [ASU 2016-18, paragraph 3] }
45-24A
{For cash flow disclosures related to a discontinued operation, see paragraph 205-20-50-5B(c). [ASU 2014–08,
paragraph 14] }
45-25
{In reporting cash flows from operating activities, entities are encouraged to report major classes of gross cash receipts and
gross cash payments and their arithmetic sum—the net cash flow from operating activities (the direct method). [FAS 095,
paragraph 27] }{(Paragraphs 230-10-55-1 through 55-4 and paragraph 230-10-55-21, respectively, discuss and illustrate a method
by which those major classes of gross operating cash receipts and payments generally may be determined indirectly.) [FAS 095,
03/09/2023 11:15 AM EST
Page 60 / 1816
paragraph 27] }{Entities that do so shall, at a minimum, separately report the following classes of operating cash receipts and
payments: [FAS 095, paragraph 27] }
a.
{Cash collected from customers, including lessees, licensees, and the like [FAS 095, paragraph 27] }
b.
{Interest and dividends received. [FAS 095, paragraph 27] }{Interest and dividends that are donor restricted for long-term
purposes as included in the list of financing activities and paragraph 230-10-45-14(c) are not part of operating cash receipts.
[FAS 095, paragraph 27] }
c.
{Other operating cash receipts, if any [FAS 095, paragraph 27] }
d.
{Cash paid to employees and other suppliers of goods or services, including suppliers of insurance, advertising, and the like [FAS
095, paragraph 27] }
e.
{Interest paid, [FAS 095, paragraph 27] }{including the portion of the payments made to settle zero-coupon debt instruments
that is attributable to accreted interest related to the debt discount or the portion of the payments made to settle other debt
instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing that is
attributable to accreted interest related to the debt discount [ASU 2016-15, paragraph 6] }
f.
{Income taxes paid [FAS 095, paragraph 27] }
g.
{Other operating cash payments, if any. [FAS 095, paragraph 27] }
{Entities are encouraged to provide further breakdowns of operating cash receipts and payments that they consider meaningful and
feasible. For example, a retailer or manufacturer might decide to further divide cash paid to employees and suppliers (category (d) in
the preceding paragraph) into payments for costs of inventory and payments for selling, general, and administrative expenses. [FAS
095, paragraph 27] }
45-26
{Except for items described in paragraphs 230-10-45-8 through 45-9, both investing cash inflows and outflows and financing
cash inflows and outflows shall be reported separately in a statement of cash flows—for example, outlays for acquisitions of property,
plant, and equipment shall be reported separately from proceeds from sales of property, plant, and equipment; proceeds of borrowings
shall be reported separately from repayments of debt; and proceeds from issuing stock shall be reported separately from outlays to
reacquire the entity's stock. [FAS 095, paragraph 31] }
> >
45-27
Cash Receipts and Payments Related to Hedging Activities
{Generally, each cash receipt or payment is to be classified according to its nature without regard to whether it stems from an
item intended as a hedge of another item. For example, the proceeds of a borrowing are a financing cash inflow even though the debt is
intended as a hedge of an investment, and the purchase or sale of a futures contract is an investing activity even though the contract is
intended as a hedge of a firm commitment to purchase inventory. However, cash flows from a derivative instrument that is accounted
for as a fair value hedge or cash flow hedge may be classified in the same category as the cash flows from the items being hedged
provided that the derivative instrument does not include an other-than-insignificant financing element at inception, other than a
financing element inherently included in an at-the-market derivative instrument with no prepayments (that is, the forward points in an
at-the-money forward contract) and that the accounting policy is disclosed. If the derivative instrument includes an other-thaninsignificant financing element at inception, all cash inflows and outflows of the derivative instrument shall be considered cash flows
from financing activities by the borrower. If for any reason hedge accounting for an instrument that hedges an identifiable transaction or
event is discontinued, then any cash flows after the date of discontinuance shall be classified consistent with the nature of the
instrument. [FAS 095, paragraph 14] }
Is the entity in compliance with the guidance in ASC 230-10-45:
Proceeds from the Settlement of Insurance Claims?
03/09/2023 11:15 AM EST
Page 61 / 1816
FASB Codification:
>
Proceeds from the Settlement of Insurance Claims
45-21B
{Cash receipts resulting from the settlement of insurance claims, excluding proceeds received from corporate-owned life
insurance policies and bank-owned life insurance policies, shall be classified on the basis of the related insurance coverage (that is, the
nature of the loss). For insurance proceeds that are received in a lump-sum settlement, an entity shall determine the classification on
the basis of the nature of each loss included in the settlement. [ASU 2016-15, paragraph 12] }
45-21C
{Cash receipts resulting from the settlement of corporate-owned life insurance policies, including bank-owned life insurance
policies, shall be classified as cash inflows from investing activities. Cash payments for premiums on corporate-owned life insurance
policies, including bank-owned life insurance policies, may be classified as cash outflows for investing activities, operating activities, or
a combination of cash outflows for investing and operating activities. [ASU 2016-15, paragraph 15] }
Is the entity in compliance with the guidance in ASC 230-10-45:
Distributions Received from Equity Method Investees?
FASB Codification:
>
Distributions Received from Equity Method Investees
45-21D
{When a reporting entity applies the equity method, it shall make an accounting policy election to classify distributions
received from equity method investees using either of the following approaches: [ASU 2016-15, paragraph 17] }
a.
{Cumulative earnings approach: Distributions received are considered returns on investment and shall be classified as cash
inflows from operating activities unless the investor’s cumulative distributions received less distributions received in prior
periods that were determined to be returns of investment exceed cumulative equity in earnings recognized by the investor (as
adjusted for amortization of basis differences). When such an excess occurs, the current-period distribution up to this excess is
considered a return of investment and shall be classified as cash inflows from investing activities. [ASU 2016-15, paragraph 17]
}
b.
{Nature of the distribution approach: Distributions received shall be classified on the basis of the nature of the activity or
activities of the investee that generated the distribution as either a return on investment (classified as a cash inflow from
operating activities) or a return of investment (classified as a cash inflow from investing activities) when such information is
available. [ASU 2016-15, paragraph 17] }
{If an entity elects to apply the nature of the distribution approach and the information to apply that approach to distributions received
from an individual equity method investee is not available to the investor, the entity shall report a change in accounting principle on a
retrospective basis by applying the cumulative earnings approach described in (a) above for that investee. In such situations, an entity
shall disclose that a change in accounting principle has occurred with respect to the affected investee(s) due to the lack of available
information and shall provide the disclosures required in paragraphs 250-10-50-1(b) and 250-10-50-2, as applicable. With either
approach described in (a) or (b) above, an entity also shall comply with the applicable accounting policy disclosure requirements in
paragraphs 235-10-50-1 through 50-6. [ASU 2016-15, paragraph 17] }
Entities that choose not to provide information about cash receipts
and cash payments by the direct method, has the entity reported
net cash flow from operating activities indirectly by adjusting net
income (or change in net assets of a not-for-profit entity) to
reconcile it to net cash flow from operating activities (i.e., the
indirect method) properly? [ASC 230-10-45-28 through 45-32]
03/09/2023 11:15 AM EST
Page 62 / 1816
FASB Codification:
>
Reconciliation of Net Income and Net Cash Flow from Operating Activities
45-28
{Entities that choose not to provide information about major classes of operating cash receipts and payments by the direct
method as encouraged in paragraph 230-10-45-25 shall determine and report the same amount for net cash flow from operating
activities indirectly by adjusting net income of a business entity or change in net assets of a not-for-profit entity (NFP) to reconcile it to
net cash flow from operating activities (the indirect or reconciliation method). [FAS 095, paragraph 28] }{That requires adjusting net
income of a business entity or change in net assets of an NFP to remove both of the following: [FAS 095, paragraph 28] }
a.
{The effects of all deferrals of past operating cash receipts and payments, such as changes during the period in inventory,
deferred income, and the like, and all accruals of expected future operating cash receipts and payments, such as changes during
the period in receivables and payables. [FAS 095, paragraph 28] }{Adjustments to net income of a business entity or change in
net assets of an NFP to determine net cash flow from operating activities shall reflect accruals for interest earned but not
received and interest incurred but not paid. Those accruals may be reflected in the statement of financial position in changes in
assets and liabilities that relate to investing or financing activities, such as loans or deposits. However, interest credited directly
to a deposit account that has the general characteristics of cash is a cash outflow of the payor and a cash inflow of the payee
when the entry is made. [FAS 095, paragraph 28] }
b.
{All items that are included in net income of a business entity or change in net assets of an NFP that do not affect net cash
provided from, or used for, operating activities such as depreciation of property, plant, and equipment and amortization of finitelife intangible assets. [ASU 2010-08, paragraph 3] }{This includes all items whose cash effects are related to investing or
financing cash flows, such as gains or losses on sales of property, plant, and equipment and discontinued operations (which relate
to investing activities), and gains or losses on extinguishment of debt (which relate to financing activities). [FAS 095,
paragraph 28] }
45-29
{The reconciliation of net income of a business entity to net cash flow from operating activities described in paragraph 230-10-
45-28 shall be provided regardless of whether the direct or indirect method of reporting net cash flow from operating activities is used.
[FAS 095, paragraph 29] }{However, NFPs that use the direct method of reporting net cash flows from operations are not required to
provide a reconciliation of change in net assets to net cash flow from operating activities. Additional guidance for NFPs is found in
Subtopic 958-230. [ASU 2016-14, paragraph 61] }{The reconciliation shall separately report all major classes of reconciling items.
[FAS 095, paragraph 29] }{ For example, major classes of deferrals of past operating cash receipts and payments and accruals of
expected future operating cash receipts and payments, including, at a minimum, changes during the period in receivables pertaining to
operating activities, in inventory, and in payables pertaining to operating activities, shall be separately reported. [FAS 095,
paragraph 29] }{Entities are encouraged to provide further breakdowns of those categories that they consider meaningful. [FAS 095,
paragraph 29] }{For example, changes in receivables from customers for an entity's sale of goods or services might be reported
separately from changes in other operating receivables. [FAS 095, paragraph 29] }
45-30
{If an entity other than an NFP uses the direct method of reporting net cash flow from operating activities, the reconciliation of
net income to net cash flow from operating activities shall be provided in a separate schedule. [FAS 095, paragraph 30] }
45-31
{If the indirect method is used, the reconciliation may be either reported within the statement of cash flows or provided in a
separate schedule, with the statement of cash flows reporting only the net cash flow from operating activities. [FAS 095, paragraph 30]
}
45-32
{If the reconciliation is presented in the statement of cash flows, all adjustments to net income of a business entity or change in
net assets of an NFP to determine net cash flow from operating activities shall be clearly identified as reconciling items. [FAS 095,
paragraph 30] }
Presentation > 230 Statement of Cash Flows > 10 Overall > 50 Disclosure > General
Has an entity's policy for determining which items are treated as
cash equivalents been disclosed? [ASC 230-10-50-1]
03/09/2023 11:15 AM EST
Page 63 / 1816
FASB Codification:
>
Cash Equivalents Policy
50-1
{An entity shall disclose its policy for determining which items are treated as cash equivalents. Any change to that policy is a
change in accounting principle that shall be effected by restating financial statements for earlier years presented for comparative
purposes. [FAS 095, paragraph 10] }
If the entity reports cash flows using the indirect method, have
amounts of interest and income taxes paid been disclosed? [ASC
230-10-50-2]
FASB Codification:
>
Interest and Income Taxes Paid
50-2
{If the indirect method is used, amounts of interest paid (net of amounts capitalized), [FAS 095, paragraph 29] }{including the
portion of the payments made to settle zero-coupon debt instruments that is attributable to accreted interest related to the debt discount
or the portion of the payments made to settle other debt instruments with coupon interest rates that are insignificant in relation to the
effective interest rate of the borrowing that is attributable to accreted interest related to the debt discount, [ASU 2016-15,
paragraph 7] }{and income taxes paid during the period shall be disclosed. [FAS 095, paragraph 29] }
Consideration Points:
Section 230-10-50 has been updated as the result of the issuance of ASU 2016-15. The pending content resulting from the
issuance of this ASU amended paragraph 230-10-50-2. The amendments in this Update are effective for public business
entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other
entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal
years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. If an entity
early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year
that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period.
The amendments should be applied using a retrospective transition method to each period presented. If it is impracticable
to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied
prospectively as of the earliest date practicable.
Has information about all investing and financing activities been
disclosed properly? [ASC 230-10-50-3 through 50-6]
03/09/2023 11:15 AM EST
Page 64 / 1816
FASB Codification:
>
Noncash Investing and Financing Activities
50-3
{Information about all investing and financing activities of an entity during a period that affect recognized assets or liabilities
but that do not result in cash receipts or cash payments in the period shall be disclosed. [FAS 095, paragraph 32] }{Those disclosures
[FAS 095, paragraph 32] }{may be either narrative or summarized in a schedule, and [FAS 095, paragraph 32] }{they shall clearly
relate the cash and noncash aspects of transactions involving similar items. [FAS 095, paragraph 32] }
50-4
{Examples of noncash investing and financing transactions are converting debt to equity; [FAS 095, paragraph 32] }{acquiring
assets by assuming directly related liabilities, such as purchasing a building by incurring a mortgage to the seller; [FAS 095,
paragraph 32] }{obtaining an asset by entering into a capital lease; [FAS 095, paragraph 32] }{obtaining a beneficial interest as
consideration for transferring financial assets (excluding cash), including the transferor’s trade receivables, in a securitization
transaction; [ASU 2016-15, paragraph 21] }{obtaining a building or investment asset by receiving a gift; [FAS 095, paragraph 32] }
{and exchanging noncash assets or liabilities for other noncash assets or liabilities. [FAS 095, paragraph 32] }
Pending Content:
Transition Date: (P) December 16, 2018; (N) December 16, 2021 Transition Guidance 842-10-65-1
842-10-65-1{Examples of noncash investing and financing transactions are converting debt to equity; [FAS 095, paragraph 32] }
{acquiring assets by assuming directly related liabilities, such as purchasing a building by incurring a mortgage to the seller; [FAS
095, paragraph 32] }{obtaining a right-of-use asset in exchange for a lease liability; [ASU 2016-02, paragraph 15] }{obtaining a
beneficial interest as consideration for transferring financial assets (excluding cash), including the transferor’s trade receivables, in a
securitization transaction; [ASU 2016-15, paragraph 21] }{obtaining a building or investment asset by receiving a gift; [FAS 095,
paragraph 32] }{and exchanging noncash assets or liabilities for other noncash assets or liabilities. [FAS 095, paragraph 32] }
50-5
{Some transactions are part cash and part noncash; only the cash portion shall be reported in the statement of cash flows. [FAS
095, paragraph 32] }
50-6
{If there are only a few such noncash transactions, it may be convenient to include them on the same page as the statement of
cash flows. Otherwise, the transactions may be reported elsewhere in the financial statements, clearly referenced to the statement of
cash flows. [FAS 095, paragraph 74] }
Consideration Points:
Section 230-10-50 has been updated as the result of the issuance of ASU 2016-02. The pending content resulting from the
issuance of this ASU amended paragraph 230-10-50-4. The amendments in this ASU are effective for fiscal years beginning
after December 15, 2018, including interim periods within those fiscal years, for any of the following: * Public business
entities. * Not-for-profit entities that have issued, or are a conduit bond obligor for, securities that are traded, listed, or
quoted on an exchange or an over-the-counter market. * Employee benefit plans that file financial statements with the SEC.
For all other entities, the amendments in the ASU are effective for fiscal years beginning after December 15, 2019, and
interim periods within fiscal years beginning after December 15, 2020. Early application of the amendments in the ASU is
permitted for all entities. ASU 2016-15 Section 230-10-50 has been updated as the result of the issuance of ASU 2016-15.
The pending content resulting from the issuance of this ASU amended paragraph 230-10-50-4. The amendments in this
Update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods
within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15,
2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including
adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be
reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must
adopt all of the amendments in the same period. The amendments should be applied using a retrospective transition method
to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the
amendments for those issues would be applied prospectively as of the earliest date practicable.
Is the entity in compliance with the guidance in ASC 230-10-50:
Restrictions on Cash and Cash Equivalents?
03/09/2023 11:15 AM EST
Page 65 / 1816
FASB Codification:
>
Restrictions on Cash and Cash Equivalents
50-7
{An entity shall disclose information about the nature of restrictions on its cash, cash equivalents, and amounts generally
described as restricted cash or restricted cash equivalents. An entity within the scope of Topic 958 on not-for-profit entities also shall
provide the disclosures required in paragraph 958-210-50-3 (see paragraphs 230-10-55-12A and 230-10-55-18A). [ASU 2016-18,
paragraph 4] }
50-8
{When cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents are presented in
more than one line item within the statement of financial position, an entity shall, for each period that a statement of financial position
is presented, present on the face of the statement of cash flows or disclose in the notes to the financial statements, the line items and
amounts of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents reported within the
statement of financial position. The amounts, disaggregated by the line item in which they appear within the statement of financial
position, shall sum to the total amount of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash
equivalents at the end of the corresponding period shown in the statement of cash flows. This disclosure may be provided in either a
narrative or a tabular format (see paragraphs 230-10-55-12A and 230-10-55-18A). [ASU 2016-18, paragraph 4] }
Consideration Points:
Section 230-10-50 has been updated as the result of the issuance of ASU 2016-18. The pending content resulting from the
issuance of this ASU added paragraphs 230-10-50-7 and 50-8. The amendments in this Update are effective for public
business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all
other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within
fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. If an
entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the
fiscal year that includes that interim period. The amendments in this Update should be applied using a retrospective
transition method to each period presented.
Presentation > 235 Notes to Financial Statements > 10 Overall > 50 Disclosure > General
Has a description of all significant accounting policies of the entity
been included as an integral part of the financial statements? [ASC
235-10-50-1 and 50-2]
FASB Codification:
>
50-1
Accounting Policies Disclosure
{Information about the accounting policies adopted by an entity is essential for financial statement users. When financial
statements that are issued or are available to be issued (as discussed in Section 855-10-25) purport to present fairly financial position,
cash flows, and results of operations in accordance with generally accepted accounting principles (GAAP), a description of all significant
accounting policies of the entity shall be included as an integral part of the financial statements. In circumstances where it may be
appropriate to issue one or more of the basic financial statements without the others, purporting to present fairly the information given
in accordance with GAAP, statements so presented also shall include disclosure of the pertinent accounting policies. [APB 22,
paragraph 8] }
Consideration Points:
If no changes to an entity's accounting policies have been made since last annual reporting date, disclosure of such policies
at interim reporting dates is not required.
03/09/2023 11:15 AM EST
Page 66 / 1816
Does the accounting policy disclosure identify and describe the
accounting principles followed by the entity and the methods of
applying those principles that materially affect the determination of
the financial position, cash flows, or results of operations (including
those involving a selection from existing acceptable alternatives,
principles and methods peculiar to the industry in which the entity
operates, and/or unusual or innovative applications of GAAP)?
[ASC 235-10-50-3]
FASB Codification:
>
What to Disclose
50-3
{Disclosure of accounting policies shall identify and describe the accounting principles followed by the entity and the methods of
applying those principles that materially affect the determination of financial position, cash flows, or results of operations. In general,
the disclosure shall encompass important judgments as to appropriateness of principles relating to recognition of revenue and allocation
of asset costs to current and future periods; in particular, it shall encompass those accounting principles and methods that involve any of
the following: [APB 22, paragraph 12] }
a.
{A selection from existing acceptable alternatives [APB 22, paragraph 12] }
b.
{Principles and methods peculiar to the industry in which the entity operates, even if such principles and methods are
predominantly followed in that industry [APB 22, paragraph 12] }
c.
{Unusual or innovative applications of GAAP. [APB 22, paragraph 12] }
Has the entity avoided duplication of financial statement disclosure
of accounting policies that may be presented elsewhere as part of
the financial statements? [ASC 235-10-50-5]
FASB Codification:
>
Avoid Duplicate Details of Disclosures
50-5
{Financial statement disclosure of accounting policies shall not duplicate details (for example, composition of inventories or of
plant assets) presented elsewhere as part of the financial statements. In some cases, the disclosure of accounting policies shall refer to
related details presented elsewhere as part of the financial statements; for example, changes in accounting policies during the period
shall be described with cross-reference to the disclosure required by Topic 250. [APB 22, paragraph 14] }
Has the entity disclosed significant accounting policies in a
separate summary of significant accounting policies preceding the
notes to the financial statements, or as the initial note, under the
same or a similar title? [ASC 235-10-50-6]
FASB Codification:
>
Format
50-6
{This Subtopic recognizes the need for flexibility in matters of format (including the location) of disclosure of accounting policies
provided that the entity identifies and describes its significant accounting policies as an integral part of its financial statements in
accordance with the provisions of this Subtopic. Disclosure is preferred in a separate summary of significant accounting policies
preceding the notes to financial statements (notes), or as the initial note, under the same or a similar title. [APB 22, paragraph 15] }
03/09/2023 11:15 AM EST
Page 67 / 1816
Presentation > 250 Accounting Changes and Error Corrections > 10 Overall > 45 Other Presentation > General
Is a change in accounting principle the result of either a change
required by a newly issued Codification update or a justifiable
change to an allowable alternative accounting principle on the basis
that it is preferable? [ASC 250-10-45-2]
FASB Codification:
45-2
{A reporting entity shall change an accounting principle only if either of the following apply: [FAS 154, paragraph 5] }
a.
{The change is required by a newly issued Codification update. [FAS 154, paragraph 5] }
b.
{The entity can justify the use of an allowable alternative accounting principle on the basis that it is preferable. [FAS 154,
paragraph 5] }
Has the entity reported a change in accounting principle through
retrospective application of the new accounting principle to all prior
periods, unless it is impracticable to do so; and has the entity
satisfied the requirements of retrospective application described in
ASC 250-10-45-5 through 45-8? [ASC 250-10-45-5 through 45-8]
FASB Codification:
45-5
{An entity shall report a change in accounting principle through retrospective application of the new accounting principle to all
prior periods, unless it is impracticable to do so. Retrospective application requires all of the following: [FAS 154, paragraph 7] }
a.
{The cumulative effect of the change to the new accounting principle on periods prior to those presented shall be reflected in the
carrying amounts of assets and liabilities as of the beginning of the first period presented. [FAS 154, paragraph 7] }
b.
{An offsetting adjustment, if any, shall be made to the opening balance of retained earnings (or other appropriate components of
equity or net assets in the statement of financial position) for that period. [FAS 154, paragraph 7] }
c.
{Financial statements for each individual prior period presented shall be adjusted to reflect the period-specific effects of applying
the new accounting principle. [FAS 154, paragraph 7] }
Consideration Points:
ASC 250-10-45-9 states: It shall be deemed impracticable to apply the effects of a change in accounting principle
retrospectively only if any of the following conditions exist: (1) after making every reasonable effort to do so, the entity is
unable to apply the requirement; (2) retrospective application requires assumptions about management's intent in a prior
period that cannot be independently substantiated; (3) retrospective application requires significant estimates of amounts,
and it is impossible to distinguish objectively information about those estimates that both (a) provides evidence of
circumstances that existed on the date(s) at which those amounts would be recognized, measured, or disclosed under
retrospective application ,and (b) would have been available when the financial statements for that prior period were
issued.
If an accounting change results in financial statements that are, in
effect, the statements of a different reporting entity, has the change
been retrospectively applied to the financial statements of all prior
periods presented to show financial information for the new
reporting entity for those periods and has previously issued interim
financial information been presented on a retrospective basis? [ASC
250-10-45-21]
03/09/2023 11:15 AM EST
Page 68 / 1816
FASB Codification:
>
Change in Reporting Entity
45-21
{When an accounting change results in financial statements that are, in effect, the statements of a different reporting entity, the
change shall be retrospectively applied to the financial statements of all prior periods presented to show financial information for the
new reporting entity for those periods. Previously issued interim financial information shall be presented on a retrospective basis.
However, the amount of interest cost previously capitalized through application of Subtopic 835-20 shall not be changed when
retrospectively applying the accounting change to the financial statements of prior periods. [FAS 154, paragraph 23] }
If a correction on an error in previously issued financial statements
has been made in the current period, has the entity excluded this
amount from net income for the period? [ASC 250-10-45-22]
FASB Codification:
45-22
{As indicated in paragraph 220-10-45-7A, net income for the period shall include all items of profit and loss recognized
during the period, [APB 09, paragraph 17] }{including accruals of estimated losses from loss contingencies, but shall not include
corrections of errors from prior periods. [FAS 016, paragraph 10] }{As used in this Subtopic, the term period refers to both annual and
interim reporting periods. [FAS 016, paragraph 10] }
If an error in the financial statements of a prior period is discovered
after the financial statements are issued or are available to be
issued (as discussed in Section 855-10-25) has the error been
reported as an error correction, by properly restating the priorperiod financial statements, and has the presentation guidance in
ASC 250-11-45-24 been considered? [ASC 250-10-45-23 and 45-24]
FASB Codification:
45-23
{Any error in the financial statements of a prior period discovered after the financial statements are issued or are available to
be issued (as discussed in Section 855-10-25) shall be reported as an error correction, by restating the prior-period financial
statements. Restatement requires all of the following: [FAS 154, paragraph 25] }
a.
{The cumulative effect of the error on periods prior to those presented shall be reflected in the carrying amounts of assets and
liabilities as of the beginning of the first period presented. [FAS 154, paragraph 25] }
b.
{An offsetting adjustment, if any, shall be made to the opening balance of retained earnings (or other appropriate components of
equity or net assets in the statement of financial position) for that period. [FAS 154, paragraph 25] }
c.
{Financial statements for each individual prior period presented shall be adjusted to reflect correction of the period-specific
effects of the error. [FAS 154, paragraph 25] }
Consideration Points:
Restatement requires all of the following: (1) the cumulative effect of the error on periods prior to those presented shall be
reflected in the carrying amounts of assets and liabilities as of the beginning of the first period presented; (2) an offsetting
adjustment, if any, shall be made to the opening balance of retained earnings (or other appropriate components of equity or
net assets in the statement of financial position) for that period; (3) financial statements for each individual prior period
presented shall be adjusted to reflect correction of the period-specific effects of the error.(ASC 250-10-45-23)
03/09/2023 11:15 AM EST
Page 69 / 1816
If an item of profit or loss occurs in other than the first interim
period of the entity's fiscal year and all or a part of the item of profit
or loss is an adjustment related to prior interim periods of the
current fiscal year (which meets the conditions of ASC 250-10-4525) has the guidance in ASC 250-10-45-26 been followed? [ASC
250-10-45-25 and 45-26]
FASB Codification:
>
Corrections Related to Prior Interim Periods of the Current Fiscal Year
45-25
{For purposes of this Subtopic, an adjustment related to prior interim periods of the current fiscal year is an adjustment or
settlement of litigation or similar claims, of income taxes (except for the effects of retroactive tax legislation), of renegotiation
proceedings, or of utility revenue under rate-making processes provided that the adjustment or settlement meets all of the following
criteria: [FAS 016, paragraph 13] }
a.
{The effect of the adjustment or settlement is material in relation to income from continuing operations of the current fiscal year
or in relation to the trend of income from continuing operations or is material by other appropriate criteria. [FAS 016,
paragraph 13] }
b.
{All or part of the adjustment or settlement can be specifically identified with and is directly related to business activities of
specific prior interim periods of the current fiscal year. [FAS 016, paragraph 13] }
c.
{The amount of the adjustment or settlement could not be reasonably estimated prior to the current interim period but becomes
reasonably estimable in the current interim period. [FAS 016, paragraph 13] }
{The criterion in (b) is not met solely because of incidental effects such as interest on a settlement. The criterion in (c) would be met by
the occurrence of an event with currently measurable effects such as a final decision on a rate order. Treatment as adjustments related
to prior interim periods of the current fiscal year shall not be applied to the normal recurring corrections and adjustments that are the
result of the use of estimates inherent in the accounting process. Changes in provisions for doubtful accounts shall not be considered to
be adjustments related to prior interim periods of the current fiscal year even though the changes result from litigation or similar
claims. [FAS 016, paragraph 13] }
45-26
{If an item of profit or loss occurs in other than the first interim period of the entity's fiscal year and all or a part of the item of
profit or loss is an adjustment related to prior interim periods of the current fiscal year, as defined in the preceding paragraph, the item
shall be reported as follows: [FAS 016, paragraph 14] }
a.
{The portion of the item that is directly related to business activities of the entity during the current interim period, if any, shall
be included in the determination of net income for that period. [FAS 016, paragraph 14] }
b.
{Prior interim periods of the current fiscal year shall be restated to include the portion of the item that is directly related to
business activities of the entity during each prior interim period in the determination of net income for that period. [FAS 016,
paragraph 14] }
c.
{The portion of the item that is directly related to business activities of the entity during prior fiscal years, if any, shall be
included in the determination of net income of the first interim period of the current fiscal year. [FAS 016, paragraph 14] }
Is the entity in compliance with the guidance in ASC 250-10-45:
Materiality Determination for Correction of an Error?
03/09/2023 11:15 AM EST
Page 70 / 1816
FASB Codification:
>
Materiality Determination for Correction of an Error
45-27
{In determining materiality for the purpose of reporting the correction of an error, amounts shall be related to the estimated
income for the full fiscal year and also to the effect on the trend of earnings. Changes that are material with respect to an interim
period but not material with respect to the estimated income for the full fiscal year or to the trend of earnings shall be separately
disclosed in the interim period. [APB 28, paragraph 29] }
Pending Content:
Transition Date: (P) December 16, 2020; (N) December 16, 2021 Transition Guidance 105-10-65-6
105-10-65-6
Editor's Note: The content of paragraph 250-10-45-27 will change upon transition, together with a change in the heading noted below.
> Materiality Considerations for Correction of an Error
{In considering [ASU 2020-10, paragraph 12] }{materiality for the purpose of reporting the correction of an error, amounts shall be
related to the estimated income for the full fiscal year and also to the effect on the trend of earnings. [APB 28, paragraph 29] }{(See
paragraph 250-10-50-12.) [ASU 2020-10, paragraph 12] }
Consideration Points:
The pending content resulting from the issuance of ASU 2020-10 amended paragraph 250-10-45-27 and its related heading
and added paragraph 250-10-50-12 and its related heading. For 1) public business entities, 2) not-for-profit entities that
have issued, or are a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-thecounter market, and 3) an employee benefit plan that files or furnishes financial statements with or to the SEC, the
amendments in ASU 2020-10 are effective for annual periods after December 15, 2020. For all other entities, the
amendments in ASU 2020-10 are effective for annual periods beginning after December 15, 2021, and interim periods
within annual periods beginning after December 15, 2022. Early application of the amendments in this Update is permitted
for: 1) public business entities, 2) not-for-profit entities that have issued, or are a conduit bond obligor for, securities that
are traded, listed, or quoted on an exchange or an over-the-counter market, and 3) an employee benefit plan that files or
furnishes financial statements with or to the SEC for any annual or interim period for which financial statements have not
been issued. For all other entities, early application of the amendments is permitted for any annual or interim period for
which financial statements are available to be issued. The amendments in this Update should be applied retrospectively.
An entity should apply the amendments at the beginning of the period that includes the adoption date.
Is the entity in compliance with the guidance in ASC 250-10-45:
Historical Summaries of Financial Data?
FASB Codification:
>
Historical Summaries of Financial Data
45-28
{It has become customary for business entities to present historical, statistical-type summaries of financial data for a number of
periods—commonly 5 or 10 years. [APB 09, paragraph 27] }{Whenever error corrections have been recorded during any of the periods
included therein, the reported amounts of net income (and the components thereof), as well as other affected items, shall be
appropriately restated, with disclosure in the first summary published after the adjustments. [APB 09, paragraph 27] }
Pending Content:
Transition Date: (P) December 16, 2020; (N) December 16, 2021 Transition Guidance 105-10-65-6
105-10-65-6{It has become customary for business entities to present historical, statistical-type summaries of financial data for a
number of periods—commonly 5 or 10 years. [APB 09, paragraph 27] }{Whenever error corrections have been recorded during any of
the periods included therein, the reported amounts of net income (and the components thereof), as well as other affected items, shall be
appropriately restated, with disclosure in the first summary published after the adjustments. [APB 09, paragraph 27] }{(See paragraph
250-10-50-7A.) [ASU 2020-10, paragraph 14] }
03/09/2023 11:15 AM EST
Page 71 / 1816
Consideration Points:
The pending content resulting from the issuance of ASU 2020-10 amended paragraph 250-10-45-28 and added paragraph
250-10-50-7A. For 1) public business entities, 2) not-for-profit entities that have issued, or are a conduit bond obligor for,
securities that are traded, listed, or quoted on an exchange or an over-the-counter market, and 3) an employee benefit plan
that files or furnishes financial statements with or to the SEC, the amendments in ASU 2020-10 are effective for annual
periods after December 15, 2020. For all other entities, the amendments in ASU 2020-10 are effective for annual periods
beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022. Early
application of the amendments in this Update is permitted for: 1) public business entities, 2) not-for-profit entities that
have issued, or are a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-thecounter market, and 3) an employee benefit plan that files or furnishes financial statements with or to the SEC for any
annual or interim period for which financial statements have not been issued. For all other entities, early application of the
amendments is permitted for any annual or interim period for which financial statements are available to be issued. The
amendments in this Update should be applied retrospectively. An entity should apply the amendments at the beginning of
the period that includes the adoption date.
Presentation > 250 Accounting Changes and Error Corrections > 10 Overall > 50 Disclosure > General
Has an entity that has had a change in accounting principle
provided the disclosures required by ASC 250-10-50-1 in the fiscal
period in which the change is made? [ASC 250-10-50-1]
03/09/2023 11:15 AM EST
Page 72 / 1816
FASB Codification:
50-1
{An entity shall disclose all of the following in the fiscal period in which a change in accounting principle is made: [FAS
154, paragraph 17] }
a.
{The nature of and reason for the change in accounting principle, including an explanation of why the newly adopted accounting
principle is preferable. [FAS 154, paragraph 17] }
b.
{The method of applying the change, including all of the following: [FAS 154, paragraph 17] }
1.
{A description of the prior-period information that has been retrospectively adjusted, if any. [FAS 154, paragraph 17] }
2.
{The effect of the change on income from continuing operations, net income (or other appropriate captions of changes in the
applicable net assets or performance indicator), any other affected financial statement line item, and any affected per-share
amounts for the current period and any prior periods retrospectively adjusted. Presentation of the effect on financial
statement subtotals and totals other than income from continuing operations and net income (or other appropriate captions
of changes in the applicable net assets or performance indicator) is not required. [FAS 154, paragraph 17] }
3.
{The cumulative effect of the change on retained earnings or other components of equity or net assets in the statement of
financial position as of the beginning of the earliest period presented. [FAS 154, paragraph 17] }
4.
{If retrospective application to all prior periods is impracticable, disclosure of the reasons therefore, and a description of
the alternative method used to report the change (see paragraphs 250-10-45-5 through 45-7). [FAS 154, paragraph 17] }
c.
{If indirect effects of a change in accounting principle are recognized both of the following shall be disclosed: [FAS 154,
paragraph 17] }
1.
{A description of the indirect effects of a change in accounting principle, including the amounts that have been recognized in
the current period, and the related per-share amounts, if applicable [FAS 154, paragraph 17] }
2.
{Unless impracticable, the amount of the total recognized indirect effects of the accounting change and the related pershare amounts, if applicable, that are attributable to each prior period presented. [FAS 154, paragraph 17] }{Compliance
with this disclosure requirement is practicable unless an entity cannot comply with it after making every reasonable effort
to do so. [FAS 154, paragraph 17] }
{Financial statements of subsequent periods need not repeat the disclosures required by this paragraph. If a change in accounting
principle has no material effect in the period of change but is reasonably certain to have a material effect in later periods, the
disclosures required by (a) shall be provided whenever the financial statements of the period of change are presented. [FAS 154,
paragraph 17] }
03/09/2023 11:15 AM EST
Page 73 / 1816
Has the entity disclosed the method of applying the change,
including all of the following: (1) a description of the prior-period
information that has been retrospectively adjusted, if any; (2) the
effect of the change on income from continuing operations, net
income (or other appropriate captions of changes in the applicable
net assets or performance indicator), any other affected financial
statement line item, and any affected per-share amounts for the
current period and any prior periods retrospectively adjusted; (3)
the cumulative effect of the change on retained earnings or other
components of equity or net assets in the statement of financial
position as of the beginning of the earliest period presented; and (4)
if retrospective application to all prior periods is impracticable,
disclosure of the reasons therefore, and a description of the
alternative method used to report the change? [ASC 250-10-501(b)]
Consideration Points:
To view the text of ASC 250-10-50-1(b), select 50-1 in the navigation tree.
If indirect effects of a change in accounting principle are recognized,
has the entity disclosed both of the following: (1) a description of
the indirect effects of a change in accounting principle, including
the amounts that have been recognized in the current period, and
the related per-share amounts, if applicable; and (2) unless
impracticable, the amount of the total recognized indirect effects of
the accounting change and the related per-share amounts, if
applicable, that are attributable to each prior period presented?
[ASC 250-10-50-1(c)]
Consideration Points:
To view the text of ASC 250-10-50-1(c), select 50-1 in the navigation tree.
If an entity that has a change in accounting principle issues interim
financial statements, has the entity provided the disclosures
required by ASC 250-10-50-1 in the financial statements of both
the interim period of the change and the annual period of the
change? [ASC 250-10-50-2]
FASB Codification:
50-2
{An entity that issues interim financial statements shall provide the required disclosures in the financial statements of both the
interim period of the change and the annual period of the change. [FAS 154, paragraph 17] }
In the fiscal year in which a new accounting principle is adopted,
has financial information reported for interim periods after the date
of adoption disclosed the effect of the change on income from
continuing operations, net income (or other appropriate captions of
changes in the applicable net assets or performance indicator), and
related per-share amounts, if applicable, for those post-change
interim periods? [ASC 250-10-50-3]
03/09/2023 11:15 AM EST
Page 74 / 1816
FASB Codification:
50-3
{In the fiscal year in which a new accounting principle is adopted, financial information reported for interim periods after the
date of adoption shall disclose the effect of the change on income from continuing operations, net income (or other appropriate captions
of changes in the applicable net assets or performance indicator), and related per-share amounts, if applicable, for those post-change
interim periods. [FAS 154, paragraph 18] }
Has the effect on income from continuing operations, net income
(or other appropriate captions of changes in the applicable net
assets or performance indicator), and any related per-share amounts
of the current period been disclosed for a change in estimate that
affects several future periods, such as a change in service lives of
depreciable assets? [ASC 250-10-50-4]
FASB Codification:
50-4
{The effect on income from continuing operations, net income (or other appropriate captions of changes in the applicable net
assets or performance indicator), and any related per-share amounts of the current period shall be disclosed for a change in estimate
that affects several future periods, such as a change in service lives of depreciable assets. Disclosure of those effects is not necessary
for estimates made each period in the ordinary course of accounting for items such as uncollectible accounts or inventory obsolescence;
however, disclosure is required if the effect of a change in the estimate is material. When an entity effects a change in estimate by
changing an accounting principle, the disclosures required by paragraphs 250-10-50-1 through 50-3 also are required. If a change in
estimate does not have a material effect in the period of change but is reasonably certain to have a material effect in later periods, a
description of that change in estimate shall be disclosed whenever the financial statements of the period of change are presented. [FAS
154, paragraph 22] }
Consideration Points:
ASC 250-10-50-4 and 50-5 also state: Disclosure of those effects is not necessary for estimates made each period in the
ordinary course of accounting for items such as uncollectible accounts, inventory obsolescence, or for revisions arising from
a change in valuation techniques or their application; however, disclosure is required if the effect of a change in the
estimate is material.
When an entity effects a change in estimate by changing an
accounting principle, have the disclosures required by paragraphs
250-10-50-1 through 50-3 also been made? [ASC 250-10-50-4]
Consideration Points:
To view the text of ASC 250-10-50-4, select 50-4 in the navigation tree.
If a change in estimate does not have a material effect in the period
of change but is reasonably certain to have a material effect in later
periods, has a description of that change in estimate been disclosed
whenever the financial statements of the period of change are
presented? [ASC 250-10-50-4]
Consideration Points:
To view the text of ASC 250-10-50-4, select 50-4 in the navigation tree.
03/09/2023 11:15 AM EST
Page 75 / 1816
When there has been a change in the reporting entity, have the
financial statements of the period of the change described the
nature of the change and the reason for it, including the effect of the
change on income from continuing operations, net income (or other
appropriate captions of changes in the applicable net assets or
performance indicator), other comprehensive income, and any
related per-share amounts for all periods presented? (Financial
statements of subsequent periods need not repeat the disclosures
required by ASC 250-10-50-6.) [ASC 250-10-50-6]
FASB Codification:
50-6
{When there has been a change in the reporting entity, the financial statements of the period of the change shall describe the
nature of the change and the reason for it. In addition, the effect of the change on income from continuing operations, net income (or
other appropriate captions of changes in the applicable net assets or performance indicator), other comprehensive income, and any
related per-share amounts shall be disclosed for all periods presented. Financial statements of subsequent periods need not repeat the
disclosures required by this paragraph. If a change in reporting entity does not have a material effect in the period of change but is
reasonably certain to have a material effect in later periods, the nature of and reason for the change shall be disclosed whenever the
financial statements of the period of change are presented. (Sections 805-10-50, 805-20-50, 805-30-50, and 805-740-50 describe
the manner of reporting and the disclosures required for a business combination.) [FAS 154, paragraph 24] }
Consideration Points:
Section 250-10-50 has been updated as the result of the issuance of ASU 2015-01. The pending content resulting from the
issuance of this ASU amended paragraph 250-10-50-6. The amendments in this Update are effective for fiscal years, and
interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the
amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented
in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the
fiscal year of adoption.
If a change in reporting entity does not have a material effect in the
period of change but is reasonably certain to have a material effect
in later periods, has the nature of and reason for the change been
disclosed whenever the financial statements of the period of change
are presented? [ASC 250-10-50-6]
Consideration Points:
To view the text of ASC 250-10-50-6, select 50-6 in the navigation tree.
When financial statements are restated to correct an error, has the
entity provided the disclosures required by ASC 250-10-50-7 ? [ASC
250-10-50-7]
03/09/2023 11:15 AM EST
Page 76 / 1816
FASB Codification:
50-7
{When financial statements are restated to correct an error, the entity shall disclose that its previously issued financial
statements have been restated, along with a description of the nature of the error. The entity also shall disclose both of the following:
[FAS 154, paragraph 26] }
a.
{The effect of the correction on each financial statement line item and any per-share amounts affected for each prior period
presented [FAS 154, paragraph 26] }
b.
{The cumulative effect of the change on retained earnings or other appropriate components of equity or net assets in the
statement of financial position, as of the beginning of the earliest period presented. [FAS 154, paragraph 26] }
Is the entity in compliance with the guidance in ASC 250-10-507A?
FASB Codification:
50-7A
Pending Content:
Transition Date: (P) December 16, 2020; (N) December 16, 2021 Transition Guidance 105-10-65-6
105-10-65-6{An entity that restates historical, statistical-type summaries of financial data for error corrections shall disclose that
information in accordance with paragraph 250-10-45-28. [ASU 2020-10, paragraph 14] }
Consideration Points:
The pending content resulting from the issuance of ASU 2020-10 amended paragraph 250-10-45-28 and added paragraph
250-10-50-7A. For 1) public business entities, 2) not-for-profit entities that have issued, or are a conduit bond obligor for,
securities that are traded, listed, or quoted on an exchange or an over-the-counter market, and 3) an employee benefit plan
that files or furnishes financial statements with or to the SEC, the amendments in ASU 2020-10 are effective for annual
periods after December 15, 2020. For all other entities, the amendments in ASU 2020-10 are effective for annual periods
beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022. Early
application of the amendments in this Update is permitted for: 1) public business entities, 2) not-for-profit entities that
have issued, or are a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-thecounter market, and 3) an employee benefit plan that files or furnishes financial statements with or to the SEC for any
annual or interim period for which financial statements have not been issued. For all other entities, early application of the
amendments is permitted for any annual or interim period for which financial statements are available to be issued. The
amendments in this Update should be applied retrospectively. An entity should apply the amendments at the beginning of
the period that includes the adoption date.
When prior period adjustments are recorded, have the resulting
effects (both gross and net of applicable income tax) on the net
income of prior periods been disclosed in the annual report for the
year in which the adjustments are made and in interim reports
issued during that year after the date of recording the adjustments?
[ASC 250-10-50-8]
FASB Codification:
50-8
{When prior period adjustments are recorded, the resulting effects (both gross and net of applicable income tax) on the net
income of prior periods shall be disclosed in the annual report for the year in which the adjustments are made [APB 09, paragraph 26]
}{ and in interim reports issued during that year after the date of recording the adjustments. [APB 09, paragraph 26] }
Is the entity in compliance with the guidance in ASC 250-10-50:
Materiality Determination for Correction of an Error?
03/09/2023 11:15 AM EST
Page 77 / 1816
FASB Codification:
>
Materiality Determination for Correction of an Error
50-12
Pending Content:
Transition Date: (P) December 16, 2020; (N) December 16, 2021 Transition Guidance 105-10-65-6
105-10-65-6
Editor's Note: The content of paragraph 250-10-50-12 will be added upon transition, together with a change in the heading noted
below.
> Materiality Considerations for Correction of an Error
{In considering [ASU 2020-10, paragraph 12] }{materiality for the purpose of reporting the correction of an error, amounts shall be
related to the estimated income for the full fiscal year and also to the effect on the trend of earnings. Changes that are material with
respect to an interim period but not material with respect to the estimated income for the full fiscal year or to the trend of earnings
shall be separately disclosed in the interim period. [APB 28, paragraph 29] }{(See paragraph 250-10-45-27.) [ASU 2020-10,
paragraph 12] }
Consideration Points:
The pending content resulting from the issuance of ASU 2020-10 amended paragraph 250-10-45-27 and its related heading
and added paragraph 250-10-50-12 and its related heading. For 1) public business entities, 2) not-for-profit entities that
have issued, or are a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-thecounter market, and 3) an employee benefit plan that files or furnishes financial statements with or to the SEC, the
amendments in ASU 2020-10 are effective for annual periods after December 15, 2020. For all other entities, the
amendments in ASU 2020-10 are effective for annual periods beginning after December 15, 2021, and interim periods
within annual periods beginning after December 15, 2022. Early application of the amendments in this Update is permitted
for: 1) public business entities, 2) not-for-profit entities that have issued, or are a conduit bond obligor for, securities that
are traded, listed, or quoted on an exchange or an over-the-counter market, and 3) an employee benefit plan that files or
furnishes financial statements with or to the SEC for any annual or interim period for which financial statements have not
been issued. For all other entities, early application of the amendments is permitted for any annual or interim period for
which financial statements are available to be issued. The amendments in this Update should be applied retrospectively.
An entity should apply the amendments at the beginning of the period that includes the adoption date.
Presentation > 255 Changing Prices > 10 Overall > 50 Disclosure > General
Has the entity decided whether or not to provided the encouraged
disclosures as outlined in ASC 255-10-50? [ASC 255-10-50-1]
FASB Codification:
>
Introduction
50-1
{A business entity that prepares its financial statements in U.S. dollars and in accordance with U.S. generally accepted
accounting principles (GAAP) is encouraged, but not required, to disclose supplementary information on the effects of changing prices.
[FAS 089, paragraph 3] }{Entities are not discouraged from experimenting with other forms of disclosure. [FAS 089, paragraph 3] }
Consideration Points:
If the entity answers "No" to this question (ASC 255-10-50-1), then it follows that the answers to all other questions in
ASC 255-10-50 are "N/A". If the entity answers "Yes" then the questions in ASC 255-10-50 can be answered to assist in
applying the encouraged disclosures in ASC 255.
Has the entity disclosed a summary of selected financial data for the
five most recent years? [255-10-50-3 through 50-10]
FASB Codification:
>
Five-Year Summary of Selected Financial Data
03/09/2023 11:15 AM EST
50-3
Page 78 / 1816
{An entity shall disclose all of the following information for each of the five most recent years: [FAS 089, paragraph 7] }
a.
{Net sales and other operating revenues [FAS 089, paragraph 7] }
b.
{Income from continuing operations on a current cost basis [FAS 089, paragraph 7] }
c.
{Purchasing power gain or loss on net monetary items [FAS 089, paragraph 7] }
d.
{Increase or decrease in the current cost or lower recoverable amount of inventory and property, plant, and equipment, net of
inflation [FAS 089, paragraph 7] }
e.
{The aggregate foreign currency translation adjustment on a current cost basis, if applicable [FAS 089, paragraph 7] }
f.
{Net assets at year-end on a current cost basis [FAS 089, paragraph 7] }
g.
{Income per common share from continuing operations on a current cost basis [FAS 089, paragraph 7] }
h.
{Cash dividends declared per common share [FAS 089, paragraph 7] }
i.
{Market price per common share at year-end. [FAS 089, paragraph 7] }
50-4
{For the purposes of this Subtopic, except where otherwise provided, inventory and property, plant, and equipment shall include
land and other natural resources and capitalized leasehold interests but not goodwill or other intangible assets. [FAS 089, paragraph 7]
}
50-5
{An entity that presents consolidated financial statements shall present the information required by this Subtopic on the same
consolidated basis. The information required by this Subtopic need not be presented for a parent company, an investee company, or
other entity in a financial report that includes the results for that entity in consolidated financial statements. [FAS 089, paragraph 7] }
50-6
{The information required by this Subtopic shall be presented as supplementary information in any published annual report that
contains the primary financial statements of the entity except that the information need not be presented in an interim financial report.
The information required by this Subtopic need not be presented for segments of a business entity although such presentations are
encouraged. [FAS 089, paragraph 7] }
50-7
{The information presented in the five-year summary shall be stated as either of the following: [FAS 089, paragraph 8] }
a.
{In average-for-the-year or end-of-year units of constant purchasing power [FAS 089, paragraph 8] }
b.
{In dollars having a purchasing power equal to that of dollars of the base period used by the Bureau of Labor Statistics in
calculating the Consumer Price Index for All Urban Consumers. [FAS 089, paragraph 8] }{As a practical matter, this option is
not available to entities that measure a significant part of their operations in one or more functional currencies other than the
U.S. dollar and that elect to use the restate-translate method for measuring inflation-adjusted current cost information. [FAS
089, paragraph 8] }
50-8
{An entity shall disclose the level of the Consumer Price Index for All Urban Consumers used for each of the five most recent
years. [FAS 089, paragraph 8] }{If the level of the Consumer Price Index at the end of the year and the data required to compute the
average level of the index over the year have not been published in time for preparation of the annual report, they may be estimated
by referring to published forecasts based on economic statistics or by extrapolation based on recently reported changes in the index.
[FAS 089, paragraph 8] }
50-9
{If the entity has a significant foreign operation measured in a functional currency other than the U.S. dollar, it shall disclose
whether adjustments to the current cost information to reflect the effects of general inflation are based on the Consumer Price Index for
All Urban Consumers (the translate-restate method) or on a functional currency general price level index (the restate-translate
method). [FAS 089, paragraph 9] }
50-10
{The entity shall provide an explanation of the disclosures required by this Subtopic and a discussion of their significance in the
03/09/2023 11:15 AM EST
Page 79 / 1816
circumstances of the entity. Disclosure and discussion of additional information to help users of the financial report understand the
effects of changing prices on the activities of the entity are encouraged. [FAS 089, paragraph 10] }
If the entity's income from continuing operations on a current costconstant purchasing power basis differs significantly from income
from continuing operations, has the entity complied with the
additional disclosure requirements? [ASC 255-10-50-11 through 5016]
FASB Codification:
>
Additional Disclosures for the Current Year
50-11
{In addition to the information required by paragraphs 255-10-50-3 through 50-10, an entity shall provide the information
specified in paragraphs 255-10-50-12 through 50-16 if income from continuing operations on a current cost-constant purchasing
power basis would differ significantly from income from continuing operations in the primary financial statements. [FAS 089,
paragraph 11] }
50-12
{An entity shall disclose certain components of income from continuing operations for the current year on a current cost basis
(see paragraphs 255-10-50-39 through 50-41), applying the same constant purchasing power option used for presentation of the fiveyear summary. The information may be presented in any of the following formats: [FAS 089, paragraph 12] }
a.
{In a statement format (disclosing revenues, expenses, gains, and losses) [FAS 089, paragraph 12] }
b.
{In a reconciliation format (disclosing adjustments to the income from continuing operations that is shown in the primary income
statement) [FAS 089, paragraph 12] }
c.
{In notes to the five-year summary required by paragraph 255-10-50-3. [FAS 089, paragraph 12] }
50-13
{Formats for presenting the supplementary information are illustrated in Example 1 (see paragraphs 255-10-55-14 through
55-21). Whichever format is used, the presentation shall disclose (for example, in a reconciliation format) or allow the reader to
determine (for example, in a statement format) the difference between the amount in the primary statements and the current cost
amount of all of the following items: [FAS 089, paragraph 12] }
a.
{Cost of goods sold and depreciation [FAS 089, paragraph 12] }
b.
{Depletion [FAS 089, paragraph 12] }
c.
{Amortization expense. [FAS 089, paragraph 12] }
50-14
{If depreciation has been allocated among various expense categories in the supplementary computations of income from
continuing operations (for example, among cost of goods sold and other functional expenses), the aggregate amount of depreciation on a
current cost basis shall be included in the notes to the supplementary information. In addition to information about income from
continuing operations, the entity may include the following items in a schedule of current year information: [FAS 089, paragraph 12] }
a.
{The purchasing power gain or loss on net monetary items [FAS 089, paragraph 12] }
b.
{The increase or decrease in the current cost or lower recoverable amount of inventory and property, plant, and equipment, net
of inflation [FAS 089, paragraph 12] }
c.
{The translation adjustment. [FAS 089, paragraph 12] }
50-15
{As illustrated in Example 1 (see paragraphs 255-10-55-14 through 55-21, income from continuing operations does not
include the information that is described in paragraph 255-10-50-14(a) through 50-14(c). [FAS 089, paragraph 12] }
50-16
{An entity shall also disclose all of the following: [FAS 089, paragraph 13] }
03/09/2023 11:15 AM EST
a.
Page 80 / 1816
{Separate amounts for the current cost or lower recoverable amount at the end of the current year of inventory and property,
plant, and equipment (see paragraphs 255-10-50-20 through 50-33 and 255-10-50-36 through 50-38) [FAS 089,
paragraph 13] }
b.
{The increase or decrease in current cost or lower recoverable amount before and after adjusting for the effects of inflation of
inventory and property, plant, and equipment for the current year (see paragraphs 255-10-50-42 through 50-43) [FAS 089,
paragraph 13] }
c.
{The principal types of information used to calculate the current cost of inventory; property, plant, and equipment; cost of goods
sold; and depreciation, depletion, and amortization expense (see paragraphs 255-10-50-24 through 50-33) [FAS 089,
paragraph 13] }
d.
{Any differences between: [FAS 089, paragraph 13] }
1.
{The depreciation methods, estimates of useful lives, and salvage values of assets used for calculations of current costconstant purchasing power depreciation [FAS 089, paragraph 13] }
2.
{The methods and estimates used for calculations of depreciation in the primary financial statements (see paragraph 25510-50-29). [FAS 089, paragraph 13] }
For entities with mineral resources assets (other than oil and gas),
has the entity provided additional disclosures for the five most
recent fiscal years? [ASC 255-10-50-17 and 50-18]
03/09/2023 11:15 AM EST
Page 81 / 1816
FASB Codification:
>
Additional Disclosures by Entities with Mineral Resources Assets
50-17
{For its mineral reserves other than oil and gas, an entity shall disclose all of the following additional information for each of
its five most recent fiscal years: [FAS 089, paragraph 14] }
a.
{Estimates of significant quantities of proved mineral reserves or proved and probable mineral reserves (whichever is used for
cost amortization purposes) at the end of the year or at the most recent date during the year for which estimates can be made (if
estimates are not made as of the end of the year, the disclosures shall indicate the dates of the estimates) [FAS 089,
paragraph 14] }
b.
{The estimated quantity, expressed in physical units or in percentages of reserves, of each mineral product that is recoverable in
significant commercial quantities if the mineral reserves included under (a) include deposits containing one or more significant
mineral products [FAS 089, paragraph 14] }
c.
{The quantities of each significant mineral produced during the year (if the mineral reserves included under (a) are ones that are
milled or similarly processed, the quantity of each significant mineral product produced by the milling or similar process shall
also be disclosed) [FAS 089, paragraph 14] }
d.
{The quantity of significant proved, or proved and probable, mineral reserves purchased or sold in place during the year [FAS
089, paragraph 14] }
e.
{For each significant mineral product, the average market price or, for mineral products transferred within the entity, the
equivalent market price prior to use in a manufacturing process. [FAS 089, paragraph 14] }
50-18
a.
{In determining the quantities to be reported in conformity with the preceding paragraph: [FAS 089, paragraph 15] }
{If the entity issues consolidated financial statements, 100 percent of the quantities attributable to the parent entity and 100
percent of the quantities attributable to its consolidated subsidiaries (whether or not wholly owned) shall be included. [FAS 089,
paragraph 15] }
b.
{If the entity's financial statements include investments that are proportionately consolidated, the entity's quantities shall include
its proportionate share of the investee's quantities. [FAS 089, paragraph 15] }
c.
{If the entity's financial statements include investments that are accounted for by the equity method, the investee's quantities
shall not be included in the disclosures of the entity's quantities. However, the entity's (investor's) share of the investee's
quantities of reserves shall be reported separately, if significant. [FAS 089, paragraph 15] }
Has the entity measured the current cost amounts of inventory and
property, plant and equipment in properly? [ASC 255-10-50-20
through 50-29]
FASB Codification:
>
Inventory and Property, Plant, and Equipment
50-20
{Current cost amounts of inventory and property, plant, and equipment are measured as follows: [FAS 089, paragraph 16] }
a.
{Inventory at current cost or lower recoverable amount at the measurement date [FAS 089, paragraph 16] }
b.
{Property, plant, and equipment at the current cost or lower recoverable amount of the assets' remaining service potential at the
measurement date [FAS 089, paragraph 16] }
03/09/2023 11:15 AM EST
c.
Page 82 / 1816
{Resources used on a partly completed contract at current cost or lower recoverable amount at the date of use on or commitment
to the contract. [FAS 089, paragraph 16] }
50-21
{The current cost of inventory owned by an entity is the current cost of purchasing the goods concerned or the current cost of
the resources required to produce the goods concerned (including an allowance for the current overhead costs according to the allocation
bases used under GAAP), whichever would be applicable in the circumstances of the entity. [FAS 089, paragraph 17] }
50-22
{The current cost of property, plant, and equipment owned by an entity is the current cost of acquiring the same service
potential (indicated by operating costs and physical output capacity) as embodied by the asset owned; the information used to measure
current cost reflects whatever method of acquisition would currently be appropriate in the circumstances of the entity. The current cost
of a used asset may be calculated by measuring any of the following: [FAS 089, paragraph 18] }
a.
{The current cost of a new asset that has the same service potential as the used asset had when it was new (the current cost of the
asset as if it were new) and deducting an allowance for depreciation [FAS 089, paragraph 18] }
b.
{The current cost of a used asset of the same age and in the same condition as the asset owned [FAS 089, paragraph 18] }
c.
{The current cost of a new asset with a different service potential and adjusting that cost for the value of the difference in service
potential due to differences in life, output capacity, nature of service, and operating costs. [FAS 089, paragraph 18] }
50-23
{The following types of information are listed as examples of the information that may be used but are not listed in any order
of preferability. The entity shall select types of information appropriate to its particular circumstances, giving due consideration to their
availability, reliability, and cost: [FAS 089, paragraph 19] }
a.
b.
{Indexation [FAS 089, paragraph 19] }
1.
{Externally generated price indexes for the class of goods or services being measured [FAS 089, paragraph 19] }
2.
{Internally generated price indexes for the class of goods or services being measured. [FAS 089, paragraph 19] }
{Direct pricing [FAS 089, paragraph 19] }
50-24
1.
{Current invoice prices [FAS 089, paragraph 19] }
2.
{Vendors' price lists or other quotations or estimates [FAS 089, paragraph 19] }
3.
{Standard manufacturing costs that reflect current costs. [FAS 089, paragraph 19] }
{Various types of information may be used in the measurement methods described in paragraphs 255-10-50-21 through 50-
22 to determine the current cost of inventory; property, plant, and equipment; cost of goods sold; and depreciation, depletion, and
amortization expense. The information may be applied to single items or broad categories, as appropriate in the circumstances. [FAS
089, paragraph 19] }
50-25
{If turnover is rapid and material amounts of depreciation are not allocated to inventory, cost of goods sold measured on a last-
in, first-out (LIFO) basis may provide an acceptable approximation of cost of goods sold, measured at current cost, provided that the
effect of any LIFO inventory liquidations (that is, any decreases in earlier years' LIFO layers) is excluded. [FAS 089, paragraph 19] }
50-26
{An entity may substitute historical cost amounts adjusted by an externally generated price index of a broad-based measure
of general purchasing power (that is, historical cost-constant purchasing power amounts) for current cost amounts if that
substitution would not result in a significantly different number for income from continuing operations than other means of estimating
current cost amounts described in this Subtopic. For example, an entity with small amounts of inventory and property, plant, and
equipment apart from certain specialized assets (see paragraphs 255-10-50-30 through 50-33) may be able to report historical costconstant purchasing power information. In such circumstances, disclosure of the increase or decrease in the current cost or lower
recoverable amount of inventory and property, plant, and equipment, net of inflation (see paragraphs 255-10-50-3(d) and 255-10-50-
03/09/2023 11:15 AM EST
Page 83 / 1816
16(b)) is not required, but the disclosures described in paragraphs 255-10-50-10 and 255-10-50-16(a), 50-16(c), and 50-16(d) are
required. [FAS 089, paragraph 20] }
50-27
{Current cost measurements shall be based on production or purchase of the asset in whatever location or market would
minimize total cost including transportation cost. For a U.S. operation, either: [FAS 089, paragraph 21] }
a.
{The purchase would be made in the United States and current cost would be estimated directly in dollars. [FAS 089,
paragraph 21] }
b.
{The purchase would be made in a foreign market and the current cost in that market would be translated into dollars at the
current exchange rate. [FAS 089, paragraph 21] }
50-28
{An entity may need to measure the current cost of inventory and property, plant, and equipment located outside the United
States. That may be difficult depending upon the availability of information in the country concerned, and, accordingly, reasonable
approximations are acceptable. If a foreign operation first measures current cost in a currency other than its functional currency, that
amount shall then be translated into the functional currency at the current exchange rate. [FAS 089, paragraph 21] }
50-29
{There is a presumption that depreciation methods, estimates of useful lives, and salvage values of assets for purposes of the
supplementary information are the same as the methods and estimates used for calculations in the primary financial statements.
However, if the primary financial statements are based on methods and estimates that partly allow for price changes, different methods
and estimates may be used for purposes of the supplementary information. [FAS 089, paragraph 22] }
Has the entity complied with the measurement guidance for
specialized assets? [ASC 255-10-50-30 through 50-33]
FASB Codification:
>
Specialized Assets
50-30
{The current cost of mineral resource assets shall be determined by current market buying prices or by the current cost of
finding and developing mineral reserves. No generally accepted approach exists for measuring the current finding cost of mineral
reserves. To indicate the effects of changes in current costs, it may be impracticable to do more than adjust historical costs by an index
of the changes in specific prices of the inputs concerned. That approach may fail to yield a close approximation of the current cost of
finding and developing new reserves. In recognition of that difficulty, the requirements of this Subtopic are flexible regarding the
approach used to measure current cost of mineral resource assets. The approach may include use of specific price indexes, direct
information about market buying prices, and other statistical evidence of the cost of acquisitions. [FAS 089, paragraph 23] }
50-31
{Because paragraph 932-235-50-2 requires an entity to disclose a standardized measure of discounted future net cash flows
relating to proved oil and gas reserve quantities, the entity may follow the approach in the preceding paragraph or in the following
paragraph for its oil and gas mineral resource assets. Paragraph 255-10-50-16(c) requires disclosure of the types of information that
have been used to measure current costs. [FAS 089, paragraph 24] }
50-32
{Timberlands and growing timber, income-producing real estate, and motion picture films have certain special features
that raise doubts about the applicability of the current cost measurement methods required for other assets. Accordingly, an entity may
disclose historical cost amounts adjusted by an externally generated index of a broad-based measure of general purchasing power as
substitutes for current cost amounts for such assets and their related expenses. [FAS 089, paragraph 25] }
50-33
{If an entity estimates the current cost of growing timber and timber harvested by adjusting historical cost for the changes in
specific prices, those historical costs may either: [FAS 089, paragraph 26] }
a.
{Be limited to the costs that are capitalized in the primary financial statements [FAS 089, paragraph 26] }
b.
{Include all costs that are directly related to reforestation and forest management, such as planting, fertilization, fire protection,
property taxes, and nursery stock, whether or not those costs are capitalized in the primary financial statements. [FAS 089,
paragraph 26] }
03/09/2023 11:15 AM EST
Page 84 / 1816
Consideration Points:
This subtopic provides measurement guidance on mineral resource assets, income producing real estate and motion picture
films.
Has the entity complied with measurement guidance for net
assets? [ASC 255-10-50-34 and 50-3]
FASB Codification:
>
Net Assets
50-34
{If the entity presents the minimum information required by this Subtopic, the amount of net assets (that is, shareholders'
equity) is the amount of net assets reported in the primary financial statements, adjusted for the difference between the historical cost
amounts and the current cost or lower recoverable amounts of inventory and property, plant, and equipment. [FAS 089, paragraph 27]
}
50-35
{If the entity elects to present comprehensive current cost-constant purchasing power financial statements as supplementary
information, the amount of net assets in the five-year summary is the amount reported in the supplementary balance sheet. [FAS 089,
paragraph 28] }
Has the entity complied with measurement guidance for recoverable
amount? [ASC 255-10-50-36 through 50-38]
FASB Codification:
>
Recoverable Amount
50-36
{Recoverable amount [FAS 089, paragraph 29] }{may be measured by considering the value in use or fair value less costs to
sell of the asset concerned. Value in use is used to determine recoverable amount of an asset if immediate sale of the asset is not
intended. Fair value less costs to sell is used to determine recoverable amount only if the asset is about to be sold. [FAS 089,
paragraph 29] }
50-37
{If the recoverable amount for a group of assets is judged to be materially and permanently lower than the current cost
amount, the recoverable amount shall be used as a measure of the assets and of the expense associated with the use or sale of the
assets. Decisions on the measurement of assets at their recoverable amounts need not be made by considering assets individually unless
they are used independently of other assets. [FAS 089, paragraph 30] }
50-38
{An entity that is subject to rate regulation or another form of price control may be limited to a maximum recovery through its
selling prices, based on the nominal currency amount of the historical cost of its assets. In that situation, historical costs measured in
nominal currency may represent an appropriate basis for the measurement of the recoverable amounts associated with those assets.
Recoverable amounts may also be lower than historical costs. Nevertheless, cost of goods sold and depreciation, depletion, and
amortization expense shall be measured at current cost-constant purchasing power amounts provided that replacement of the service
potential of the related assets would be undertaken, if necessary, in current economic conditions; if replacement would not be
undertaken, those expenses shall be measured at recoverable amounts. [FAS 089, paragraph 31] }
Has the entity complied with measurement guidance for income
from continuing operations? [ASC 255-10-50-39 through 50-41]
03/09/2023 11:15 AM EST
Page 85 / 1816
FASB Codification:
>
Income from Continuing Operations
50-39
{An entity that presents the minimum information required by this Subtopic shall measure income from continuing operations
on a current cost basis as follows: [FAS 089, paragraph 32] }
a.
{Cost of goods sold at current cost or lower recoverable amount at the date of sale or at the date on which resources are used on
or committed to a specific contract [FAS 089, paragraph 32] }
b.
{Depreciation, depletion, and amortization expense of property, plant, and equipment on the basis of the average current cost of
the assets' service potential or lower recoverable amount during the period of use. [FAS 089, paragraph 32] }
50-40
{Other revenues, expenses, gains, and losses may be measured at the amounts included in the primary income statement. (See
paragraphs 255-10-50-20 through 50-33 and 255-10-50-36 through 38 for discussions of current cost or lower recoverable amount
measurements.) [FAS 089, paragraph 32] }
50-41
{The amount of income tax expense in computations of current cost-constant purchasing power income from continuing
operations is the same as the amount of income tax expense charged against income from continuing operations in the primary financial
statements. No adjustments shall be made to income tax expense for any temporary differences that might be deemed to arise as a
result of the use of current cost accounting methods. Income tax expense shall not be allocated between income from continuing
operations and the increases or decreases in current cost amounts of inventory and property, plant, and equipment. [FAS 089,
paragraph 33] }
Has the entity complied with measurement guidance for increase or
decrease in the current cost amounts of inventory and property,
plant, and equipment, net of inflation? [ASC 255-10-50-42 and 5043]
FASB Codification:
>
Increase or Decrease in the Current Cost Amounts of Inventory and Property, Plant, and Equipment, Net of Inflation
50-42
{The increase or decrease in the current cost amounts of inventory and property, plant, and equipment represents the
difference between the measures of the assets at their entry dates for the year and the measures of the assets at their exit dates for the
year. Entry dates means the beginning of the year or the dates of acquisition, whichever is applicable; exit dates means the end of the
year or the dates of use, sale, or commitment to a specific contract, whichever is applicable. For the purposes of this paragraph, assets
shall be measured in accordance with the provisions of paragraphs 255-10-50-20 through 50-33 and paragraphs 255-10-50-36
through 50-38. [FAS 089, paragraph 34] }
50-43
{For the current year, the increase or decrease in current cost amounts of inventory and property, plant, and equipment shall
be reported both before and after eliminating the effects of general inflation (see paragraph 255-10-50-16(b)). In the five-year
summary, the increase or decrease shall be reported after elimination of the effects of each year's general inflation (see paragraph
255-10-50-3(d)). An acceptable approximate method of calculating the increase or decrease in current cost amounts and the inflation
adjustment is illustrated in Example 1 (see paragraphs 255-10-55-46 through 55-49). [FAS 089, paragraph 35] }
Has an entity with foreign operations complied with the
measurement guidance for restatement of current cost information
into units of constant purchasing power? [ASC 255-10-50-44
through 50-47]
03/09/2023 11:15 AM EST
Page 86 / 1816
FASB Codification:
>
Restatement of Current Cost Information into Units of Constant Purchasing Power
50-44
{Entities that do not have significant foreign operations or that use the dollar as the functional currency for all significant
foreign operations shall use the Consumer Price Index for All Urban Consumers to restate current costs into units of constant purchasing
power. Acceptable approximate methods are illustrated in Example 1 (see paragraphs 255-10-55-66 through 55-67). [FAS 089,
paragraph 36] }
50-45
{The effects of general inflation on current cost information for operations measured in a foreign functional currency shall be
measured either: [FAS 089, paragraph 37] }
a.
{After translation and based upon the Consumer Price Index for All Urban Consumers (the translate-restate method) [FAS 089,
paragraph 37] }
b.
{Before translation and based on a broad-based measure of the change in the general purchasing power of the functional currency
(the restate-translate method). [FAS 089, paragraph 37] }
50-46
{The same method shall be used for all operations measured in functional currencies other than the dollar and for all periods
presented. Acceptable approximate methods are illustrated in Example 1 (see paragraphs 255-10-55-66 through 55-70 and 255-1055-78 through 80). [FAS 089, paragraph 37] }
50-47
{The choice of a measure of functional currency purchasing power should take into account the availability, reliability, and
timeliness of a general price level index and the frequency with which it is adjusted. It is anticipated that an appropriate index of the
change in the general price level will be available for most functional currencies. Indexes are published in most countries, and some
indexes are published periodically by organizations such as the International Monetary Fund, the Organisation for Economic CoOperation and Development, and the United Nations. However, in some cases indexes may not be available on a timely basis or may
not be sufficiently reliable. In those circumstances, management should estimate the change in the general price level. [FAS 089,
paragraph 37] }
Has the entity with foreign operations with a functional currency
other than the dollar, in compliance with the translation adjustment
measurement guidance? [ASC 255-10-50-48 and 50-49]
FASB Codification:
>
Translation Adjustment
50-48
{If current cost information for operations measured in functional currencies other than the dollar is based on the translate-
restate method, the aggregate translation adjustment on the current cost basis shall be stated net of any income taxes allocated to the
aggregate translation adjustment in the primary financial statements (see paragraph 830-30-45-20(c)). [FAS 089, paragraph 38] }
50-49
{If current cost information for operations measured in functional currencies other than the dollar is based on the restate-
translate method, the aggregate translation adjustment on the current cost basis shall be stated net of both any income taxes allocated
to the aggregate translation adjustment in the primary financial statements and the aggregate parity adjustment. The parity
adjustment is the amount needed to measure end-of-year net assets in either of the following: [FAS 089, paragraph 39] }
a.
{Average-for-the-year dollars, if income from continuing operations is measured in average-for-the-year functional currency units
[FAS 089, paragraph 39] }
b.
{End-of-year dollars, if income from continuing operations is measured in end-of-year functional currency units. [FAS 089,
paragraph 39] }
03/09/2023 11:15 AM EST
Page 87 / 1816
Has the entity complied with the measurement guidance for
purchasing power gain or loss on net monetary items? [ASC 25510-50-50 through 50-55]
FASB Codification:
>
Purchasing Power Gain or Loss on Net Monetary Items
50-50
{The purchasing power gain or loss on net monetary items is the net gain or loss determined by restating in units of constant
purchasing power the opening and closing balances of, and transactions in, monetary assets and monetary liabilities. Acceptable
approximate methods of calculating the purchasing power gain or loss on net monetary items are illustrated in Example 1 (see
paragraphs 255-10-55-45, 255-10-55-68 through 55-70, and 255-10-55-78). [FAS 089, paragraph 40] }
50-51
{The economic significance of monetary assets and liabilities depends heavily on the general purchasing power of money,
although other factors, such as creditworthiness of debtors, may affect their significance. The economic significance of nonmonetary
items depends heavily on the value of specific goods and services. Nonmonetary assets include all of the following: [FAS 089,
paragraph 41] }
a.
{Goods held primarily for resale or assets held primarily for direct use in providing services for the business of the entity [FAS
089, paragraph 41] }
b.
{Claims to cash in amounts dependent on future prices of specific goods or services [FAS 089, paragraph 41] }
c.
{Residual rights such as goodwill or equity interests. [FAS 089, paragraph 41] }
50-52
a.
{Nonmonetary liabilities include both of the following: [FAS 089, paragraph 41] }
{Obligations to furnish goods or services in quantities that are fixed or determinable without reference to changes in prices [FAS
089, paragraph 41] }
b.
{Obligations to pay cash in amounts dependent on future prices of specific goods or services. [FAS 089, paragraph 41] }
50-53
{Guidance on the classification of balance sheet items as monetary or nonmonetary is set forth in paragraphs 255-10-55-1
through 55-13. [FAS 089, paragraph 41] }
50-54
{If inflation-adjusted current cost information is based on the translate-restate method, the purchasing power gain or loss on net
monetary items is equal to the net gain or loss determined by restating the opening and closing balances of, and transactions in,
monetary assets and liabilities in units of constant purchasing power as measured by the Consumer Price Index for All Urban
Consumers. [FAS 089, paragraph 42] }
50-55
{If inflation-adjusted current cost information is based on the restate-translate method, the purchasing power gain or loss on net
monetary items is equal to the net gain or loss determined by restating the opening and closing balances of, and transactions in,
monetary assets and liabilities in units of constant purchasing power as measured by the change in the general purchasing power of the
functional currency. The purchasing power gain or loss computed in that manner shall be translated into its dollar equivalent at the
average exchange rate for the period. [FAS 089, paragraph 43] }
Presentation > 260 Earnings Per Share > 10 Overall > 25 Recognition > General
Is the entity in compliance with the guidance in ASC 260-10-25-1?
03/09/2023 11:15 AM EST
Page 88 / 1816
FASB Codification:
25-1
{An entity that presents earnings per share (EPS) in accordance with this Topic shall recognize the value of the effect of a down
round feature in an equity-classified freestanding financial instrument (that is, instruments that are not convertible instruments)
when the down round feature is triggered. That effect shall be treated as a dividend and as a reduction of income available to common
stockholders in basic earnings per share, in accordance with the guidance in paragraph 260-10-45-12B. See paragraphs 260-10-5595 through 55-97 for an illustration of this guidance. [ASU 2017-11, paragraph 5] }
Pending Content:
Transition Date: (P) December 16, 2021; (N) December 16, 2023 Transition Guidance 815-40-65-1
815-40-65-1
Editor's Note: The content of paragraph 260-10-25-1 will change upon transition, together with the addition of the heading noted
below.
> Financial Instruments That Include a Down Round Feature
{An entity that presents earnings per share (EPS) in accordance with this Topic shall recognize the value of the effect of a down round
feature in an equity-classified freestanding financial instrument [ASU 2017-11, paragraph 5] }{and an equity-classified convertible
preferred stock (if the conversion feature has not been bifurcated in accordance with other guidance) [ASU 2020-06, paragraph 8] }
{when the down round feature is triggered. That effect shall be treated as a dividend and as a reduction of income available to common
stockholders in basic earnings per share, in accordance with the guidance in paragraph 260-10-45-12B. See paragraphs 260-10-5595 through 55-97 for an illustration of this guidance. [ASU 2017-11, paragraph 5] }
Consideration Points:
ASU 2020-06 The pending content resulting from the issuance of ASU 2020-06 amend paragraph 260-10-25-1 and added
the related heading and amended paragraphs 260-10-30-1, 260-10-35-1, and 260-10-45-12B. For public business entities
that are not smaller reporting companies, the amendments are effective fiscal years beginning after December 15, 2021,
and interim periods within those fiscal years. For all other entities, fiscal years beginning after December 15, 2023, and
interim periods within those fiscal years. The guidance may be early adopted for fiscal years beginning after December 15,
2020, and interim periods within those fiscal years.
Presentation > 260 Earnings Per Share > 10 Overall > 30 Initial Measurement > General
Is the entity in compliance with the guidance in ASC 260-10-30:
Financial Instruments That Include a Down Round Feature?
03/09/2023 11:15 AM EST
Page 89 / 1816
FASB Codification:
>
Financial Instruments That Include a Down Round Feature
30-1
{As of the date that a down round feature is triggered (that is, upon the occurrence of the triggering event that results in a
reduction of the strike price) in an equity-classified freestanding financial instrument, an entity shall measure the value of the effect
of the feature as the difference between the following amounts determined immediately after the down round feature is triggered:
[ASU 2017-11, paragraph 6] }
a.
{The fair value of the financial instrument (without the down round feature) with a strike price corresponding to the currently
stated strike price of the issued instrument (that is, before the strike price reduction) [ASU 2017-11, paragraph 6] }
b.
{The fair value of the financial instrument (without the down round feature) with a strike price corresponding to the reduced
strike price upon the down round feature being triggered. [ASU 2017-11, paragraph 6] }
Pending Content:
Transition Date: (P) December 16, 2021; (N) December 16, 2023 Transition Guidance 815-40-65-1
815-40-65-1{As of the date that a down round feature is triggered (that is, upon the occurrence of the triggering event that results in a
reduction of the strike price) in an equity-classified freestanding financial instrument [ASU 2017-11, paragraph 6] }{and an equityclassified convertible preferred stock (if the conversion feature has not been bifurcated in accordance with other guidance), [ASU 202006, paragraph 8] }{ an entity shall measure the value of the effect of the feature as the difference between the following amounts
determined immediately after the down round feature is triggered: [ASU 2017-11, paragraph 6] }
a.
{The fair value of the financial instrument (without the down round feature) with a strike price corresponding to the currently
stated strike price of the issued instrument (that is, before the strike price reduction) [ASU 2017-11, paragraph 6] }
b.
{The fair value of the financial instrument (without the down round feature) with a strike price corresponding to the reduced
strike price upon the down round feature being triggered. [ASU 2017-11, paragraph 6] }
30-2
{The fair values of the financial instruments in paragraph 260-10-30-1 shall be measured in accordance with the guidance in
Topic 820 on fair value measurement. See paragraph 260-10-45-12B for related earnings per share guidance and paragraphs 50510-50-3 through 50-3A for related disclosure guidance. [ASU 2017-11, paragraph 6] }
Consideration Points:
ASU 2020-06 The pending content resulting from the issuance of ASU 2020-06 amend paragraph 260-10-25-1 and added
the related heading and amended paragraphs 260-10-30-1, 260-10-35-1, and 260-10-45-12B. For public business entities
that are not smaller reporting companies, the amendments are effective fiscal years beginning after December 15, 2021,
and interim periods within those fiscal years. For all other entities, fiscal years beginning after December 15, 2023, and
interim periods within those fiscal years. The guidance may be early adopted for fiscal years beginning after December 15,
2020, and interim periods within those fiscal years.
Presentation > 260 Earnings Per Share > 10 Overall > 35 Subsequent Measurement > General
Is the entity in compliance with the guidance in ASC 260-10-35:
Financial Instruments That Include a Down Round Feature?
03/09/2023 11:15 AM EST
Page 90 / 1816
FASB Codification:
>
Financial Instruments That Include a Down Round Feature
35-1
{An entity shall recognize the value of the effect of a down round feature in an equity-classified freestanding financial
instrument each time it is triggered but shall not otherwise subsequently remeasure the value of a down round feature that it has
recognized and measured in accordance with paragraphs 260-10-25-1 and 260-10-30-1 through 30-2. An entity shall not
subsequently amortize the amount in additional paid-in capital arising from recognizing the value of the effect of the down round
feature. [ASU 2017-11, paragraph 7] }
Pending Content:
Transition Date: (P) December 16, 2021; (N) December 16, 2023 Transition Guidance 815-40-65-1
815-40-65-1{An entity shall recognize the value of the effect of a down round feature in an equity-classified freestanding financial
instrument [ASU 2017-11, paragraph 7] }{and an equity-classified convertible preferred stock (if the conversion feature has not been
bifurcated in accordance with other guidance) [ASU 2020-06, paragraph 8] }{ each time it is triggered but shall not otherwise
subsequently remeasure the value of a down round feature that it has recognized and measured in accordance with paragraphs 260-1025-1 and 260-10-30-1 through 30-2. An entity shall not subsequently amortize the amount in additional paid-in capital arising from
recognizing the value of the effect of the down round feature. [ASU 2017-11, paragraph 7] }
Consideration Points:
ASU 2020-06 The pending content resulting from the issuance of ASU 2020-06 amend paragraph 260-10-25-1 and added
the related heading and amended paragraphs 260-10-30-1, 260-10-35-1, and 260-10-45-12B. For public business entities
that are not smaller reporting companies, the amendments are effective fiscal years beginning after December 15, 2021,
and interim periods within those fiscal years. For all other entities, fiscal years beginning after December 15, 2023, and
interim periods within those fiscal years. The guidance may be early adopted for fiscal years beginning after December 15,
2020, and interim periods within those fiscal years.
Presentation > 260 Earnings Per Share > 10 Overall > 45 Other Presentation > General
Is the entity in compliance with the guidance in ASC 260-10-45:
Required EPS Presentation on the Face of the Income Statement?
03/09/2023 11:15 AM EST
Page 91 / 1816
FASB Codification:
>
Required EPS Presentation on the Face of the Income Statement
45-2
{Entities with simple capital structures, that is, those with only common stock outstanding, shall present basic per-share
amounts for income from continuing operations [FAS 128, paragraph 36] }{ and for net income on the face of the income statement.
All other entities shall present basic and diluted per-share amounts for income from continuing operations and for net income on the
face of the income statement with equal prominence. [FAS 128, paragraph 36] }
45-3
{An entity that reports a discontinued operation [FAS 128, paragraph 37] }{in a period shall present basic and diluted per-share
amounts for that line item either on the face of the income statement or in the notes to the financial statements. [FAS 128,
paragraph 37] }
45-4
{The terms basic EPS and diluted EPS are used to identify EPS data to be presented and are not required to be captions used in
the income statement. There are no explicit requirements for the terms to be used in the presentation of basic and diluted EPS; terms
such as earnings per common share and earnings per common share—assuming dilution, respectively, are appropriate. [FAS 128,
paragraph 39] }
45-5
{Per-share amounts not required to be presented by this Subtopic that an entity chooses to disclose shall be computed in
accordance with this Subtopic and disclosed only in the notes to financial statements; it shall be noted whether the per-share amounts
are pretax or net of tax. [FAS 128, paragraph 37] }
Pending Content:
Transition Date: (P) December 16, 2020; (N) December 16, 2021 Transition Guidance 105-10-65-6
105-10-65-6{Per-share amounts not required to be presented by this Subtopic that an entity chooses to disclose shall be computed in
accordance with this Subtopic and disclosed only in the notes to financial statements; it shall be noted whether the per-share amounts
are pretax or net of tax. [FAS 128, paragraph 37] }{(See paragraph 260-10-50-1A.) [ASU 2020-10, paragraph 16] }
45-6
{Paragraph 230-10-45-3 prohibits reporting an amount of cash flow per share. [FAS 128, paragraph 37] }
45-7
{EPS data shall be presented for all periods for which an income statement or summary of earnings is presented. If diluted EPS
data are reported for at least one period, they shall be reported for all periods presented, even if they are the same amounts as basic
EPS. If basic and diluted EPS are the same amount, dual presentation can be accomplished in one line on the income statement. [FAS
128, paragraph 38] }
45-8
45-9
See Example 1 (paragraph 260-10-55-38) for an illustration of this guidance.
[Paragraph Not Used not used]
Consideration Points:
The pending content resulting from the issuance of ASU 2020-10 amended paragraph 260-10-45-5 and added paragraph
260-10-50-1A. For 1) public business entities, 2) not-for-profit entities that have issued, or are a conduit bond obligor for,
securities that are traded, listed, or quoted on an exchange or an over-the-counter market, and 3) an employee benefit plan
that files or furnishes financial statements with or to the SEC, the amendments in ASU 2020-10 are effective for annual
periods after December 15, 2020. For all other entities, the amendments in ASU 2020-10 are effective for annual periods
beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022. Early
application of the amendments in this Update is permitted for: 1) public business entities, 2) not-for-profit entities that
have issued, or are a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-thecounter market, and 3) an employee benefit plan that files or furnishes financial statements with or to the SEC for any
annual or interim period for which financial statements have not been issued. For all other entities, early application of the
amendments is permitted for any annual or interim period for which financial statements are available to be issued. The
amendments in this Update should be applied retrospectively. An entity should apply the amendments at the beginning of
the period that includes the adoption date.
Has the entity computed basic EPS by dividing income available to
common stockholders by the weighted-average number of common
shares outstanding during the period and has it weighted shares
issued or reacquired during the period appropriately? [ASC 260-1045-10]
03/09/2023 11:15 AM EST
Page 92 / 1816
FASB Codification:
>
Computation of Basic EPS
45-10
{Basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-
average number of common shares outstanding (the denominator) during the period. Shares issued during the period and shares
reacquired during the period shall be weighted for the portion of the period that they were outstanding. [FAS 128, paragraph 8] }See
Example 1 (paragraph 260-10-55-38) for an illustration of this guidance.
For purposes of computing EPS, has the entity calculated income
available to common stockholders properly? [ASC 260-10-45-11
through 45-12]
FASB Codification:
>
Income Available to Common Stockholders and Preferred Dividends
45-11
{Income available to common stockholders shall be computed by deducting both the dividends declared in the period on
preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not
earned) [FAS 128, paragraph 9] }{ from income from continuing operations (if that amount appears in the income statement) [FAS
128, paragraph 9] }{ and also from net income. If there is a loss from continuing operations or a net loss, the amount of the loss shall
be increased by those preferred dividends. [FAS 128, paragraph 9] }{ An adjustment to net income or loss for preferred stock
dividends is required for all preferred stock dividends, regardless of the form of payment. [EITF D-082, paragraph ] }{Preferred
dividends that are cumulative only if earned shall be deducted only to the extent that they are earned. [FAS 128, paragraph 9] }
45-11A
{For purposes of computing EPS in consolidated financial statements (both basic and diluted), if one or more less-than-
wholly-owned subsidiaries are included in the consolidated group, income from continuing operations and net income shall exclude
the income attributable to the noncontrolling interest in subsidiaries. Example 7 (see paragraph 260-10-55-64) provides an example
of calculating EPS when there is a noncontrolling interest in a subsidiary in the consolidated group. [FAS 128, paragraph 9] }
45-12
{Preferred stock dividends that an issuer has paid or intends to pay in its own common shares shall be deducted from net
income (or added to the amount of a net loss) in computing income available to common stockholders. In certain cases, the dividends
may be payable in common shares or cash at the issuer's option. [EITF D-082, paragraph ] }{The adjustment to net income (or net loss)
for preferred stock dividends payable in common stock in computing income available to common stockholders is consistent with the
treatment of common stock issued for goods or services. [EITF D-082, paragraph ] }
45-12A
{ [Paragraph superseded by Accounting Standards Update No. 2017-11 superseded by Accounting Standards Update] [ASU
2017-11, paragraph 5] }
Is the entity in compliance with the guidance in ASC 260-10-45:
Freestanding Equity-Classified Financial Instrument with a Down
Round Feature?
03/09/2023 11:15 AM EST
Page 93 / 1816
FASB Codification:
>
Freestanding Equity-Classified Financial Instrument with a Down Round Feature
45-12B
{For a freestanding equity-classified financial instrument with a down round feature, an entity shall deduct the value of
the effect of a down round feature (as recognized in accordance with paragraph 260-10-25-1 and measured in accordance with
paragraphs 260-10-30-1 through 30-2) in computing income available to common stockholders when that feature has been triggered
(that is, upon the occurrence of the triggering event that results in a reduction of the strike price). [ASU 2017-11, paragraph 8] }
Pending Content:
Transition Date: (P) December 16, 2021; (N) December 16, 2023 Transition Guidance 815-40-65-1
815-40-65-1{For a freestanding equity-classified financial instrument [ASU 2017-11, paragraph 8] }{and an equity-classified
convertible preferred stock (if the conversion feature has not been bifurcated in accordance with other guidance) [ASU 2020-06,
paragraph 8] }{ with a down round feature, an entity shall deduct the value of the effect of a down round feature (as recognized in
accordance with paragraph 260-10-25-1 and measured in accordance with paragraphs 260-10-30-1 through 30-2) in computing
income available to common stockholders when that feature has been triggered (that is, upon the occurrence of the triggering event that
results in a reduction of the strike price). [ASU 2017-11, paragraph 8] }
Has the entity properly included contingently issuable shares in its
weighted-average number of common shares outstanding in the
computation of basic EPS properly? [ASC 260-10-45-12A through
45-14]
03/09/2023 11:15 AM EST
Page 94 / 1816
FASB Codification:
>
Treatment of Contingently Issuable Shares in Weighted-Average Shares Outstanding
45-12C
{ Contractual agreements (usually associated with purchase business combinations) sometimes provide for the issuance of
additional common shares contingent upon certain conditions being met. Consistent with the objective that basic EPS should represent a
measure of the performance of an entity over a specific reporting period, contingently issuable shares should be included in basic
EPS only when there is no circumstance under which those shares would not be issued and basic EPS should not be restated for changed
circumstances. [FAS 128, paragraph 91] }
45-13
{Shares issuable for little or no cash consideration upon the satisfaction of certain conditions (contingently issuable shares)
shall be considered outstanding common shares and included in the computation of basic EPS as of the date that all necessary conditions
have been satisfied (in essence, when issuance of the shares is no longer contingent). Outstanding common shares that are contingently
returnable (that is, subject to recall) shall be treated in the same manner as contingently issuable shares. [FAS 128, paragraph 10] }
{Thus, contingently issuable shares include shares that meet any of the following criteria: [FAS 128, paragraph 10] }
a.
{They will be issued in the future upon the satisfaction of specified conditions. [FAS 128, paragraph 10] }
b.
{They have been placed in escrow and all or part must be returned if specified conditions are not met. [FAS 128, paragraph 10]
}
c.
{They have been issued but the holder must return all or part if specified conditions are not met. [FAS 128, paragraph 10] }
45-14
45-15
See paragraph 710-10-05-8 for guidance related to rabbi trust shares.
[Paragraph Not Used not used]
Pending Content:
Transition Date: December 16, 2021 (P); December 16, 2021 (N) Transition Guidance 815-40-65-2
815-40-65-2
Editor’s Note: Paragraph 260-10-45-15 will be amended and the heading noted below will be added upon transition.
> > Issuer’s Accounting for Modifications or Exchanges of Freestanding Equity-Classified Written Call Options
{For a modification or an exchange of a freestanding equity-classified written call option described in paragraph 815-40-35-17(d), an
entity shall deduct the effect of the modification or exchange (as measured in accordance with paragraph 815-40-35-16) in computing
income available to common stockholders when the modification or exchange is executed by the issuer and the holder or unilaterally by
the issuer (see paragraph 815-40-15-7H). [ASU 2021-04, paragraph 3] }
Consideration Points:
ASU 2020-06 The pending content resulting from the issuance of ASU 2020-06 amend paragraph 260-10-25-1 and added
the related heading and amended paragraphs 260-10-30-1, 260-10-35-1, and 260-10-45-12B. For public business entities
that are not smaller reporting companies, the amendments are effective fiscal years beginning after December 15, 2021,
and interim periods within those fiscal years. For all other entities, fiscal years beginning after December 15, 2023, and
interim periods within those fiscal years. The guidance may be early adopted for fiscal years beginning after December 15,
2020, and interim periods within those fiscal years.
Has the entity computed diluted EPS properly ? [ASC 260-10-4516]
03/09/2023 11:15 AM EST
Page 95 / 1816
FASB Codification:
>
Computation of Diluted EPS
45-16
{The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include
the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. In
addition, in computing the dilutive effect of convertible securities, the numerator is adjusted to add back any convertible preferred
dividends and the after-tax amount of interest recognized in the period associated with any convertible debt. The numerator also is
adjusted for any other changes in income or loss that would result from the assumed conversion of those potential common shares, such
as profit-sharing expenses. Similar adjustments also may be necessary for certain contracts that provide the issuer or holder with a
choice between settlement methods. [FAS 128, paragraph 11] }See Example 1 (paragraph 260-10-55-38) for an illustration of this
guidance.
Pending Content:
Transition Date: (P) December 16, 2021; (N) December 16, 2023 Transition Guidance 815-40-65-1
815-40-65-1{The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to
include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been
issued. In computing the dilutive effect of convertible securities, the numerator is adjusted [FAS 128, paragraph 11] }{in accordance
with the guidance in paragraph 260-10-45-40. [ASU 2020-06, paragraph 9] }{Adjustments also may be necessary for certain contracts
that provide the issuer or holder with a choice between settlement methods. [FAS 128, paragraph 11] }See Example 1 (paragraph
260-10-55-38) for an illustration of this guidance.
Consideration Points:
ASU 2020-06 The pending content resulting from the issuance of ASU 2020-06 amended paragraphs 260-10-45-16, 26010-45-23, 260-10-45-40, and 260-10-45-44 through 45-46, added paragraphs 260-10-45-21A and its related heading and
260-10-45-45A, and superseded paragraph 260-10-45-64. For public business entities that are not smaller reporting
companies, the amendments are effective fiscal years beginning after December 15, 2021, and interim periods within those
fiscal years. For all other entities, fiscal years beginning after December 15, 2023, and interim periods within those fiscal
years. The guidance may be early adopted for fiscal years beginning after December 15, 2020, and interim periods within
those fiscal years.
Has the entity not assumed conversion, exercise, or contingent
issuance of securities that would have an antidilutive effect on EPS.
In determining whether a security would result in antidilution has
the entity sequenced the securities from most dilutive to least
dilutive? [ASC 260-10-45-17 through 45-20]
03/09/2023 11:15 AM EST
Page 96 / 1816
FASB Codification:
>
No Antidilution
45-17
{The computation of diluted EPS shall not assume conversion, exercise, or contingent issuance of securities that would have
an antidilutive effect on EPS. Shares issued on actual conversion, exercise, or satisfaction of certain conditions for which the underlying
potential common shares were antidilutive shall be included in the computation as outstanding common shares from the date of
conversion, exercise, or satisfaction of those conditions, respectively. In determining whether potential common shares are dilutive or
antidilutive, each issue or series of issues of potential common shares shall be considered separately rather than in the aggregate.
[FAS 128, paragraph 13] }
45-18
{Convertible securities may be dilutive on their own but antidilutive when included with other potential common shares in
computing diluted EPS. To reflect maximum potential dilution, each issue or series of issues of potential common shares shall be
considered in sequence from the most dilutive to the least dilutive. That is, dilutive potential common shares with the lowest earnings
per incremental share shall be included in diluted EPS before those with a higher earnings per incremental share. [FAS 128,
paragraph 14] }{ Example 4 (see paragraph 260-10-55-57) illustrates that provision. [FAS 128, paragraph 14] }{Options and
warrants generally will be included first because use of the treasury stock method does not affect the numerator of the computation.
[FAS 128, paragraph 14] }{An entity that reports a discontinued operation [FAS 128, paragraph 15] }{in a period shall use income
from continuing operations [FAS 128, paragraph 15] }{(adjusted for preferred dividends as described in paragraph 260-10-45-11) as
the control number in determining whether those potential common shares are dilutive or antidilutive. That is, the same number of
potential common shares used in computing the diluted per-share amount for income from continuing operations shall be used in
computing all other reported diluted per-share amounts even if those amounts will be antidilutive to their respective basic per-share
amounts. [FAS 128, paragraph 15] }{(See paragraph 260-10-45-3.) [FAS 128, paragraph 15] }{The control number excludes income
from continuing operations attributable to the noncontrolling interest in a subsidiary in accordance with paragraph 260-10-45-11A.
[FAS 128, paragraph 15] } Example 14 (see paragraph 260-10-55-90) provides an illustration of this guidance.
45-19
{Including potential common shares in the denominator of a diluted per-share computation for continuing operations always
will result in an antidilutive per-share amount when an entity has a loss from continuing operations or a loss from continuing operations
available to common stockholders (that is, after any preferred dividend deductions). Although including those potential common shares
in the other diluted per-share computations may be dilutive to their comparable basic per-share amounts, no potential common shares
shall be included in the computation of any diluted per-share amount when a loss from continuing operations exists, even if the entity
reports net income. [FAS 128, paragraph 16] }
45-20
{The control number for determining whether including potential common shares in the diluted EPS computation would be
antidilutive should be income from continuing operations (or a similar line item above net income if it appears on the income
statement). As a result, if there is a loss from continuing operations, diluted EPS would be computed in the same manner as basic EPS is
computed, even if an entity has net income after adjusting for a discontinued operation. Similarly, if an entity has income from
continuing operations but its preferred dividend adjustment made in computing income available to common stockholders in accordance
with paragraph 260-10-45-11 results in a loss from continuing operations available to common stockholders, diluted EPS would be
computed in the same manner as basic EPS. [FAS 128, paragraph 96] }
Consideration Points:
Section 260-10-45 has been updated as the result of the issuance of ASU 2015-01. The pending content resulting from the
issuance of this ASU amended paragraphs 260-10-45-18 and 45-20. The amendments in this Update are effective for fiscal
years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the
amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented
in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the
fiscal year of adoption.
For purposes of computing diluted EPS, has the entity used the
most advantageous conversion rate or exercise price from the
standpoint of the security holder? [ASC 260-10-45-21]
03/09/2023 11:15 AM EST
Page 97 / 1816
FASB Codification:
>
Conversion Rate or Exercise Price
45-21
{Diluted EPS shall be based on the most advantageous conversion rate or exercise price from the standpoint of the security
holder. Previously reported diluted EPS data shall not be retroactively adjusted for subsequent conversions or subsequent changes in the
market price of the common stock. [FAS 128, paragraph 12] }
Is the entity in compliance with the guidance in ASC 260-10-45:
Variable Denominator?
FASB Codification:
>
Variable Denominator
45-21A
Pending Content:
Transition Date: (P) December 16, 2021; (N) December 16, 2023 Transition Guidance 815-40-65-1
815-40-65-1{Changes in an entity’s share price may affect the exercise price of a financial instrument or the number of shares that
would be used to settle the financial instrument. For example, when the principal of a convertible debt instrument is required to be
settled in cash but the conversion premium is required to (or may) be settled in shares, the number of shares to be included in the
diluted EPS denominator is affected by the entity’s share price. In applying both the treasury stock method and the if-converted method
of calculating diluted EPS, the average market price shall be used for purposes of calculating the denominator for diluted EPS when the
number of shares that may be issued is variable, except for contingently issuable shares within the scope of the guidance in paragraphs
260-10-45-48 through 45-57. See paragraphs 260-10-55-4 through 55-5 for implementation guidance on determining an average
market price. [ASU 2020-06, paragraph 9] }
Consideration Points:
ASU 2020-06 The pending content resulting from the issuance of ASU 2020-06 amended paragraphs 260-10-45-16, 26010-45-23, 260-10-45-40, and 260-10-45-44 through 45-46, added paragraphs 260-10-45-21A and its related heading and
260-10-45-45A, and superseded paragraph 260-10-45-64. For public business entities that are not smaller reporting
companies, the amendments are effective fiscal years beginning after December 15, 2021, and interim periods within those
fiscal years. For all other entities, fiscal years beginning after December 15, 2023, and interim periods within those fiscal
years. The guidance may be early adopted for fiscal years beginning after December 15, 2020, and interim periods within
those fiscal years.
In computing diluted EPS, has the entity properly accounted for call
options and warrants (and their equivalents) in accordance with
ASC 260-10-45-22 through 45-26?
FASB Codification:
>
Options, Warrants, and Their Equivalents and the Treasury Stock Method
45-22
{The dilutive effect of outstanding call options and warrants (and their equivalents) issued by the reporting entity shall be
reflected in diluted EPS by application of the treasury stock method unless the provisions of paragraphs 260-10-45-35 through 45-36
and 260-10-55-8 through 55-11 require that another method be applied. Equivalents of options and warrants include nonvested stock
granted [FAS 128, paragraph 17] }{under a share-based payment arrangement, [ASU 2018-07, paragraph 7] }{stock purchase
contracts, and partially paid stock subscriptions [FAS 128, paragraph 17] }(see paragraph 260-10-55-23). {Antidilutive contracts, such
as purchased put options and purchased call options, shall be excluded from diluted EPS. [EITF D-072, paragraph ] }
45-23
a.
{Under the treasury stock method: [FAS 128, paragraph 17] }
{Exercise of options and warrants shall be assumed at the beginning of the period (or at time of issuance, if later) and common
shares shall be assumed to be issued. [FAS 128, paragraph 17] }
b.
{The proceeds from exercise shall be assumed to be used to purchase common stock at the average market price during the
03/09/2023 11:15 AM EST
Page 98 / 1816
period. [FAS 128, paragraph 17] }{(See paragraphs 260-10-45-29 and 260-10-55-4 through 55-5.) [FAS 128, paragraph 17]
}
c.
{The incremental shares (the difference between the number of shares assumed issued and the number of shares assumed
purchased) shall be included in the denominator of the diluted EPS computation. [FAS 128, paragraph 17] }
Example 15 (see paragraph 260-10-55-92) provides an illustration of this guidance.
Pending Content:
Transition Date: (P) December 16, 2021; (N) December 16, 2023 Transition Guidance 815-40-65-1
815-40-65-1{Under the treasury stock method: [FAS 128, paragraph 17] }
a.
{Exercise of options and warrants shall be assumed at the beginning of the period (or at time of issuance, if later) and common
shares shall be assumed to be issued. [FAS 128, paragraph 17] }
b.
{The proceeds from exercise shall be assumed to be used to purchase common stock at the average market price during the
period. [FAS 128, paragraph 17] }{(See paragraphs 260-10-45-29 and 260-10-55-4 through 55-5.) [FAS 128, paragraph 17]
}
c.
{The incremental shares (the difference between the number of shares assumed issued and the number of shares assumed
purchased) shall be included in the denominator of the diluted EPS computation. [FAS 128, paragraph 17] }
Example 15 (see paragraph 260-10-55-92) provides an illustration of this guidance. {See paragraph 260-10-45-21A if the exercise
price of a financial instrument or the number of shares that would be used to settle the financial instrument is variable. [ASU 2020-06,
paragraph 9] }
45-24
[Paragraph Not Used not used]
45-25
{Options and warrants will have a dilutive effect under the treasury stock method only when the average market price of the
common stock during the period exceeds the exercise price of the options or warrants (they are in the money). Previously reported EPS
data shall not be retroactively adjusted as a result of changes in market prices of common stock. [FAS 128, paragraph 18] }
45-26
{Dilutive options or warrants that are issued during a period or that expire or are cancelled during a period shall be included
in the denominator of diluted EPS for the period that they were outstanding. Likewise, dilutive options or warrants exercised during the
period shall be included in the denominator for the period prior to actual exercise. The common shares issued upon exercise of options
or warrants shall be included in the denominator for the period after the exercise date. Consequently, incremental shares assumed
issued shall be weighted for the period the options or warrants were outstanding, and common shares actually issued shall be weighted
for the period the shares were outstanding. [FAS 128, paragraph 19] }
45-27
> >
Paragraphs 260-10-55-3 through 55-11 provide additional guidance on the application of the treasury stock method.
Share-Based Payment Arrangements
45-28
{The provisions in paragraphs 260-10-45-28A through 45-31 apply to share-based awards issued to grantees under a share-
based payment arrangement in exchange for goods and services [FAS 128, paragraph 20] }{or as consideration payable to a customer.
[ASU 2019-08, paragraph 13] }
45-28A
{Awards of share options and nonvested shares (as defined in Topic 718) to be issued to a grantee [FAS 128, paragraph 20]
}{under a share-based payment arrangement are considered options for purposes of computing diluted EPS. Such share-based awards
shall be considered to be outstanding as of the grant date for purposes of computing diluted EPS even though their exercise may be
contingent upon vesting. Those share-based awards are included in the diluted EPS computation even if the grantee may not receive (or
be able to sell) the stock until some future date. Accordingly, all shares to be issued shall be included in computing diluted EPS if the
effect is dilutive. The dilutive effect of share-based payment arrangements shall be computed using the treasury stock method. If the
equity share options or other equity instruments are outstanding for only part of a period, the shares issuable shall be weighted to
reflect the portion of the period during which the equity instruments were outstanding. See Example 8 (paragraph 260-10-55-68).
[FAS 128, paragraph 20] }
45-28B
{In applying the treasury stock method, all dilutive potential common shares, regardless of whether they are exercisable, are
03/09/2023 11:15 AM EST
Page 99 / 1816
treated as if they had been exercised. The treasury stock method assumes that the proceeds upon exercise are used to repurchase the
entity's stock, reducing the number of shares to be added to outstanding common stock in computing EPS. [FAS 128, paragraph 157] }
45-29
{In applying the treasury stock method described in paragraph 260-10-45-23, the assumed proceeds shall be the sum of both
of the following: [FAS 128, paragraph 21] }
a.
{The amount, if any, the grantee must pay upon exercise. [FAS 128, paragraph 21] }
b.
{The amount of cost attributed to [FAS 128, paragraph 21] }{share-based payment awards (within the scope of Topic 718 on
stock compensation) not yet recognized. This amount includes share-based payment awards that are not contingent upon satisfying
certain conditions as described in paragraph 260-10-45-32 and contingently issuable shares that have been determined to be
included in the computation of diluted EPS as described in paragraphs 260-10-45-48 through 45-57 [ASU 2018-07,
paragraph 7] }
c.
[Subparagraph superseded by Accounting Standards Update No. 2016-09 superseded by Accounting Standards Update] .
45-29A
{Under paragraphs 718-10-35-1D and 718-10-35-3, the effect of forfeitures is taken into account by recognizing
compensation cost for those instruments for which the [FAS 128, paragraph 158] }{employee’s requisite service has been rendered or
the nonemployee’s vesting conditions have been met and no compensation cost shall be recognized for instruments that grantees forfeit
because a service or performance condition is not satisfied. [ASU 2018-07, paragraph 7] }{See Example 8 (paragraph 260-10-55-68)
for an illustration of this guidance. [FAS 128, paragraph 158] }
45-30
{If share-based payment arrangements are payable in common stock or in cash at the election of either the entity or the
grantee, the determination of whether such share-based awards are potential common shares shall be made based on the provisions in
paragraph 260-10-45-45. If an entity has a tandem award (as defined in Topic 718) that allows the entity or the grantee to make an
election involving two or more types of equity instruments, diluted EPS for the period shall be computed based on the terms used in the
computation of compensation cost for that period. [FAS 128, paragraph 22] }
45-31
{Awards with a market condition, a performance condition, or any combination thereof (as defined in Topic 718) shall be
included in diluted EPS pursuant to the contingent share provisions in paragraphs 260-10-45-48 through 45-57. [FAS 128,
paragraph 23] }
45-32
{Fixed grantee stock options (fixed awards) and nonvested stock (including restricted stock) shall be included in the
computation of diluted EPS based on the provisions for options and warrants in paragraphs 260-10-45-22 through 45-27. Even
though their issuance may be contingent upon vesting, they shall not be considered to be contingently issuable shares (see Section 81515-55 and paragraph 260-10-45-48). However, because issuance of performance-based stock options (and performance-based
nonvested stock) is contingent upon satisfying conditions in addition to the mere passage of time, those options and nonvested stock
shall be considered to be contingently issuable shares in the computation of diluted EPS. A distinction shall be made only between timerelated contingencies and contingencies requiring specific achievement. [FAS 128, paragraph 109] }
45-33
[Paragraph Not Used not used]
45-34
[Paragraph Not Used not used]
> >
Written Put Options and the Reverse Treasury Stock Method
45-35
{Contracts that require that the reporting entity repurchase its own stock, such as written put options and forward purchase
contracts other than forward purchase contracts accounted for under paragraphs 480-10-30-3 through 30-5 and 480-10-35-3, shall
be reflected in the computation of diluted EPS if the effect is dilutive. If those contracts are in the money during the reporting period
(the exercise price is above the average market price for that period), the potential dilutive effect on EPS shall be computed using the
reverse treasury stock method. Under that method: [FAS 128, paragraph 24] }
a.
{Issuance of sufficient common shares shall be assumed at the beginning of the period (at the average market price during the
period) to raise enough proceeds to satisfy the contract. [FAS 128, paragraph 24] }
b.
{The proceeds from issuance shall be assumed to be used to satisfy the contract (that is, to buy back shares). [FAS 128,
paragraph 24] }
03/09/2023 11:15 AM EST
c.
Page 100 / 1816
{The incremental shares (the difference between the number of shares assumed issued and the number of shares received from
satisfying the contract) shall be included in the denominator of the diluted EPS computation. [FAS 128, paragraph 24] }
45-36
{For example, an entity sells 100 put options with an exercise price of $25; the average market price for the period is $20. In
computing diluted EPS at the end of the period, the entity assumes it issues 125 shares at $20 per share to satisfy its put obligation of
$2,500. The difference between the 125 shares issued and the 100 shares received from satisfying the put option (25 incremental
shares) would be added to the denominator of diluted EPS. [FAS 128, paragraph 24] }
> >
Purchased Options
45-37
{Contracts such as purchased put options and purchased call options (options held by the entity on its own stock) shall not be
included in the computation of diluted EPS because including them would be antidilutive. That is, the put option would be exercised only
when the exercise price is higher than the market price and the call option would be exercised only when the exercise price is lower
than the market price; in both instances, the effect would be antidilutive under both the treasury stock method and the reverse treasury
stock method, respectively. [FAS 128, paragraph 25] }
45-38
[Paragraph Not Used not used]
45-39
[Paragraph Not Used not used]
Consideration Points:
ASU 2020-06 The pending content resulting from the issuance of ASU 2020-06 amended paragraphs 260-10-45-16, 26010-45-23, 260-10-45-40, and 260-10-45-44 through 45-46, added paragraphs 260-10-45-21A and its related heading and
260-10-45-45A, and superseded paragraph 260-10-45-64. For public business entities that are not smaller reporting
companies, the amendments are effective fiscal years beginning after December 15, 2021, and interim periods within those
fiscal years. For all other entities, fiscal years beginning after December 15, 2023, and interim periods within those fiscal
years. The guidance may be early adopted for fiscal years beginning after December 15, 2020, and interim periods within
those fiscal years.
Has the dilutive effect of share-based compensation arrangements
issued to employees and nonemployees in exchange for goods or
services or as consideration payable to a customer been properly
reflected in diluted EPS by application of the treasury stock method
unless another method is required? [ASC 260-10-45-28 through 4532]
FASB Codification:
>
Share-Based Payment Arrangements
45-28
{The provisions in paragraphs 260-10-45-28A through 45-31 apply to share-based awards issued to grantees under a share-
based payment arrangement in exchange for goods and services [FAS 128, paragraph 20] }{or as consideration payable to a customer.
[ASU 2019-08, paragraph 13] }
45-28A
{Awards of share options and nonvested shares (as defined in Topic 718) to be issued to a grantee [FAS 128, paragraph 20]
}{under a share-based payment arrangement are considered options for purposes of computing diluted EPS. Such share-based awards
shall be considered to be outstanding as of the grant date for purposes of computing diluted EPS even though their exercise may be
contingent upon vesting. Those share-based awards are included in the diluted EPS computation even if the grantee may not receive (or
be able to sell) the stock until some future date. Accordingly, all shares to be issued shall be included in computing diluted EPS if the
effect is dilutive. The dilutive effect of share-based payment arrangements shall be computed using the treasury stock method. If the
equity share options or other equity instruments are outstanding for only part of a period, the shares issuable shall be weighted to
reflect the portion of the period during which the equity instruments were outstanding. See Example 8 (paragraph 260-10-55-68).
[FAS 128, paragraph 20] }
45-28B
{In applying the treasury stock method, all dilutive potential common shares, regardless of whether they are exercisable, are
treated as if they had been exercised. The treasury stock method assumes that the proceeds upon exercise are used to repurchase the
entity's stock, reducing the number of shares to be added to outstanding common stock in computing EPS. [FAS 128, paragraph 157] }
45-29
{In applying the treasury stock method described in paragraph 260-10-45-23, the assumed proceeds shall be the sum of both
03/09/2023 11:15 AM EST
Page 101 / 1816
of the following: [FAS 128, paragraph 21] }
a.
{The amount, if any, the grantee must pay upon exercise. [FAS 128, paragraph 21] }
b.
{The amount of cost attributed to [FAS 128, paragraph 21] }{share-based payment awards (within the scope of Topic 718 on
stock compensation) not yet recognized. This amount includes share-based payment awards that are not contingent upon satisfying
certain conditions as described in paragraph 260-10-45-32 and contingently issuable shares that have been determined to be
included in the computation of diluted EPS as described in paragraphs 260-10-45-48 through 45-57 [ASU 2018-07,
paragraph 7] }
c.
[Subparagraph superseded by Accounting Standards Update No. 2016-09 superseded by Accounting Standards Update] .
45-29A
{Under paragraphs 718-10-35-1D and 718-10-35-3, the effect of forfeitures is taken into account by recognizing
compensation cost for those instruments for which the [FAS 128, paragraph 158] }{employee’s requisite service has been rendered or
the nonemployee’s vesting conditions have been met and no compensation cost shall be recognized for instruments that grantees forfeit
because a service or performance condition is not satisfied. [ASU 2018-07, paragraph 7] }{See Example 8 (paragraph 260-10-55-68)
for an illustration of this guidance. [FAS 128, paragraph 158] }
45-30
{If share-based payment arrangements are payable in common stock or in cash at the election of either the entity or the
grantee, the determination of whether such share-based awards are potential common shares shall be made based on the provisions in
paragraph 260-10-45-45. If an entity has a tandem award (as defined in Topic 718) that allows the entity or the grantee to make an
election involving two or more types of equity instruments, diluted EPS for the period shall be computed based on the terms used in the
computation of compensation cost for that period. [FAS 128, paragraph 22] }
45-31
{Awards with a market condition, a performance condition, or any combination thereof (as defined in Topic 718) shall be
included in diluted EPS pursuant to the contingent share provisions in paragraphs 260-10-45-48 through 45-57. [FAS 128,
paragraph 23] }
45-32
{Fixed grantee stock options (fixed awards) and nonvested stock (including restricted stock) shall be included in the
computation of diluted EPS based on the provisions for options and warrants in paragraphs 260-10-45-22 through 45-27. Even
though their issuance may be contingent upon vesting, they shall not be considered to be contingently issuable shares (see Section 81515-55 and paragraph 260-10-45-48). However, because issuance of performance-based stock options (and performance-based
nonvested stock) is contingent upon satisfying conditions in addition to the mere passage of time, those options and nonvested stock
shall be considered to be contingently issuable shares in the computation of diluted EPS. A distinction shall be made only between timerelated contingencies and contingencies requiring specific achievement. [FAS 128, paragraph 109] }
45-33
[Paragraph Not Used not used]
45-34
[Paragraph Not Used not used]
Has the dilutive effect of contracts that require the repurchase its
own stock been properly reflected in diluted EPS by application of
the reverse treasury stock method unless another method is
required? [ASC 260-10-45-35 and 45-36]
03/09/2023 11:15 AM EST
Page 102 / 1816
FASB Codification:
>
Written Put Options and the Reverse Treasury Stock Method
45-35
{Contracts that require that the reporting entity repurchase its own stock, such as written put options and forward purchase
contracts other than forward purchase contracts accounted for under paragraphs 480-10-30-3 through 30-5 and 480-10-35-3, shall
be reflected in the computation of diluted EPS if the effect is dilutive. If those contracts are in the money during the reporting period
(the exercise price is above the average market price for that period), the potential dilutive effect on EPS shall be computed using the
reverse treasury stock method. Under that method: [FAS 128, paragraph 24] }
a.
{Issuance of sufficient common shares shall be assumed at the beginning of the period (at the average market price during the
period) to raise enough proceeds to satisfy the contract. [FAS 128, paragraph 24] }
b.
{The proceeds from issuance shall be assumed to be used to satisfy the contract (that is, to buy back shares). [FAS 128,
paragraph 24] }
c.
{The incremental shares (the difference between the number of shares assumed issued and the number of shares received from
satisfying the contract) shall be included in the denominator of the diluted EPS computation. [FAS 128, paragraph 24] }
45-36
{For example, an entity sells 100 put options with an exercise price of $25; the average market price for the period is $20. In
computing diluted EPS at the end of the period, the entity assumes it issues 125 shares at $20 per share to satisfy its put obligation of
$2,500. The difference between the 125 shares issued and the 100 shares received from satisfying the put option (25 incremental
shares) would be added to the denominator of diluted EPS. [FAS 128, paragraph 24] }
For purposes of computing diluted EPS, has the entity properly
excluded contracts such as purchased put options and purchased
call options because including them would be antidilutive? [ASC
260-10-45-37]
FASB Codification:
>
Purchased Options
45-37
{Contracts such as purchased put options and purchased call options (options held by the entity on its own stock) shall not be
included in the computation of diluted EPS because including them would be antidilutive. That is, the put option would be exercised only
when the exercise price is higher than the market price and the call option would be exercised only when the exercise price is lower
than the market price; in both instances, the effect would be antidilutive under both the treasury stock method and the reverse treasury
stock method, respectively. [FAS 128, paragraph 25] }
45-38
[Paragraph Not Used not used]
45-39
[Paragraph Not Used not used]
Has the dilutive effect of convertible securities been properly
reflected in diluted EPS by application of the if-converted method?
[ASC 260-10-45-40 through 45-42]
FASB Codification:
45-40
{The dilutive effect of convertible securities shall be reflected in diluted EPS by application of the if-converted method. Under
that method: [FAS 128, paragraph 26] }
a.
{If an entity has convertible preferred stock outstanding, the preferred dividends applicable to convertible preferred stock shall
be added back to the numerator. [FAS 128, paragraph 26] }{The amount of preferred dividends added back will be the amount of
preferred dividends for convertible preferred stock deducted from income from continuing operations (and from net income) in
computing income available to common stockholders pursuant to paragraph 260-10-45-11. [FAS 128, paragraph 26] }
03/09/2023 11:15 AM EST
b.
Page 103 / 1816
{If an entity has convertible debt outstanding: [FAS 128, paragraph 26] }
1.
{Interest charges applicable to the convertible debt shall be added back to the numerator. [FAS 128, paragraph 26] }
2.
{To the extent nondiscretionary adjustments based on income [FAS 128, paragraph 26] }{made during the period would
have been computed differently had the interest on convertible debt never been recognized, the numerator shall be
appropriately adjusted. [FAS 128, paragraph 26] }{Nondiscretionary adjustments include any expenses or charges that are
determined based on the income (loss) for the period, such as profit-sharing and royalty agreements. [FAS 128,
paragraph 26] }
3.
c.
{The numerator shall be adjusted for the income tax effect of (b)(1) and (b)(2). [FAS 128, paragraph 26] }
{The convertible preferred stock or convertible debt shall be assumed to have been converted at the beginning of the period (or
at time of issuance, if later), and the resulting common shares shall be included in the denominator. [FAS 128, paragraph 26] }
Pending Content:
Transition Date: (P) December 16, 2021; (N) December 16, 2023 Transition Guidance 815-40-65-1
815-40-65-1{The dilutive effect of convertible securities shall be reflected in diluted EPS by application of the if-converted method.
Under that method: [FAS 128, paragraph 26] }
a.
{If an entity has convertible preferred stock outstanding, the preferred dividends applicable to convertible preferred stock shall
be added back to the numerator. [FAS 128, paragraph 26] }{The amount of preferred dividends added back will be the amount of
preferred dividends for convertible preferred stock deducted from income from continuing operations (and from net income) in
computing income available to common stockholders pursuant to paragraph 260-10-45-11. [FAS 128, paragraph 26] }
b.
{If an entity has convertible debt outstanding: [FAS 128, paragraph 26] }
1.
{Interest charges applicable to the convertible debt shall be added back to the numerator. [FAS 128, paragraph 26] }{For
convertible debt for which the principal is required to be paid in cash, the interest charges shall not be added back to the
numerator. [ASU 2020-06, paragraph 9] }
2.
{To the extent nondiscretionary adjustments based on income [FAS 128, paragraph 26] }{made during the period would
have been computed differently had the interest on convertible debt never been recognized, the numerator shall be
appropriately adjusted. [FAS 128, paragraph 26] }{Nondiscretionary adjustments include any expenses or charges that are
determined based on the income (loss) for the period, such as profit-sharing and royalty agreements. [FAS 128,
paragraph 26] }
3.
c.
{The numerator shall be adjusted for the income tax effect of (b)(1) and (b)(2). [FAS 128, paragraph 26] }
{The convertible preferred stock or convertible debt shall be assumed to have been converted at the beginning of the period (or
at time of issuance, if later), and the resulting common shares shall be included in the denominator. [FAS 128, paragraph 26] }
{See paragraph 260-10-45-21A if the incremental shares are variable (such as when calculating a conversion premium). [ASU
2020-06, paragraph 9] }
03/09/2023 11:15 AM EST
Page 104 / 1816
Consideration Points:
To view the text of ASC 260-10-45-41 and 45-42, select "Convertible Securities and the If-Converted Method" in the
navigation tree. ASU 2020-06 The pending content resulting from the issuance of ASU 2020-06 amended paragraphs 26010-45-16, 260-10-45-23, 260-10-45-40, and 260-10-45-44 through 45-46, added paragraphs 260-10-45-21A and its related
heading and 260-10-45-45A, and superseded paragraph 260-10-45-64. For public business entities that are not smaller
reporting companies, the amendments are effective fiscal years beginning after December 15, 2021, and interim periods
within those fiscal years. For all other entities, fiscal years beginning after December 15, 2023, and interim periods within
those fiscal years. The guidance may be early adopted for fiscal years beginning after December 15, 2020, and interim
periods within those fiscal years.
Has the dilutive effect of contingently convertible instruments been
properly reflected in diluted EPS regardless of whether the market
price trigger has been met? [ASC 260-10-45-43 and 45-44]
FASB Codification:
>
Contingently Convertible Instruments
45-43
{While the terms of contingently convertible instruments vary, a typical instrument includes a market price trigger that
exceeds a specified conversion price of the issuer's underlying stock price on the date of issuance by a specified percentage (for
example, 10 percent, 20 percent, or 30 percent). Some contingently convertible instruments have floating market price triggers for
which conversion is dependent upon the market price of the issuer's stock exceeding the conversion price by a specified percentage or
percentages at specified times during the term of the debt. Other contingently convertible instruments require that the market price of
the issuer's stock exceed a specified level for a specified period (for example, 20 percent above the conversion price for a 30-day
period). In addition, contingently convertible instruments may have additional features such as parity features, issuer call options, and
investor put options. [EITF 04-08, paragraph ISSUE] }
45-44
{Contingently convertible instruments shall be included in diluted EPS (if dilutive) regardless of whether the market price
trigger has been met. There is no substantive economic difference between contingently convertible instruments and conventional
convertible instruments with a market price conversion premium. The treatment for diluted EPS shall not differ because of a contingent
market price trigger. [EITF 04-08, paragraph DISCUSSION] }{The guidance provided in this paragraph also shall be applied to
instruments that have multiple contingencies if one of the contingencies is a market price trigger and the instrument is convertible or
settleable in shares based on meeting a market condition—that is, the conversion is not dependent (or no longer dependent) on a
substantive non-market-based contingency. For example, this guidance applies if an instrument is convertible upon meeting a market
price trigger or a substantive non-market-based contingency (for example, a change in control). Alternatively, if the instrument is
convertible upon achieving both a market price trigger and a substantive non-market-based contingency, this guidance would not apply
until the non-market-based contingency has been met. [EITF 04-08, paragraph DISCUSSION] }See Example 11 (paragraph 260-10-5578) for an illustration of this guidance.
Pending Content:
Transition Date: (P) December 16, 2021; (N) December 16, 2023 Transition Guidance 815-40-65-1
815-40-65-1{Contingently convertible instruments shall be included in diluted EPS (if dilutive) regardless of whether the market price
trigger has been met. There is no substantive economic difference between contingently convertible instruments and convertible
instruments with a market price conversion premium. The treatment for diluted EPS shall not differ because of a contingent market
price trigger. [EITF 04-08, paragraph DISCUSSION] }{The guidance provided in this paragraph also shall be applied to instruments
that have multiple contingencies if one of the contingencies is a market price trigger and the instrument is convertible or settleable in
shares based on meeting a market condition—that is, the conversion is not dependent (or no longer dependent) on a substantive nonmarket-based contingency. For example, this guidance applies if an instrument is convertible upon meeting a market price trigger or a
substantive non-market-based contingency (for example, a change in control). Alternatively, if the instrument is convertible upon
achieving both a market price trigger and a substantive non-market-based contingency, this guidance would not apply until the nonmarket-based contingency has been met. [EITF 04-08, paragraph DISCUSSION] }See Example 11 (paragraph 260-10-55-78) for an
illustration of this guidance.
03/09/2023 11:15 AM EST
Page 105 / 1816
Consideration Points:
ASU 2020-06 The pending content resulting from the issuance of ASU 2020-06 amended paragraphs 260-10-45-16, 26010-45-23, 260-10-45-40, and 260-10-45-44 through 45-46, added paragraphs 260-10-45-21A and its related heading and
260-10-45-45A, and superseded paragraph 260-10-45-64. For public business entities that are not smaller reporting
companies, the amendments are effective fiscal years beginning after December 15, 2021, and interim periods within those
fiscal years. For all other entities, fiscal years beginning after December 15, 2023, and interim periods within those fiscal
years. The guidance may be early adopted for fiscal years beginning after December 15, 2020, and interim periods within
those fiscal years.
Has the dilutive effect of contracts that may be settled in common
stock or in cash at the election of either the entity or the holder
been properly reflected in diluted EPS? [ASC 260-10-45-45 and 4546]
FASB Codification:
>
Contracts That May Be Settled in Stock or Cash
45-45
{If an entity issues a contract that may be settled in common stock or in cash at the election of either the entity or the holder,
the determination of whether that contract shall be reflected in the computation of diluted EPS shall be made based on the facts
available each period. [FAS 128, paragraph 29] }{ It shall be presumed that the contract will be settled in common stock and the
resulting potential common shares included in diluted EPS (in accordance with the relevant provisions of this Topic) if the effect is more
dilutive. [FAS 128, paragraph 29] }{Share-based payment arrangements that are payable in common stock or in cash at the election of
either the entity or the grantee shall be accounted for pursuant to this paragraph and paragraph 260-10-45-46. [FAS 128,
paragraph 29] }{An example of such a contract is a written put option that gives the holder a choice of settling in common stock or in
cash. [FAS 128, paragraph 29] }
Pending Content:
Transition Date: (P) December 16, 2021; (N) December 16, 2023 Transition Guidance 815-40-65-1
815-40-65-1{The effect of potential share settlement shall be included in the diluted EPS calculation (if the effect is more dilutive) for an
otherwise cash-settleable instrument that contains a provision that requires or permits share settlement (regardless of whether the
election is at the option of an entity or the holder, or the entity has a history or policy of cash settlement). An example of such a
contract accounted for in accordance with this paragraph and paragraph 260-10-45-46 is a written call option that gives the holder a
choice of settling in common stock or in cash. An election to share settle an instrument, for purposes of applying the guidance in this
paragraph, does not include circumstances in which share settlement is contingent upon the occurrence of a specified event or
circumstance (such as contingently issuable shares). In those circumstances (other than if the contingency is an entity’s own share
price), the guidance on contingently issuable shares should first be applied, and, if the contingency would be considered met, then the
guidance in this paragraph should be applied. [ASU 2020-06, paragraph 9] }{Share-based payment arrangements that are payable in
common stock or in cash at the election of either the entity or the grantee shall be accounted for pursuant to this paragraph and
paragraph 260-10-45-46, [FAS 128, paragraph 29] }{unless the share-based payment arrangement is classified as a liability because
of the requirements in paragraph 718-10-25-15 (see paragraph 260-10-45-45A for guidance for those instruments). If the payment of
cash is required only upon the final liquidation of an entity, then the entity shall include the effect of potential share settlement in the
diluted EPS calculation until the liquidation occurs. [ASU 2020-06, paragraph 9] }
45-45A
Pending Content:
Transition Date: (P) December 16, 2021; (N) December 16, 2023 Transition Guidance 815-40-65-1
815-40-65-1{For a share-based payment arrangement that is classified as a liability because of the requirements in paragraph 718-1025-15 and may be settled in common stock or in cash at the election of either the entity or the holder, determining whether that
contract shall be reflected in the computation of diluted EPS shall be prepared on the basis of the facts available each period. It shall be
presumed that the contract will be settled in common stock and the resulting potential common shares included in diluted EPS (in
accordance with the relevant guidance of this Topic) if the effect is more dilutive. The presumption that the contract will be settled in
common stock may be overcome if past experience or a stated policy provides a reasonable basis to conclude that the contract will be
paid partially or wholly in cash. [ASU 2020-06, paragraph 9] }
03/09/2023 11:15 AM EST
45-46
Page 106 / 1816
{A contract that is reported as an asset or liability for accounting purposes may require an adjustment to the numerator for any
changes in income or loss that would result if the contract had been reported as an equity instrument for accounting purposes during the
period. That adjustment is similar to the adjustments required for convertible debt in paragraph 260-10-45-40(b). The presumption
that the contract will be settled in common stock may be overcome if past experience or a stated policy provides a reasonable basis to
believe that the contract will be paid partially or wholly in cash. [FAS 128, paragraph 29] }
Pending Content:
Transition Date: (P) December 16, 2021; (N) December 16, 2023 Transition Guidance 815-40-65-1
815-40-65-1{A contract that is reported as an asset or liability for accounting purposes may require an adjustment to the numerator for
any changes in income or loss that would result if the contract had been reported as an equity instrument for accounting purposes during
the period. That adjustment is similar to the adjustments required for convertible debt in paragraph 260-10-45-40(b). [FAS 128,
paragraph 29] }
45-47
Paragraphs 260-10-55-32 through 55-36A provide additional guidance on contracts that may be settled in stock or cash.
Consideration Points:
ASU 2020-06 The pending content resulting from the issuance of ASU 2020-06 amended paragraphs 260-10-45-16, 26010-45-23, 260-10-45-40, and 260-10-45-44 through 45-46, added paragraphs 260-10-45-21A and its related heading and
260-10-45-45A, and superseded paragraph 260-10-45-64. For public business entities that are not smaller reporting
companies, the amendments are effective fiscal years beginning after December 15, 2021, and interim periods within those
fiscal years. For all other entities, fiscal years beginning after December 15, 2023, and interim periods within those fiscal
years. The guidance may be early adopted for fiscal years beginning after December 15, 2020, and interim periods within
those fiscal years.
Has the dilutive effect per share whose issuance is contingent upon
the satisfaction of certain conditions been properly reflected in
diluted EPS? [ASC 260-10-45-48 through 45-57]
FASB Codification:
>
Contingently Issuable Shares
45-48
{Shares whose issuance is contingent upon the satisfaction of certain conditions shall be considered outstanding and included in
the computation of diluted EPS as follows: [FAS 128, paragraph 30] }
a.
{If all necessary conditions have been satisfied by the end of the period (the events have occurred), those shares shall be included
as of the beginning of the period in which the conditions were satisfied (or as of the date of the contingent stock agreement, if
later). [FAS 128, paragraph 30] }
b.
{If all necessary conditions have not been satisfied by the end of the period, the number of contingently issuable shares included
in diluted EPS shall be based on the number of shares, if any, that would be issuable if the end of the reporting period were the
end of the contingency period (for example, the number of shares that would be issuable based on current period earnings or
period-end market price) and if the result would be dilutive. Those contingently issuable shares shall be included in the
denominator of diluted EPS as of the beginning of the period (or as of the date of the contingent stock agreement, if later). [FAS
128, paragraph 30] }
45-49
{For year-to-date computations, contingent shares shall be included on a weighted-average basis. That is, contingent shares
shall be weighted for the interim periods in which they were included in the computation of diluted EPS. [FAS 128, paragraph 30] }
45-50
{Paragraphs 260-10-45-51 through 45-54 provide general guidelines that shall be applied in determining the EPS impact of
different types of contingencies that may be included in contingent stock agreements. [FAS 128, paragraph 30] }
45-51
{If attainment or maintenance of a specified amount of earnings is the condition and if that amount has been attained, the
additional shares shall be considered to be outstanding for the purpose of computing diluted EPS if the effect is dilutive. The diluted EPS
computation shall include those shares that would be issued under the conditions of the contract based on the assumption that the
current amount of earnings will remain unchanged until the end of the agreement, but only if the effect would be dilutive. Because the
amount of earnings may change in a future period, basic EPS shall not include such contingently issuable shares because all necessary
conditions have not been satisfied. Example 3 (see paragraph 260-10-55-53) illustrates that provision. [FAS 128, paragraph 31] }
03/09/2023 11:15 AM EST
45-52
Page 107 / 1816
{The number of shares contingently issuable may depend on the market price of the stock at a future date. In that case,
computations of diluted EPS shall reflect the number of shares that would be issued based on the current market price at the end of the
period being reported on if the effect is dilutive. If the condition is based on an average of market prices over some period of time, the
average for that period shall be used. Because the market price may change in a future period, basic EPS shall not include such
contingently issuable shares because all necessary conditions have not been satisfied. [FAS 128, paragraph 32] }
45-53
{In some cases, the number of shares contingently issuable may depend on both future earnings and future prices of the shares.
In that case, the determination of the number of shares included in diluted EPS shall be based on both conditions, that is, earnings to
date and current market price—as they exist at the end of each reporting period. If both conditions are not met at the end of the
reporting period, no contingently issuable shares shall be included in diluted EPS. [FAS 128, paragraph 33] }
45-54
{If the contingency is based on a condition other than earnings or market price (for example, opening a certain number of
retail stores), the contingent shares shall be included in the computation of diluted EPS based on the assumption that the current status
of the condition will remain unchanged until the end of the contingency period. Example 3 (see paragraph 260-10-55-53) illustrates
that provision. [FAS 128, paragraph 34] }
45-55
{Contingently issuable potential common shares (other than those covered by a contingent stock agreement, such as
contingently issuable convertible securities) shall be included in diluted EPS as follows: [FAS 128, paragraph 35] }
a.
{An entity shall determine whether the potential common shares may be assumed to be issuable based on the conditions specified
for their issuance pursuant to the contingent share provisions in paragraphs 260-10-45-48 through 45-54. [FAS 128,
paragraph 35] }
b.
{If those potential common shares should be reflected in diluted EPS, an entity shall determine their impact on the computation of
diluted EPS by following the provisions for options and warrants in paragraphs 260-10-45-22 through 45-37, the provisions for
convertible securities in paragraphs 260-10-45-40 through 45-42, and the provisions for contracts that may be settled in stock
or cash in paragraph 260-10-45-45, as appropriate. [FAS 128, paragraph 35] }
45-56
{Neither interest nor dividends shall be imputed for the additional contingently issuable convertible securities because any
imputed amount would be reversed by the if-converted adjustments for assumed conversions. [FAS 128, paragraph 35] }
45-57
{However, exercise or conversion shall not be assumed for purposes of computing diluted EPS unless exercise or conversion of
similar outstanding potential common shares that are not contingently issuable is assumed. See Example 3 (paragraph 260-10-55-53)
for an illustration of this guidance. [FAS 128, paragraph 35] }
For purposes of computing basic and diluted EPS, has the effect of
(1) participating securities and (2) a class of common stock with
different dividend rates from those of another class of common stock
been properly reflected in EPS using the two-class method? [ASC
260-10-45-59A through 45-70]
FASB Codification:
>
Participating Securities and the Two-Class Method
45-59A
a.
{The capital structures of some entities include: [FAS 128, paragraph 60] }
{Securities that may participate in dividends with common stocks according to a predetermined formula (for example, two for
one) with, at times, an upper limit on the extent of participation (for example, up to, but not beyond, a specified amount per
share) [FAS 128, paragraph 60] }
b.
{A class of common stock with different dividend rates from those of another class of common stock but without prior or senior
rights. [FAS 128, paragraph 60] }
45-60
{The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that
otherwise would have been available to common shareholders but does not require the presentation of basic and diluted EPS for
securities other than common stock. The presentation of basic and diluted EPS for a participating security other than common stock is
03/09/2023 11:15 AM EST
Page 108 / 1816
not precluded. [EITF 03-06, paragraph DISCUSSION] }
45-60A
{All securities that meet the definition of a participating security, irrespective of whether the securities are convertible,
nonconvertible, or potential common stock securities, shall be included in the computation of basic EPS using the two-class method.
[EITF 03–06, paragraph DISCUSSION] }
45-60B
a.
{Under the two-class method: [FAS 128, paragraph 61] }
{Income from continuing operations (or net income) shall be reduced by the amount of dividends declared in the current period
for each class of stock and by the contractual amount of dividends (or interest on participating income bonds) that must be paid for
the current period (for example, unpaid cumulative dividends). [FAS 128, paragraph 61] }{Dividends declared in the current
period do not include dividends declared in respect of prior-year unpaid cumulative dividends. Preferred dividends that are
cumulative only if earned are deducted only to the extent that they are earned. [FAS 128, paragraph 61] }
b.
{The remaining earnings shall be allocated to common stock and participating securities to the extent that each security may
share in earnings as if all of the earnings for the period had been distributed. The total earnings allocated to each security shall
be determined by adding together the amount allocated for dividends and the amount allocated for a participation feature. [FAS
128, paragraph 61] }
c.
{The total earnings allocated to each security shall be divided by the number of outstanding shares of the security to which the
earnings are allocated to determine the EPS for the security. [FAS 128, paragraph 61] }
d.
{Basic and diluted EPS data shall be presented for each class of common stock. [FAS 128, paragraph 61] }
{For the diluted EPS computation, outstanding common shares shall include all potential common shares assumed issued. Example 6
(see paragraph 260-10-55-62) illustrates the two-class method. [FAS 128, paragraph 61] }
45-61
{Fully vested share-based compensation subject to the provisions of Topic 718, including fully vested options and fully vested
stock, that contain a right to receive dividends declared on the common stock of the issuer, are subject to the guidance in paragraph
260-10-45-60A. [EITF 03-06, paragraph DISCUSSION] }
45-61A
{Unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid
or unpaid) are participating securities and shall be included in the computation of EPS pursuant to the two-class method under the
requirements of paragraph 260-10-45-60A. [FSP EITF03-6-1, paragraph 6] }
45-62
{Dividends or dividend equivalents transferred to the holder of a convertible security in the form of a reduction to the
conversion price or an increase in the conversion ratio of the security do not represent participation rights. This guidance applies
similarly to other contracts (securities) to issue an entity's common stock if these contracts (securities) provide for an adjustment to the
exercise price that is tied to the declaration of dividends by the issuer. [EITF 03-06, paragraph DISCUSSION] }{The scope of the
guidance in this paragraph excludes forward contracts to issue an entity's own equity shares. [EITF 03-06, paragraph DISCUSSION] }
45-63
{In a forward contract to issue an entity's own equity shares, a provision that reduces the contract price per share when
dividends are declared on the issuing entity's common stock represents a participation right. Such a provision constitutes a participation
right because it results in a noncontingent transfer of value to the holder of the forward contract for dividends declared during the
forward contract period. That is, the forward contract holder has a right to participate in the undistributed earnings of the issuing entity
because a dividend declaration by the issuing entity results in a transfer of value to the holder of the forward contract through a
reduction in the forward purchase price per share. Because that value transfer is not contingent-as opposed to a similar reduction in the
exercise price of an option or warrant-the forward contract is a participating security, regardless of whether, during the period the
contract is outstanding, a dividend is declared. [EITF 03-06, paragraph DISCUSSION] }
45-64
{A dividend equivalent that is applied to reduce the conversion price or increase the conversion ratio of a convertible security
may represent a contingent beneficial conversion feature. Guidance on whether such a dividend equivalent represents a contingent
beneficial conversion feature is presented in Subtopic 470-20. [EITF 03-06, paragraph DISCUSSION] }That Subtopic also establishes
the accounting required for contingent beneficial conversion features.
Pending Content:
Transition Date: (P) December 16, 2021; (N) December 16, 2023 Transition Guidance 815-40-65-1
815-40-65-1 [Paragraph superseded by Accounting Standards Update No. 2020-06 superseded by Accounting Standards Update]
03/09/2023 11:15 AM EST
45-65
Page 109 / 1816
{Undistributed earnings for a period shall be allocated to a participating security based on the contractual participation rights
of the security to share in those current earnings as if all of the earnings for the period had been distributed. If the terms of the
participating security do not specify objectively determinable, nondiscretionary participation rights, then undistributed earnings would
not be allocated based on arbitrary assumptions. For example, if an entity could avoid distribution of earnings to a participating
security, even if all of the earnings for the year were distributed, then no allocation of that period's earnings to the participating
security would be made. [EITF 03-06, paragraph DISCUSSION] }{Paragraphs 260-10-55-24 through 55-31 provide additional
guidance on participating securities and undistributed earnings. [EITF 03-06, paragraph DISCUSSION] }
45-66
{Under the two-class method the remaining earnings shall be allocated to common stock and participating securities to the
extent that each security may share in earnings as if all of the earnings for the period had been distributed. This allocation is required
despite its pro forma nature and that it may not reflect the economic probabilities of actual distributions to the participating security
holders. [EITF 03-06, paragraph DISCUSSION] }
45-67
{An entity would allocate losses to a nonconvertible participating security in periods of net loss if, based on the contractual
terms of the participating security, the security had not only the right to participate in the earnings of the issuer, but also a contractual
obligation to share in the losses of the issuing entity on a basis that was objectively determinable. Determination of whether a
participating security holder has an obligation to share in the losses of the issuing entity in a given period shall be made on a periodby-period basis, based on the contractual rights and obligations of the participating security. [EITF 03-06, paragraph DISCUSSION] }
{The holder of a participating security would have a contractual obligation to share in the losses of the issuing entity if either of the
following conditions is present: [EITF 03-06, paragraph DISCUSSION] }
a.
{The holder is obligated to fund the losses of the issuing entity (that is, the holder is obligated to transfer assets to the issuer in
excess of the holder's initial investment in the participating security without any corresponding increase in the holder's
investment interest). [EITF 03-06, paragraph DISCUSSION] }
b.
{The contractual principal or mandatory redemption amount of the participating security is reduced as a result of losses incurred
by the issuing entity. [EITF 03-06, paragraph DISCUSSION] }
45-68
{A convertible participating security should be included in the computation of basic EPS in periods of net loss if, based on its
contractual terms, the convertible participating security has the contractual obligation to share in the losses of the issuing entity on a
basis that is objectively determinable. The guidance in this paragraph also applies to the inclusion of convertible participating securities
in basic EPS, irrespective of the differences that may exist between convertible and nonconvertible securities. That is, an entity should
not automatically exclude a convertible participating security from the computation of basic EPS if an entity has a net loss from
continuing operations. Determination of whether a participating security holder has an obligation to share in the losses of the issuing
entity in a given period shall be made on a period-by-period basis, based on the contractual rights and obligations of the participating
security. [EITF 03-06, paragraph DISCUSSION] }
45-68A
[Paragraph Not Used not used]
45-68B
{Paragraph 718-10-55-45 requires that nonrefundable dividends or dividend equivalents paid on awards for which the
requisite service is not (or is not expected to be) rendered be recognized as additional compensation cost and that dividends or dividend
equivalents paid on awards for which the requisite service is (or is expected to be) rendered be charged to retained earnings. As a
result, an entity shall not include dividends or dividend equivalents that are accounted for as compensation cost in the earnings
allocation in computing EPS. To do so would include the dividend as a reduction of earnings available to common shareholders from
both compensation cost and distributed earnings. Undistributed earnings shall be allocated to all share-based payment awards [FSP
EITF03-6-1, paragraph 9] }{outstanding during the period, including those for which the requisite service is not expected to be
rendered (or is not rendered because of forfeiture during the period, if an entity elects to account for forfeitures when they occur in
accordance with paragraph 718-10-35-3). [ASU 2016-09, paragraph 27] }{An entity’s estimate of the number of awards for which the
requisite service is not expected to be rendered [FSP EITF03-6-1, paragraph 9] }{(or no estimate, if the entity has elected to account
for forfeitures when they occur in accordance with paragraph 718-10-35-3) [ASU 2016-09, paragraph 27] }{for the purpose of
determining EPS under this Topic shall be consistent with the estimate used for the purposes of recognizing compensation cost under
Topic 718. Paragraph 718-10-35-3 requires that an entity apply a change in the estimate of the number of awards for which the
requisite service is not expected to be rendered in the period that the change in estimate occurs. This change in estimate will affect net
income in the current period; however, a current-period change in an entity’s expected forfeiture rate would not affect prior-period EPS
03/09/2023 11:15 AM EST
Page 110 / 1816
calculations. [FSP EITF03-6-1, paragraph 9] }See Example 9 for an illustration of this guidance.
45-69
45-70
[Paragraph Not Used not used]
See Example 9 (paragraph 260-10-55-71) for an illustration of this guidance.
Consideration Points:
ASU 2020-06 The pending content resulting from the issuance of ASU 2020-06 amended paragraphs 260-10-45-16, 26010-45-23, 260-10-45-40, and 260-10-45-44 through 45-46, added paragraphs 260-10-45-21A and its related heading and
260-10-45-45A, and superseded paragraph 260-10-45-64. For public business entities that are not smaller reporting
companies, the amendments are effective fiscal years beginning after December 15, 2021, and interim periods within those
fiscal years. For all other entities, fiscal years beginning after December 15, 2023, and interim periods within those fiscal
years. The guidance may be early adopted for fiscal years beginning after December 15, 2020, and interim periods within
those fiscal years.
For purposes of computing basic and diluted EPS, has the effect of
(1) mandatorily redeemable shares of common stock or (2) forward
purchase contracts that require physical settlement by repurchase
of a fixed number of the issuer's common shares been properly
reflected? [ASC 260-10-45-70A]
FASB Codification:
>
Certain Redeemable Financial Instruments
45-70A
{Paragraph 480-10-45-4 provides guidance on calculating basic and diluted EPS if an entity has mandatorily redeemable
shares of common stock or has entered into certain forward contracts that require physical settlement by repurchase of a fixed number
of the issuer’s equity shares of common stock. [FAS 150, paragraph 25] }
For purposes of computing basic and diluted EPS, has the effect of
own-share lending arrangements issued in contemplation of
convertible debt issuance or other financing been properly
reflected? [ASC 260-10-45-70B]
FASB Codification:
>
Own-Share Lending Arrangements Issued in Contemplation of Convertible Debt Issuance or Other Financing
45-70B
{Paragraph 470-20-45-2A provides guidance on calculating basic and diluted earnings per share if an entity has entered into
own-share lending arrangements issued in contemplation of convertible debt issuance or other financing. [ASU 2009-15, paragraph 14]
}
Presentation > 260 Earnings Per Share > 10 Overall > 45 Other Presentation > Master Limited Partnerships
If the entity is a master limited partnership with incentive
distribution rights that are a separate class of limited partner
interest, has the entity properly determined that the incentive
distribution rights are participating securities and therefore applied
the two-class method to the general partner, limited partner, and
incentive distribution rights in computing earnings per unit? [ASC
260-10-45-72]
03/09/2023 11:15 AM EST
Page 111 / 1816
FASB Codification:
>
Incentive Distribution Rights That Are a Separate Class of Limited Partner Interest
45-72
{Incentive distribution rights that are a separate class of limited partner interest are participating securities because they have
a right to participate in earnings with common equity holders. Therefore, current-period earnings shall be allocated to the general
partner, limited partner, and incentive distribution right holder using the two-class method to calculate earnings per unit. [EITF 07-04,
paragraph 7] }
If the entity is a master limited partnership with incentive
distribution rights that are embedded in the general partner
interest, has the entity properly determined that the incentive
distribution rights are not participating securities and therefore
applied the two-class method to the general partner and limited
partner interests in computing earnings per unit? [ASC 260-10-4573]
FASB Codification:
>
Incentive Distribution Rights That Are Embedded in the General Partner Interest
45-73
{Incentive distribution rights that are embedded in the general partner interest are not separate participating securities.
However, because the general partner and limited partner interests are separate classes of equity, the two-class method shall be
applied in computing earnings per unit for the general partner and limited partner interests. [EITF 07-04, paragraph 12] }
Presentation > 260 Earnings Per Share > 10 Overall > 50 Disclosure > General
For each period for which an income statement is presented, has
the entity provided required earnings per share disclosures? [ASC
260-10-50-1]
FASB Codification:
50-1
{For each period for which an income statement is presented, an entity shall disclose all of the following: [FAS 128,
paragraph 40] }
a.
{A reconciliation of the numerators and the denominators of the basic and diluted per-share computations for income from
continuing operations. [FAS 128, paragraph 40] }{ The reconciliation shall include the individual income and share amount
effects of all securities that affect earnings per share (EPS). [FAS 128, paragraph 40] }{Example 2 (see paragraph 260-10-5551) illustrates that disclosure. [FAS 128, paragraph 40] }{(See paragraph 260-10-45-3.) [FAS 128, paragraph 40] }{An entity
is encouraged to refer to pertinent information about securities included in the EPS computations that is provided elsewhere in
the financial statements as prescribed by Subtopic 505-10. [FAS 128, paragraph 40] }
b.
{The effect that has been given to preferred dividends in arriving at income available to common stockholders in computing
basic EPS. [FAS 128, paragraph 40] }
c.
{Securities (including those issuable pursuant to contingent stock agreements) that could potentially dilute basic EPS in the future
that were not included in the computation of diluted EPS because to do so would have been antidilutive for the period(s)
presented. [FAS 128, paragraph 40] }{Full disclosure of the terms and conditions of these securities is required even if a
security is not included in diluted EPS in the current period. [EITF 00-27, paragraph DISCUSSION] }
03/09/2023 11:15 AM EST
Page 112 / 1816
Is the entity in compliance with the guidance in ASC 260-10-501A?
FASB Codification:
50-1A
Pending Content:
Transition Date: (P) December 16, 2020; (N) December 16, 2021 Transition Guidance 105-10-65-6
105-10-65-6{Per-share amounts not required to be presented by this Subtopic that an entity chooses to disclose shall be computed in
accordance with this Subtopic and disclosed only in the notes to financial statements; it shall be noted whether the per-share amounts
are pretax or net of tax. [FAS 128, paragraph 37] }{(See paragraph 260-10-45-5.) [ASU 2020-10, paragraph 16] }
Consideration Points:
The pending content resulting from the issuance of ASU 2020-10 amended paragraph 260-10-45-5 and added paragraph
260-10-50-1A. For 1) public business entities, 2) not-for-profit entities that have issued, or are a conduit bond obligor for,
securities that are traded, listed, or quoted on an exchange or an over-the-counter market, and 3) an employee benefit plan
that files or furnishes financial statements with or to the SEC, the amendments in ASU 2020-10 are effective for annual
periods after December 15, 2020. For all other entities, the amendments in ASU 2020-10 are effective for annual periods
beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022. Early
application of the amendments in this Update is permitted for: 1) public business entities, 2) not-for-profit entities that
have issued, or are a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-thecounter market, and 3) an employee benefit plan that files or furnishes financial statements with or to the SEC for any
annual or interim period for which financial statements have not been issued. For all other entities, early application of the
amendments is permitted for any annual or interim period for which financial statements are available to be issued. The
amendments in this Update should be applied retrospectively. An entity should apply the amendments at the beginning of
the period that includes the adoption date.
For the latest period for which an income statement is presented,
has the entity provided a description of any transaction that
occurred after the end of the most recent period but before the
financial statements are issued or are available to be issued that
would have changed materially the number of common shares or
potential common shares outstanding? [ASC 260-10-50-2]
FASB Codification:
50-2
{For the latest period for which an income statement is presented, an entity shall provide a description of any transaction that
occurs after the end of the most recent period but before the financial statements are issued or are available to be issued (as discussed
in Section 855-10-25) that would have changed materially the number of common shares or potential common shares outstanding at
the end of the period if the transaction had occurred before the end of the period. Examples of those transactions include the issuance or
acquisition of common shares; the issuance of warrants, options, or convertible securities; the resolution of a contingency pursuant to a
contingent stock agreement; and the conversion or exercise of potential common shares outstanding at the end of the period into
common shares. [FAS 128, paragraph 41] }
Presentation > 260 Earnings Per Share > 10 Overall > 50 Disclosure > Master Limited Partnerships
Is the entity in compliance with the guidance in ASC 260-10-50-3?
FASB Codification:
50-3
{In the period in which a dropdown transaction occurs that is accounted for under the Transactions Between Entities Under
Common Control Subsections of Subtopic 805-50, a reporting entity shall disclose in narrative format how the rights to the earnings
(losses) of the transferred net assets differ before and after the dropdown transaction occurs for purposes of computing earnings per unit
under the two-class method. [ASU 2015-06, paragraph 3] }
03/09/2023 11:15 AM EST
Page 113 / 1816
Consideration Points:
Section 260-10-50 has been updated as the result of the issuance of ASU 2015-06. The pending content resulting from the
issuance of this ASU added paragraph 260-10-50-3. The amendments in the ASU are effective for fiscal years beginning
after December 15, 2015, and interim periods within those fiscal years. Earlier application is permitted. The amendments
should be applied retrospectively for all financial statements presented.
Presentation > 270 Interim Reporting > 10 Overall > 45 Other Presentation > General
Have the results for each interim period been based on the
accounting principles and practices used by an entity in the
preparation of its latest annual financial statements unless a
change in an accounting practice or policy has been adopted in the
current year? [ASC 270-10-45-1 and 45-2]
FASB Codification:
>
Accounting Principles and Practices
45-1
{Interim financial information is essential to provide investors and others with timely information as to the progress of the
entity. The usefulness of such information rests on the relationship that it has to the annual results of operations. Accordingly, each
interim period should be viewed primarily as an integral part of an annual period. [APB 28, paragraph 9] }
45-2
{In general, the results for each interim period shall be based on the accounting principles and practices used by an entity in the
preparation of its latest annual financial statements unless a change in an accounting practice or policy has been adopted in the current
year (see paragraphs 270-10-45-12 through 45-16). However, certain accounting principles and practices followed for annual
reporting purposes may require modification at interim reporting dates so that the reported results for the interim period may better
relate to the results of operations for the annual period. Paragraphs 270-10-45-4 through 45-11 sets forth the modifications that are
necessary or desirable at interim dates in accounting principles or practices followed for annual periods. [APB 28 , paragraph 10] }
Consideration Points:
Certain accounting principles and practices followed for annual reporting purposes may require modification at interim
reporting dates so that the reported results for the interim period may better relate to the results of operations for the
annual period. Paragraphs 270-10-45-4 through 45-11 sets forth the modifications that are necessary or desirable at interim
dates in accounting principles or practices followed for annual periods.
Have revenues from products sold or services rendered been
recognized as earned during an interim period on the same basis as
followed for the full year? [ASC 270-10-45-3]
FASB Codification:
>
Revenue
45-3
{Revenue from products sold or services rendered shall be recognized as the entity satisfies a performance obligation by
transferring a promised good or service to a customer. [ASU 2014-09, paragraph 13] }{Those revenues shall be recognized during an
interim period on the same basis as followed for the full year in accordance with Topic 606 on revenue from contracts with customers.
[APB 28, paragraph 11] }{For example, revenues from a long-term construction contract with a customer that includes performance
obligations that the entity satisfies over time in accordance with paragraphs 606-10-25-27 through 25-29 shall be recognized in
interim periods on the same basis followed for the full year. [ASU 2014-09, paragraph 13] }{Losses projected on contracts within the
scope of Subtopic 605-35, in accordance with paragraphs 605-35-25-45 through 25-49, shall be recognized in full during the interim
period in which the existence of such losses becomes evident. [APB 28, paragraph 11] }
Is the entity in compliance with the guidance in ASC 270-10-45:
Costs and Expenses?
FASB Codification:
03/09/2023 11:15 AM EST
>
Page 114 / 1816
Costs and Expenses
45-4
a.
{Costs and expenses for interim reporting purposes may be classified as either of the following: [APB 28, paragraph 12] }
{Costs associated with revenue - those costs that are associated directly with or allocated to the products sold or to the services
rendered and that are charged against income in those interim periods in which the related revenue is recognized [APB 28,
paragraph 12] }
b.
{All other costs and expenses - those costs and expenses that are not allocated to the products sold or to the services rendered
and that are charged against income in interim fiscal periods as incurred, or are allocated among interim periods based on an
estimate of time expired, benefit received, or other activity associated with the periods. [APB 28, paragraph 12] }
> >
Costs Associated with Revenue
45-5
{Those costs and expenses that are associated directly with or allocated to the products sold or to the services rendered for
annual reporting purposes (including, for example, material costs, wages and salaries and related fringe benefits, manufacturing
overhead, and warranties) shall be similarly treated for interim reporting purposes. [APB 28, paragraph 13] }
45-6
{Practices vary in determining costs of inventory. For example, cost of goods produced may be determined based on standard or
actual cost, while cost of inventory may be determined on an average, first-in, first-out (FIFO), or last-in, first-out (LIFO) cost basis.
While entities generally shall use the same inventory pricing methods and make provisions for writedowns at interim dates on the same
basis as used at annual inventory dates, the following exceptions are appropriate at interim reporting dates: [APB 28, paragraph 14] }
a.
{Some entities use estimated gross profit rates to determine the cost of goods sold during interim periods or use other methods
different from those used at annual inventory dates. These entities shall disclose the method used at the interim date and any
significant adjustments that result from reconciliations with the annual physical inventory. [APB 28, paragraph 14] }
b.
{Entities that use the LIFO method may encounter a liquidation of base period inventories at an interim date that is expected to
be replaced by the end of the annual period. In those cases the inventory at the interim reporting date shall not give effect to the
LIFO liquidation, and cost of sales for the interim reporting period shall include the expected cost of replacement of the
liquidated LIFO base. [APB 28, paragraph 14] }
c.
{Inventory losses from [APB 28, paragraph 14] }{the application of the guidance on subsequent measurement in Subtopic 33010 [ASU 2015-11, paragraph 7] }{shall not be deferred beyond the interim period in which the decline occurs. Recoveries of
such losses on the same inventory in later interim periods of the same fiscal year through market [APB 28, paragraph 14] }
{value recoveries (for inventory measured using LIFO or the retail inventory method) or net realizable value [ASU 2015-11,
paragraph 7] }{recoveries (for all other inventory) shall be recognized as gains in the later interim period. Such gains shall not
exceed previously recognized losses. Some declines [APB 28, paragraph 14] }{in the market value (for inventory measured
using LIFO or the retail inventory method) or net realizable value (for all other inventory) of inventory [ASU 2015-11,
paragraph 7] }{at interim dates, however, can reasonably be expected to be restored in the fiscal year. Such temporary declines
need not be recognized at the interim date since no loss is expected to be incurred in the fiscal year. [APB 28, paragraph 14] }
d.
{Entities that use standard cost accounting systems for determining inventory and product costs should generally follow the same
procedures in reporting purchase price, wage rate, usage, or efficiency variances from standard cost at the end of an interim
period as followed at the end of a fiscal year. Purchase price variances or volume or capacity cost variances that are planned and
expected to be absorbed by the end of the annual period, should ordinarily be deferred at interim reporting dates. The effect of
unplanned or unanticipated purchase price or volume variances, however, shall be reported at the end of an interim period
following the same procedures used at the end of a fiscal year. [APB 28, paragraph 14] }
> >
All Other Costs and Expenses
45-7
{Charges are made to income for all other costs and expenses in annual reporting periods based upon any of the following:
[APB 28, paragraph 15] }
03/09/2023 11:15 AM EST
Page 115 / 1816
a.
{Direct expenditures made in the period (salaries and wages) [APB 28, paragraph 15] }
b.
{Accruals for estimated expenditures to be made at a later date (vacation pay) [APB 28, paragraph 15] }
c.
{Amortization of expenditures that affect more than one annual period (such as insurance premiums, interest, and rents). [APB
28, paragraph 15] }
45-8
{The objective in all cases is to achieve a fair measure of results of operations for the annual period and to present fairly the
financial position at the end of the annual period. The following standards shall apply in accounting for costs and expenses other than
product costs in interim periods: [APB 28, paragraph 15] }
a.
{Costs and expenses other than product costs shall be charged to income in interim periods as incurred, or be allocated among
interim periods based on an estimate of time expired, benefit received or activity associated with the periods. Procedures
adopted for assigning specific cost and expense items to an interim period shall be consistent with the bases followed by the
entity in reporting results of operations at annual reporting dates. However, if a specific cost or expense item charged to expense
for annual reporting purposes benefits more than one interim period, the cost or expense item may be allocated to those interim
periods (see paragraph 270-10-45-9). [APB 28, paragraph 15] }
b.
{Some costs and expenses incurred in an interim period, however, cannot be readily identified with the activities or benefits of
other interim periods and shall be charged to the interim period in which incurred. Disclosure shall be made as to the nature and
amount of such costs unless items of a comparable nature are included in both the current interim period and in the corresponding
interim period of the preceding year. [APB 28, paragraph 15] }
c.
{Arbitrary assignment of the amount of such costs to an interim period shall not be made. [APB 28, paragraph 15] }
d.
{Gains and losses that arise in any interim period similar to those that would not be deferred at year end shall not be deferred to
later interim periods within the same fiscal year. [APB 28, paragraph 15] }
Pending Content:
Transition Date: (P) December 16, 2020; (N) December 16, 2021 Transition Guidance 105-10-65-6
105-10-65-6{The objective in all cases is to achieve a fair measure of results of operations for the annual period and to present fairly
the financial position at the end of the annual period. The following standards shall apply in accounting for costs and expenses other
than product costs in interim periods: [APB 28, paragraph 15] }
a.
{Costs and expenses other than product costs shall be charged to income in interim periods as incurred, or be allocated among
interim periods based on an estimate of time expired, benefit received or activity associated with the periods. Procedures
adopted for assigning specific cost and expense items to an interim period shall be consistent with the bases followed by the
entity in reporting results of operations at annual reporting dates. However, if a specific cost or expense item charged to expense
for annual reporting purposes benefits more than one interim period, the cost or expense item may be allocated to those interim
periods (see paragraph 270-10-45-9). [APB 28, paragraph 15] }
b.
{Some costs and expenses incurred in an interim period, however, cannot be readily identified with the activities or benefits of
other interim periods and shall be charged to the interim period in which incurred. Disclosure [APB 28, paragraph 15] }{in the
notes to financial statements [ASU 2020-10, paragraph 18] }{shall be made as to the nature and amount of such costs unless
items of a comparable nature are included in both the current interim period and in the corresponding interim period of the
preceding year. [APB 28, paragraph 15] }{(See paragraph 270-10-50-1B.) [ASU 2020-10, paragraph 18] }
c.
{Arbitrary assignment of the amount of such costs to an interim period shall not be made. [APB 28, paragraph 15] }
d.
{Gains and losses that arise in any interim period similar to those that would not be deferred at year end shall not be deferred to
later interim periods within the same fiscal year. [APB 28, paragraph 15] }
03/09/2023 11:15 AM EST
45-9
Page 116 / 1816
{A complete listing of examples of application of paragraphs 270-10-45-7 through 45-8 is not practical; however, the
following examples of applications may be helpful: [APB 28, paragraph 16] }
a.
{If a cost that is expensed for annual reporting purposes clearly benefits two or more interim periods, each interim period shall
be charged for an appropriate portion of the annual cost by the use of accruals or deferrals. [APB 28, paragraph 16] }
b.
{If quantity discounts are allowed to customers based upon annual sales volume, the amount of such discounts charged to each
interim period shall be based on the sales to customers during the interim period in relation to estimated annual sales. [APB 28,
paragraph 16] }
c.
{Property taxes (and similar costs such as interest and rent) may be accrued or deferred at annual reporting date, to achieve a
full year's charge of taxes to costs and expenses. Similar procedures shall be adopted at each interim reporting date to provide an
appropriate cost in each period. [APB 28, paragraph 16] }
d.
{Advertising costs may be deferred within a fiscal year if the benefits of an expenditure made clearly extend beyond the interim
period in which the expenditure is made. Advertising costs may be accrued and assigned to interim periods in relation to sales
prior to the time the service is received if the advertising program is clearly implicit in the sales arrangement. [APB 28,
paragraph 16] }
45-10
{The amounts of certain costs and expenses are frequently subjected to year-end adjustments even though they can be
reasonably approximated at interim dates. To the extent possible such adjustments should be estimated and the estimated costs and
expenses assigned to interim periods so that the interim periods bear a reasonable portion of the anticipated annual amount. Examples
of such items include inventory shrinkage, allowance for uncollectible accounts, allowance for quantity discounts, and discretionary
year-end bonuses. [APB 28, paragraph 17] }
Consideration Points:
The pending content resulting from the issuance of ASU 2020-10 amended paragraph 270-10-45-8 and added paragraph
270-10-50-1B. For 1) public business entities, 2) not-for-profit entities that have issued, or are a conduit bond obligor for,
securities that are traded, listed, or quoted on an exchange or an over-the-counter market, and 3) an employee benefit plan
that files or furnishes financial statements with or to the SEC, the amendments in ASU 2020-10 are effective for annual
periods after December 15, 2020. For all other entities, the amendments in ASU 2020-10 are effective for annual periods
beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022. Early
application of the amendments in this Update is permitted for: 1) public business entities, 2) not-for-profit entities that
have issued, or are a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-thecounter market, and 3) an employee benefit plan that files or furnishes financial statements with or to the SEC for any
annual or interim period for which financial statements have not been issued. For all other entities, early application of the
amendments is permitted for any annual or interim period for which financial statements are available to be issued. The
amendments in this Update should be applied retrospectively. An entity should apply the amendments at the beginning of
the period that includes the adoption date.
Where certain revenues are subject to material seasonal variations,
has the entity disclosed the seasonal nature of their activities, and
considered supplementing their interim reports with information for
12-month periods ended at the interim date for the current and
preceding years? [ASC 270-10-45-11]
FASB Codification:
>
Seasonal Revenue, Costs, or Expenses
45-11
{Revenues of certain entities are subject to material seasonal variations. To avoid the possibility that interim results with
material seasonal variations may be taken as fairly indicative of the estimated results for a full fiscal year, such entities shall disclose
the seasonal nature of their activities, and consider supplementing their interim reports with information for 12-month periods ended at
the interim date for the current and preceding years. [APB 28, paragraph 18] }
03/09/2023 11:15 AM EST
Page 117 / 1816
Have the effects of disposals of a component of an entity and
unusual and infrequently occurring transactions and events that are
material with respect to the operating results of the interim period
been reported separately? [ASC 270-10-45-11A] Note – Entities
that early adopt ASU 2015-01 will consider whether transactions
are unusual or infrequent versus unusual and infrequent.
FASB Codification:
>
Unusual or Infrequent Items and Disposals of Components
45-11A
{Effects of disposals of a component of an entity and unusual or infrequently occurring transactions and events that are
material with respect to the operating results of the interim period shall be reported separately. Gains or losses from disposal of a
component of an entity and unusual or infrequently occurring items shall not be prorated over the balance of the fiscal year. [APB 28,
paragraph 21] }
Consideration Points:
Section 270-10-45 has been updated as the result of the issuance of ASU 2015-01. The pending content resulting from the
issuance of this ASU amended paragraph 270-10-45-11A. The amendments in this Update are effective for fiscal years, and
interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the
amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented
in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the
fiscal year of adoption.
In each report of interim financial information, has the entity
disclosed any change in accounting principles or practices from
those applied in any of the following: (1) the comparable interim
period of the prior annual period; (2) the preceding interim periods
in the current annual period; or (3) the prior annual report? [ASC
270-10-45-12]
FASB Codification:
45-12
{ Each report of interim financial information shall indicate any change in accounting principles or practices from those
applied in any of the following: [APB 28, paragraph 23] }
a.
{The comparable interim period of the prior annual period [APB 28, paragraph 23] }
b.
{The preceding interim periods in the current annual period [APB 28, paragraph 23] }
c.
{The prior annual report. [APB 28, paragraph 23] }
Have changes in an interim or annual accounting practice or policy
made in an interim period been reported in the period in which the
change is made, in accordance with the provisions of Topic 250?
[ASC 270-10-45-13]
FASB Codification:
45-13
{Changes in an interim or annual accounting practice or policy made in an interim period shall be reported in the period in
which the change is made, in accordance with the provisions of Topic 250. [APB 28, paragraph 24] }
03/09/2023 11:15 AM EST
Page 118 / 1816
Consideration Points:
The effect of a change in an accounting estimate, including a change in the estimated effective annual tax rate, shall be
accounted for in the period in which the change in estimate is made. No restatement of previously reported interim
information shall be made for changes in estimates.
Has the effect on earnings of a change in estimate made in a current
interim period been reported in the current and subsequent interim
periods, if material in relation to any period presented, and has the
entity continued report that effect on earnings in the interim
financial information of the subsequent year for as many periods as
necessary to avoid misleading comparisons? [ASC 270-10-45-14]
FASB Codification:
45-14
{The effect of a change in accounting estimate, including a change in the estimated effective annual tax rate, shall be
accounted for in the period in which the change in estimate is made. No restatement of previously reported interim information shall
be made for changes in estimates, but the effect on earnings of a change in estimate made in a current interim period shall be reported
in the current and subsequent interim periods, if material in relation to any period presented and shall continue to be reported in the
interim financial information of the subsequent year for as many periods as necessary to avoid misleading comparisons. Such disclosure
shall conform with paragraph 250-10-50-4. [APB 28, paragraph 26] }
As indicated in paragraph 250-10-45-27, in determining materiality
for the purpose of reporting the correction of an error, have the
amounts used by the entity been related to the estimated income
for the full fiscal year and also to the effect on the trend of earnings
and, if applicable, have changes that are material with respect to an
interim period but not material with respect to the estimated
income for the full fiscal year or to the trend of earnings been
separately disclosed in the interim period? [ASC 270-10-45-16]
FASB Codification:
45-16
{As indicated in paragraph 250-10-45-27, in determining materiality for the purpose of reporting the correction of an error,
amounts shall be related to the estimated income for the full fiscal year and also to the effect on the trend of earnings. Changes that are
material with respect to an interim period but not material with respect to the estimated income for the full fiscal year or to the trend
of earnings shall be separately disclosed in the interim period. [APB 28, paragraph 29] }
Does a current interim period adjustment related to prior interim
periods of the current fiscal year meet all of the following criteria:
(1) the effect of the adjustment or settlement is material in relation
to income from continuing operations of the current fiscal year or in
relation to the trend of income from continuing operations or is
material by other appropriate criteria; (2) all or part of the
adjustment or settlement can be specifically identified with and is
directly related to business activities of specific prior interim
periods of the current fiscal year; and (3) the amount of the
adjustment or settlement could not be reasonably estimated prior to
the current interim period but becomes reasonably estimable in the
current interim period? [ASC 270-10-45-17]
03/09/2023 11:15 AM EST
Page 119 / 1816
FASB Codification:
45-17
{As indicated in paragraph 250-10-45-25, an adjustment related to prior interim periods of the current fiscal year is an
adjustment or settlement of litigation or similar claims, of income taxes (except for the effects of retroactive tax legislation), of
renegotiation proceedings, or of utility revenue under rate-making processes provided that the adjustment or settlement meets all of the
following criteria: [FAS 016, paragraph 13] }
a.
{The effect of the adjustment or settlement is material in relation to income from continuing operations of the current fiscal year
or in relation to the trend of income from continuing operations or is material by other appropriate criteria. [FAS 016,
paragraph 13] }
b.
{All or part of the adjustment or settlement can be specifically identified with and is directly related to business activities of
specific prior interim periods of the current fiscal year. [FAS 016, paragraph 13] }
c.
{The amount of the adjustment or settlement could not be reasonably estimated prior to the current interim period but becomes
reasonably estimable in the current interim period. [FAS 016, paragraph 13] }
{ Criterion (b) above is not met solely because of incidental effects such as interest on a settlement. Criterion (c) would be met by the
occurrence of an event with currently measurable effects such as a final decision on a rate order. Treatment as adjustments related to
prior interim periods of the current fiscal year shall not be applied to the normal recurring corrections and adjustments that are the
result of the use of estimates inherent in the accounting process. Changes in provisions for doubtful accounts shall not be considered to
be adjustments related to prior interim periods of the current fiscal year even though the changes result from litigation or similar
claims. [FAS 016, paragraph 13] }
Consideration Points:
Criterion (2) is not met solely because of incidental effects such as interest on a settlement. Criterion (3) would be met by
the occurrence of an event with currently measurable effects such as a final decision on a rate order. Treatment as
adjustments related to prior interim periods of the current fiscal year shall not be applied to the normal recurring
corrections and adjustments that are the result of the use of estimates inherent in the accounting process. Changes in
provisions for doubtful accounts shall not be considered to be adjustments related to prior interim periods of the current
fiscal year even though the changes result from litigation or similar claims.
If an item of profit or loss occurs in other than the first interim
period of the entity's fiscal year and all or a part of the item of profit
or loss is an adjustment related to prior interim periods of the
current fiscal year, has the item been reported as follows: (1) the
portion of the item that is directly related to business activities of
the entity during the current interim period, if any, has been
included in the determination of net income for that period; (2) prior
interim periods of the current fiscal year have been restated to
include the portion of the item that is directly related to business
activities of the entity during each prior interim period in the
determination of net income for that period; and (3) the portion of
the item that is directly related to business activities of the entity
during prior fiscal years, if any, has been included in the
determination of net income of the first interim period of the
current fiscal year? [ASC 270-10-45-18]
03/09/2023 11:15 AM EST
Page 120 / 1816
FASB Codification:
45-18
{As indicated in paragraph 250-10-45-26, if an item of profit or loss occurs in other than the first interim period of the
entity's fiscal year and all or a part of the item of profit or loss is an adjustment related to prior interim periods of the current fiscal
year, as defined in the preceding paragraph, the item shall be reported as follows: [FAS 016, paragraph 14] }
a.
{The portion of the item that is directly related to business activities of the entity during the current interim period, if any, shall
be included in the determination of net income for that period. [FAS 016, paragraph 14] }
b.
{Prior interim periods of the current fiscal year shall be restated to include the portion of the item that is directly related to
business activities of the entity during each prior interim period in the determination of net income for that period. [FAS 016,
paragraph 14] }
c.
{The portion of the item that is directly related to business activities of the entity during prior fiscal years, if any, shall be
included in the determination of net income of the first interim period of the current fiscal year. [FAS 016, paragraph 14] }
Has the entity provided all relevant presentation-related guidance
required by other Topics at interim dates? [ASC 270-10-45-19]
FASB Codification:
>
Guidance Related to Presentation of Other Topics at Interim Dates
45-19
The following may not represent all references to interim reporting:
a.
For accounting changes, see paragraphs 250-10-45-14 through 45-16.
b.
For comprehensive income, see paragraph 220-10-45-18.
c.
For incurred but not reported liability and interim reporting, see paragraphs 720-20-35-3 through 35-5 and 720-20-35-8.
d.
For income tax provisions, see Subtopic 740-270.
e.
For inventory, see paragraphs 330-10-55-2 and 610-30-25-3.
f.
For pensions and other postretirement benefits, see paragraphs 715-20-55-18 through 55-19 and 715-60-35-40.
Presentation > 270 Interim Reporting > 10 Overall > 50 Disclosure > General
Is the entity in compliance with the guidance in ASC 270-10-50:
Disclosure of Summarized Interim\n Financial Data by Publicly
Traded Companies?
FASB Codification:
>
Disclosure of Summarized Interim Financial Data by Publicly Traded Companies
50-1
{ Many publicly traded companies [APB 28, paragraph 30] } { report summarized financial information at periodic interim
dates in considerably less detail than that provided in annual financial statements. While this information provides more timely
information than would result if complete financial statements were issued at the end of each interim period, the timeliness of
presentation may be partially offset by a reduction in detail in the information provided. As a result, certain guides as to minimum
disclosure are desirable. [APB 28, paragraph 30] } { (It should be recognized that the minimum disclosures of summarized interim
financial data required of publicly traded companies do not constitute a fair presentation of financial position and results of operations
03/09/2023 11:15 AM EST
Page 121 / 1816
in conformity with generally accepted accounting principles [GAAP].) [APB 28, paragraph 30] } { If publicly traded companies report
summarized financial information at interim dates (including reports on fourth quarters), the following data should be reported, as a
minimum: [APB 28, paragraph 30] }
a.
{ Sales or gross revenues, provision for income taxes, net income, and comprehensive income [APB 28, paragraph 30] }
b.
{ Basic and diluted earnings per share data for each period presented, determined in accordance with the provisions of Topic 260
[APB 28, paragraph 30] }
c.
{ Seasonal revenue, costs, or expenses (see paragraph 270-10-45-11) [APB 28, paragraph 30] }
d.
{ Significant changes in estimates or provisions for income taxes (see paragraphs 740-270-30-2, 740-270-30-6, and 740-27030-8) [APB 28, paragraph 30] }
e.
{ Disposal of a component of an entity and unusual or infrequently occurring items (see paragraphs 270-10-45-11A and 270-1050-5) [APB 28, paragraph 30] }
f.
{ Contingent items (see paragraph 270-10-50-6) [APB 28, paragraph 30] }
g.
{ Changes in accounting principles or changes in accounting estimates (see paragraphs ) [APB 28, paragraph 30] }
h.
{ Significant changes in financial position (see paragraph 270-10-50-4) [APB 28, paragraph 30] }
i.
{ All of the following information about reportable operating segments determined according to the provisions of Topic 280,
including provisions related to restatement of segment information in previously issued financial statements: [APB 28,
paragraph 30] }
1.
{ Revenues from external customers [APB 28, paragraph 30] }
2.
{ Intersegment revenues [APB 28, paragraph 30] }
3.
{ A measure of segment profit or loss [APB 28, paragraph 30] }
4.
{ Total assets for which there has been a material change from the amount disclosed in the last annual report [APB 28,
paragraph 30] }
5.
{ A description of differences from the last annual report in the basis of segmentation or in the measurement of segment
profit or loss [APB 28, paragraph 30] }
6.
{ A reconciliation of the total of the reportable segments' measures of profit or loss to the entity's consolidated income
before income taxes and discontinued operations. [APB 28, paragraph 30] } { However, if, for example, an entity allocates
items such as income taxes to segments, the entity may choose to reconcile the total of the segments' measures of profit or
loss to consolidated income after those items. Significant reconciling items shall be separately identified and described in
that reconciliation. [APB 28, paragraph 30] }
j.
{ All of the following information about defined benefit pension plans and other defined benefit postretirement benefit plans,
disclosed for all periods presented pursuant to the provisions of Subtopic 715-20: [APB 28, paragraph 30] }
1.
{ The amount of net periodic benefit cost recognized, for each period for which a statement of income is presented, showing
separately the service cost component, the interest cost component, the expected return on plan assets for the period, the
gain or loss component, the prior service cost or credit component, the transition asset or obligation component, and the
03/09/2023 11:15 AM EST
Page 122 / 1816
gain or loss recognized due to a settlement or curtailment [APB 28, paragraph 30] }
2.
{ The total amount of the employer's contributions paid, and expected to be paid, during the current fiscal year, if
significantly different from amounts previously disclosed pursuant to paragraph 715-20-50-1. Estimated contributions may
be presented in the aggregate combining all of the following: [APB 28, paragraph 30] }
i.
{ Contributions required by funding regulations or laws [APB 28, paragraph 30] }
ii. { Discretionary contributions [APB 28, paragraph 30] }
iii. { Noncash contributions. [APB 28, paragraph 30] }
k.
{ The information about the use of fair value to measure assets and liabilities recognized in the statement of financial position
pursuant to Section 820-10-50 [APB 28, paragraph 30(l)] }
l.
{ The information about derivative instruments as required by Sections 815-10-50, 815-20-50, 815-25-50, 815-30-50, and
815-35-50 [APB 28, paragraph 30(m)] }
m. { The information about financial instruments as required by Section 825-10-50 [APB 28, paragraph 30] }
n.
{ The information about certain investments in debt and equity securities as required by Sections 320-10-50, 321-10-50, and
942-320-50 [APB 28, paragraph 30] }
o.
{ The information about other-than-temporary impairments as required by Sections 320-10-50, 325-20-50, and 958-320-50
[APB 28, paragraph 30] } { and impairments as required by Section 321-10-50 [ASU 2016-01, paragraph 11] }
p.
{ All of the following information about the credit quality of financing receivables and the allowance for credit losses
determined in accordance with the provisions of Topic 310: [ASU 2010-20, paragraph 28] }
1.
{ Nonaccrual and past due financing receivables (see paragraphs 310-10-50-5A through 50-7B) [ASU 2010-20,
paragraph 28] }
2.
{ Allowance for credit losses related to financing receivables (see paragraphs ) [ASU 2010-20, paragraph 28] }
3.
{ Impaired loans (see paragraphs ) [ASU 2010-20, paragraph 28] }
4.
{ Credit-quality information related to financing receivables (see paragraphs ) [ASU 2010-20, paragraph 28] }
5.
{ Modifications of financing receivables (see paragraphs ). [ASU 2010-20, paragraph 28] }
q.
{ The gross information and net information required by paragraphs . [ASU 2011-11, paragraph 6] }
r.
{ The information about changes in accumulated other comprehensive income required by paragraphs 220-10-45-14A and 22010-45-17 through 45-17B. [ASU 2013-02, paragraph 5] }
s.
{ The carrying amount of foreclosed residential real estate property as required by the last sentence of paragraph 310-10-50-11
and the amount of loans in the process of foreclosure as required by paragraph 310-10-50-35. [ASU 2014-04, paragraph 2] }
03/09/2023 11:15 AM EST
Page 123 / 1816
{ If summarized financial data are regularly reported on a quarterly basis, the foregoing information with respect to the current quarter
and the current year-to-date or the last 12 months to date should be furnished together with comparable data for the preceding year.
[APB 28, paragraph 30] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 { Many publicly traded companies [APB 28, paragraph 30] } { report summarized financial information at periodic
interim dates in considerably less detail than that provided in annual financial statements. While this information provides more timely
information than would result if complete financial statements were issued at the end of each interim period, the timeliness of
presentation may be partially offset by a reduction in detail in the information provided. As a result, certain guides as to minimum
disclosure are desirable. [APB 28, paragraph 30] } { (It should be recognized that the minimum disclosures of summarized interim
financial data required of publicly traded companies do not constitute a fair presentation of financial position and results of operations
in conformity with generally accepted accounting principles [GAAP].) [APB 28, paragraph 30] } { If publicly traded companies report
summarized financial information at interim dates (including reports on fourth quarters), the following data should be reported, as a
minimum: [APB 28, paragraph 30] }
a.
{ Sales or gross revenues, provision for income taxes, net income, and comprehensive income [APB 28, paragraph 30] }
b.
{ Basic and diluted earnings per share data for each period presented, determined in accordance with the provisions of Topic 260
[APB 28, paragraph 30] }
c.
{ Seasonal revenue, costs, or expenses (see paragraph 270-10-45-11) [APB 28, paragraph 30] }
d.
{ Significant changes in estimates or provisions for income taxes (see paragraphs 740-270-30-2, 740-270-30-6, and 740-27030-8) [APB 28, paragraph 30] }
e.
{ Disposal of a component of an entity and unusual or infrequently occurring items (see paragraphs 270-10-45-11A and 270-1050-5) [APB 28, paragraph 30] }
f.
{ Contingent items (see paragraph 270-10-50-6) [APB 28, paragraph 30] }
g.
{ Changes in accounting principles or changes in accounting estimates (see paragraphs ) [APB 28, paragraph 30] }
h.
{ Significant changes in financial position (see paragraph 270-10-50-4) [APB 28, paragraph 30] }
i.
{ All of the following information about reportable operating segments determined according to the provisions of Topic 280,
including provisions related to restatement of segment information in previously issued financial statements: [APB 28,
paragraph 30] }
1.
{ Revenues from external customers [APB 28, paragraph 30] }
2.
{ Intersegment revenues [APB 28, paragraph 30] }
3.
{ A measure of segment profit or loss [APB 28, paragraph 30] }
4.
{ Total assets for which there has been a material change from the amount disclosed in the last annual report [APB 28,
paragraph 30] }
5.
{ A description of differences from the last annual report in the basis of segmentation or in the measurement of segment
profit or loss [APB 28, paragraph 30] }
6.
{ A reconciliation of the total of the reportable segments' measures of profit or loss to the entity's consolidated income
03/09/2023 11:15 AM EST
Page 124 / 1816
before income taxes and discontinued operations. [APB 28, paragraph 30] } { However, if, for example, an entity allocates
items such as income taxes to segments, the entity may choose to reconcile the total of the segments' measures of profit or
loss to consolidated income after those items. Significant reconciling items shall be separately identified and described in
that reconciliation. [APB 28, paragraph 30] }
j.
{ All of the following information about defined benefit pension plans and other defined benefit postretirement benefit plans,
disclosed for all periods presented pursuant to the provisions of Subtopic 715-20: [APB 28, paragraph 30] }
1.
{ The amount of net periodic benefit cost recognized, for each period for which a statement of income is presented, showing
separately the service cost component, the interest cost component, the expected return on plan assets for the period, the
gain or loss component, the prior service cost or credit component, the transition asset or obligation component, and the
gain or loss recognized due to a settlement or curtailment [APB 28, paragraph 30] }
2.
{ The total amount of the employer's contributions paid, and expected to be paid, during the current fiscal year, if
significantly different from amounts previously disclosed pursuant to paragraph 715-20-50-1. Estimated contributions may
be presented in the aggregate combining all of the following: [APB 28, paragraph 30] }
i.
{ Contributions required by funding regulations or laws [APB 28, paragraph 30] }
ii. { Discretionary contributions [APB 28, paragraph 30] }
iii. { Noncash contributions. [APB 28, paragraph 30] }
k.
{ The information about the use of fair value to measure assets and liabilities recognized in the statement of financial position
pursuant to Section 820-10-50 [APB 28, paragraph 30(l)] }
l.
{ The information about derivative instruments as required by Sections 815-10-50, 815-20-50, 815-25-50, 815-30-50, and
815-35-50 [APB 28, paragraph 30(m)] }
m. { The information about financial instruments as required by Section 825-10-50 [APB 28, paragraph 30] }
n.
{ The information about certain investments in debt and equity securities as required by Sections 320-10-50, 321-10-50, and
942-320-50 [APB 28, paragraph 30] }
o.
{ The information about credit losses and impairments as required by Topic 326 on measurement of credit losses [APB 28,
paragraph 30] } { and impairments as required by Section 321-10-50 [ASU 2016-01, paragraph 11] }
p.
{ All of the following information about the credit quality of financial assets and the allowance for credit losses determined in
accordance with the provisions of Subtopic 326-20 on financial instruments measured at amortized cost: [ASU 2010-20,
paragraph 28] }
1.
{ Nonaccrual and past due financial assets (see paragraphs ) [ASU 2010-20, paragraph 28] }
2.
{ Allowance for expected credit losses related to financial assets (see paragraphs ) [ASU 2010-20, paragraph 28] }
3.
[Subparagraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update] .
4.
{ Credit-quality information related to instruments within the scope of Subtopic 326-20 (see paragraphs ) [ASU 2010-20,
paragraph 28] }
03/09/2023 11:15 AM EST
5.
Page 125 / 1816
{ Modifications of financing receivables (see paragraphs ). [ASU 2010-20, paragraph 28] }
q.
{ The gross information and net information required by paragraphs . [ASU 2011-11, paragraph 6] }
r.
{ The information about changes in accumulated other comprehensive income required by paragraphs 220-10-45-14A and 22010-45-17 through 45-17B. [ASU 2013-02, paragraph 5] }
s.
{ The carrying amount of foreclosed residential real estate property as required by the last sentence of paragraph 310-10-50-11
and the amount of loans in the process of foreclosure as required by paragraph 310-10-50-35. [ASU 2014-04, paragraph 2] }
{ If summarized financial data are regularly reported on a quarterly basis, the foregoing information with respect to the current quarter
and the current year-to-date or the last 12 months to date should be furnished together with comparable data for the preceding year.
[APB 28, paragraph 30] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5 { Many publicly traded companies [APB 28, paragraph 30] } { report summarized financial information at periodic
interim dates in considerably less detail than that provided in annual financial statements. While this information provides more timely
information than would result if complete financial statements were issued at the end of each interim period, the timeliness of
presentation may be partially offset by a reduction in detail in the information provided. As a result, certain guides as to minimum
disclosure are desirable. [APB 28, paragraph 30] } { (It should be recognized that the minimum disclosures of summarized interim
financial data required of publicly traded companies do not constitute a fair presentation of financial position and results of operations
in conformity with generally accepted accounting principles [GAAP].) [APB 28, paragraph 30] } { If publicly traded companies report
summarized financial information at interim dates (including reports on fourth quarters), the following data should be reported, as a
minimum: [APB 28, paragraph 30] }
a.
{ Sales or gross revenues, provision for income taxes, net income, and comprehensive income [APB 28, paragraph 30] }
b.
{ Basic and diluted earnings per share data for each period presented, determined in accordance with the provisions of Topic 260
[APB 28, paragraph 30] }
c.
{ Seasonal revenue, costs, or expenses (see paragraph 270-10-45-11) [APB 28, paragraph 30] }
d.
{ Significant changes in estimates or provisions for income taxes (see paragraphs 740-270-30-2, 740-270-30-6, and 740-27030-8) [APB 28, paragraph 30] }
e.
{ Disposal of a component of an entity and unusual or infrequently occurring items (see paragraphs 270-10-45-11A and 270-1050-5) [APB 28, paragraph 30] }
f.
{ Contingent items (see paragraph 270-10-50-6) [APB 28, paragraph 30] }
g.
{ Changes in accounting principles or changes in accounting estimates (see paragraphs ) [APB 28, paragraph 30] }
h.
{ Significant changes in financial position (see paragraph 270-10-50-4) [APB 28, paragraph 30] }
i.
{ All of the following information about reportable operating segments determined according to the provisions of Topic 280,
including provisions related to restatement of segment information in previously issued financial statements: [APB 28,
paragraph 30] }
1.
{ Revenues from external customers [APB 28, paragraph 30] }
03/09/2023 11:15 AM EST
Page 126 / 1816
2.
{ Intersegment revenues [APB 28, paragraph 30] }
3.
{ A measure of segment profit or loss [APB 28, paragraph 30] }
4.
{ Total assets for which there has been a material change from the amount disclosed in the last annual report [APB 28,
paragraph 30] }
5.
{ A description of differences from the last annual report in the basis of segmentation or in the measurement of segment
profit or loss [APB 28, paragraph 30] }
6.
{ A reconciliation of the total of the reportable segments' measures of profit or loss to the entity's consolidated income
before income taxes and discontinued operations. [APB 28, paragraph 30] } { However, if, for example, an entity allocates
items such as income taxes to segments, the entity may choose to reconcile the total of the segments' measures of profit or
loss to consolidated income after those items. Significant reconciling items shall be separately identified and described in
that reconciliation. [APB 28, paragraph 30] }
j.
{ All of the following information about defined benefit pension plans and other defined benefit postretirement benefit plans,
disclosed for all periods presented pursuant to the provisions of Subtopic 715-20: [APB 28, paragraph 30] }
1.
{ The amount of net periodic benefit cost recognized, for each period for which a statement of income is presented, showing
separately the service cost component, the interest cost component, the expected return on plan assets for the period, the
gain or loss component, the prior service cost or credit component, the transition asset or obligation component, and the
gain or loss recognized due to a settlement or curtailment [APB 28, paragraph 30] }
2.
{ The total amount of the employer's contributions paid, and expected to be paid, during the current fiscal year, if
significantly different from amounts previously disclosed pursuant to paragraph 715-20-50-1. Estimated contributions may
be presented in the aggregate combining all of the following: [APB 28, paragraph 30] }
i.
{ Contributions required by funding regulations or laws [APB 28, paragraph 30] }
ii. { Discretionary contributions [APB 28, paragraph 30] }
iii. { Noncash contributions. [APB 28, paragraph 30] }
k.
{ The information about the use of fair value to measure assets and liabilities recognized in the statement of financial position
pursuant to Section 820-10-50 [APB 28, paragraph 30(l)] }
l.
{ The information about derivative instruments as required by Sections 815-10-50, 815-20-50, 815-25-50, 815-30-50, and
815-35-50 [APB 28, paragraph 30(m)] }
m. { The information about financial instruments as required by Section 825-10-50 [APB 28, paragraph 30] }
n.
{ The information about certain investments in debt and equity securities as required by Sections 320-10-50, 321-10-50, and
942-320-50 [APB 28, paragraph 30] }
o.
{ The information about credit losses and impairments as required by Topic 326 on measurement of credit losses [APB 28,
paragraph 30] } { and impairments as required by Section 321-10-50 [ASU 2016-01, paragraph 11] }
03/09/2023 11:15 AM EST
p.
Page 127 / 1816
{ All of the following information about the credit quality of financial assets and the allowance for credit losses determined in
accordance with the provisions of Subtopic 326-20 on financial instruments measured at amortized cost: [ASU 2010-20,
paragraph 28] }
1.
{ Nonaccrual and past due financial assets (see paragraphs ) [ASU 2010-20, paragraph 28] }
2.
{ Allowance for expected credit losses related to financial assets (see paragraphs ) [ASU 2010-20, paragraph 28] }
3.
[Subparagraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update] .
4.
{ Credit-quality information related to instruments within the scope of Subtopic 326-20 (see paragraphs ) [ASU 2010-20,
paragraph 28] }
5.
{ Modifications of financing receivables (see paragraphs 310-10-50-42 through 50-44 ). [ASU 2010-20, paragraph 28] }
q.
{ The gross information and net information required by paragraphs . [ASU 2011-11, paragraph 6] }
r.
{ The information about changes in accumulated other comprehensive income required by paragraphs 220-10-45-14A and 22010-45-17 through 45-17B. [ASU 2013-02, paragraph 5] }
s.
{ The carrying amount of foreclosed residential real estate property as required by the last sentence of paragraph 310-10-50-11
and the amount of loans in the process of foreclosure as required by paragraph 310-10-50-35. [ASU 2014-04, paragraph 2] }
{ If summarized financial data are regularly reported on a quarterly basis, the foregoing information with respect to the current quarter
and the current year-to-date or the last 12 months to date should be furnished together with comparable data for the preceding year.
[APB 28, paragraph 30] }
50-1A
{ Consistent with paragraph 270-10-50-1, a public business entity, a not-for-profit entity that has issued, or is a conduit
bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market, or an employee benefit
plan that files or furnishes financial statements with or to the Securities and Exchange Commission, shall disclose all of the following
information about revenue from contracts with customers consistent with the guidance in Topic 606: [ASU 2014-09, paragraph 15] }
a.
{ A disaggregation of revenue for the period, see paragraphs and paragraphs . [ASU 2014-09, paragraph 15] }
b.
{ The opening and closing balances of receivables, contract assets, and contract liabilities from contracts with customers (if
not otherwise separately presented or disclosed), see paragraph 606-10-50-8(a). [ASU 2014-09, paragraph 15] }
c.
{ Revenue recognized in the reporting period that was included in the contract liability balance at the beginning of the period, see
paragraph 606-10-50-8(b). [ASU 2014-09, paragraph 15] }
d.
{ Revenue recognized in the reporting period from performance obligations satisfied (or partially satisfied) in previous periods
(for example, changes in transaction price ), see paragraph 606-10-50-12A. [ASU 2014-09, paragraph 15] }
e.
{ Information about the entity's remaining performance obligations as of the end of the reporting period, see paragraphs . [ASU
2014-09, paragraph 15] }
50-1B
Pending Content:
Transition Date: (P) December 16, 2020; (N) December 16, 2021 Transition Guidance 105-10-65-6
105-10-65-6 { Costs and expenses incurred in an interim period that cannot be readily identified with the activities or benefits of other
interim periods shall be charged to the interim period in which incurred. Disclosure [APB 28, paragraph 15] } { in the notes to
03/09/2023 11:15 AM EST
Page 128 / 1816
financial statements [ASU 2020-10, paragraph 18] } { shall be made as to the nature and amount of such costs unless items of a
comparable nature are included in both the current interim period and in the corresponding interim period of the preceding year. [APB
28, paragraph 15] } { (See paragraph 270-10-45-8(b).) [ASU 2020-10, paragraph 18] }
50-2
{ If interim financial data and disclosures are not separately reported for the fourth quarter, users of the interim financial
information often make inferences about that quarter by subtracting data based on the third quarter interim report from the annual
results. In the absence of a separate fourth quarter report or disclosure of the results (as outlined in the preceding paragraph) for that
quarter in the annual report, disposals of components of an entity and unusual or infrequently occurring items recognized in the fourth
quarter, as well as the aggregate effect of year-end adjustments that are material to the results of that quarter (see paragraphs 270-1005-2 and 270-10-45-10) shall be disclosed in the annual report in a note to the annual financial statements. If a publicly traded
company that regularly reports interim information makes an accounting change during the fourth quarter of its fiscal year and does
not report the data specified by the preceding paragraph in a separate fourth quarter report or in its annual report, the disclosures
about the effect of the accounting change on interim periods that are required by paragraphs or by paragraph 250-10-45-15, as
appropriate, shall be made in a note to the annual financial statements for the fiscal year in which the change is made. [APB 28,
paragraph 31] }
50-3
{ Disclosure of the impact of the financial results for interim periods of the matters discussed in paragraphs and is desirable for
as many subsequent periods as necessary to keep the reader fully informed. There is a presumption that users of summarized interim
financial data will have read the latest published annual report, including the financial disclosures required by generally accepted
accounting principles (GAAP) and management's commentary concerning the annual financial results, and that the summarized interim
data will be viewed in that context. In this connection, management is encouraged to provide commentary relating to the effects of
significant events upon the interim financial results. [APB 28, paragraph 32] }
50-4
{ Publicly traded companies are encouraged to publish balance sheet and cash flow data at interim dates since these data often
assist users of the interim financial information in their understanding and interpretation of the income data reported. If condensed
interim balance sheet information or cash flow data are not presented at interim reporting dates, significant changes since the last
reporting period with respect to liquid assets, net working capital, long-term liabilities, or stockholders' equity shall be disclosed. [APB
28, paragraph 33] }
Is the entity in compliance with the guidance in ASC 270-10-50-1?
FASB Codification:
50-1
{ Many publicly traded companies [APB 28, paragraph 30] } { report summarized financial information at periodic interim
dates in considerably less detail than that provided in annual financial statements. While this information provides more timely
information than would result if complete financial statements were issued at the end of each interim period, the timeliness of
presentation may be partially offset by a reduction in detail in the information provided. As a result, certain guides as to minimum
disclosure are desirable. [APB 28, paragraph 30] } { (It should be recognized that the minimum disclosures of summarized interim
financial data required of publicly traded companies do not constitute a fair presentation of financial position and results of operations
in conformity with generally accepted accounting principles [GAAP].) [APB 28, paragraph 30] } { If publicly traded companies report
summarized financial information at interim dates (including reports on fourth quarters), the following data should be reported, as a
minimum: [APB 28, paragraph 30] }
a.
{ Sales or gross revenues, provision for income taxes, net income, and comprehensive income [APB 28, paragraph 30] }
b.
{ Basic and diluted earnings per share data for each period presented, determined in accordance with the provisions of Topic 260
[APB 28, paragraph 30] }
c.
{ Seasonal revenue, costs, or expenses (see paragraph 270-10-45-11) [APB 28, paragraph 30] }
d.
{ Significant changes in estimates or provisions for income taxes (see paragraphs 740-270-30-2, 740-270-30-6, and 740-27030-8) [APB 28, paragraph 30] }
03/09/2023 11:15 AM EST
e.
Page 129 / 1816
{ Disposal of a component of an entity and unusual or infrequently occurring items (see paragraphs 270-10-45-11A and 270-1050-5) [APB 28, paragraph 30] }
f.
{ Contingent items (see paragraph 270-10-50-6) [APB 28, paragraph 30] }
g.
{ Changes in accounting principles or changes in accounting estimates (see paragraphs ) [APB 28, paragraph 30] }
h.
{ Significant changes in financial position (see paragraph 270-10-50-4) [APB 28, paragraph 30] }
i.
{ All of the following information about reportable operating segments determined according to the provisions of Topic 280,
including provisions related to restatement of segment information in previously issued financial statements: [APB 28,
paragraph 30] }
1.
{ Revenues from external customers [APB 28, paragraph 30] }
2.
{ Intersegment revenues [APB 28, paragraph 30] }
3.
{ A measure of segment profit or loss [APB 28, paragraph 30] }
4.
{ Total assets for which there has been a material change from the amount disclosed in the last annual report [APB 28,
paragraph 30] }
5.
{ A description of differences from the last annual report in the basis of segmentation or in the measurement of segment
profit or loss [APB 28, paragraph 30] }
6.
{ A reconciliation of the total of the reportable segments' measures of profit or loss to the entity's consolidated income
before income taxes and discontinued operations. [APB 28, paragraph 30] } { However, if, for example, an entity allocates
items such as income taxes to segments, the entity may choose to reconcile the total of the segments' measures of profit or
loss to consolidated income after those items. Significant reconciling items shall be separately identified and described in
that reconciliation. [APB 28, paragraph 30] }
j.
{ All of the following information about defined benefit pension plans and other defined benefit postretirement benefit plans,
disclosed for all periods presented pursuant to the provisions of Subtopic 715-20: [APB 28, paragraph 30] }
1.
{ The amount of net periodic benefit cost recognized, for each period for which a statement of income is presented, showing
separately the service cost component, the interest cost component, the expected return on plan assets for the period, the
gain or loss component, the prior service cost or credit component, the transition asset or obligation component, and the
gain or loss recognized due to a settlement or curtailment [APB 28, paragraph 30] }
2.
{ The total amount of the employer's contributions paid, and expected to be paid, during the current fiscal year, if
significantly different from amounts previously disclosed pursuant to paragraph 715-20-50-1. Estimated contributions may
be presented in the aggregate combining all of the following: [APB 28, paragraph 30] }
i.
{ Contributions required by funding regulations or laws [APB 28, paragraph 30] }
ii. { Discretionary contributions [APB 28, paragraph 30] }
iii. { Noncash contributions. [APB 28, paragraph 30] }
03/09/2023 11:15 AM EST
k.
Page 130 / 1816
{ The information about the use of fair value to measure assets and liabilities recognized in the statement of financial position
pursuant to Section 820-10-50 [APB 28, paragraph 30(l)] }
l.
{ The information about derivative instruments as required by Sections 815-10-50, 815-20-50, 815-25-50, 815-30-50, and
815-35-50 [APB 28, paragraph 30(m)] }
m. { The information about financial instruments as required by Section 825-10-50 [APB 28, paragraph 30] }
n.
{ The information about certain investments in debt and equity securities as required by Sections 320-10-50, 321-10-50, and
942-320-50 [APB 28, paragraph 30] }
o.
{ The information about other-than-temporary impairments as required by Sections 320-10-50, 325-20-50, and 958-320-50
[APB 28, paragraph 30] } { and impairments as required by Section 321-10-50 [ASU 2016-01, paragraph 11] }
p.
{ All of the following information about the credit quality of financing receivables and the allowance for credit losses
determined in accordance with the provisions of Topic 310: [ASU 2010-20, paragraph 28] }
1.
{ Nonaccrual and past due financing receivables (see paragraphs 310-10-50-5A through 50-7B) [ASU 2010-20,
paragraph 28] }
2.
{ Allowance for credit losses related to financing receivables (see paragraphs ) [ASU 2010-20, paragraph 28] }
3.
{ Impaired loans (see paragraphs ) [ASU 2010-20, paragraph 28] }
4.
{ Credit-quality information related to financing receivables (see paragraphs ) [ASU 2010-20, paragraph 28] }
5.
{ Modifications of financing receivables (see paragraphs ). [ASU 2010-20, paragraph 28] }
q.
{ The gross information and net information required by paragraphs . [ASU 2011-11, paragraph 6] }
r.
{ The information about changes in accumulated other comprehensive income required by paragraphs 220-10-45-14A and 22010-45-17 through 45-17B. [ASU 2013-02, paragraph 5] }
s.
{ The carrying amount of foreclosed residential real estate property as required by the last sentence of paragraph 310-10-50-11
and the amount of loans in the process of foreclosure as required by paragraph 310-10-50-35. [ASU 2014-04, paragraph 2] }
{ If summarized financial data are regularly reported on a quarterly basis, the foregoing information with respect to the current quarter
and the current year-to-date or the last 12 months to date should be furnished together with comparable data for the preceding year.
[APB 28, paragraph 30] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 { Many publicly traded companies [APB 28, paragraph 30] } { report summarized financial information at periodic
interim dates in considerably less detail than that provided in annual financial statements. While this information provides more timely
information than would result if complete financial statements were issued at the end of each interim period, the timeliness of
presentation may be partially offset by a reduction in detail in the information provided. As a result, certain guides as to minimum
disclosure are desirable. [APB 28, paragraph 30] } { (It should be recognized that the minimum disclosures of summarized interim
financial data required of publicly traded companies do not constitute a fair presentation of financial position and results of operations
in conformity with generally accepted accounting principles [GAAP].) [APB 28, paragraph 30] } { If publicly traded companies report
summarized financial information at interim dates (including reports on fourth quarters), the following data should be reported, as a
03/09/2023 11:15 AM EST
Page 131 / 1816
minimum: [APB 28, paragraph 30] }
a.
{ Sales or gross revenues, provision for income taxes, net income, and comprehensive income [APB 28, paragraph 30] }
b.
{ Basic and diluted earnings per share data for each period presented, determined in accordance with the provisions of Topic 260
[APB 28, paragraph 30] }
c.
{ Seasonal revenue, costs, or expenses (see paragraph 270-10-45-11) [APB 28, paragraph 30] }
d.
{ Significant changes in estimates or provisions for income taxes (see paragraphs 740-270-30-2, 740-270-30-6, and 740-27030-8) [APB 28, paragraph 30] }
e.
{ Disposal of a component of an entity and unusual or infrequently occurring items (see paragraphs 270-10-45-11A and 270-1050-5) [APB 28, paragraph 30] }
f.
{ Contingent items (see paragraph 270-10-50-6) [APB 28, paragraph 30] }
g.
{ Changes in accounting principles or changes in accounting estimates (see paragraphs ) [APB 28, paragraph 30] }
h.
{ Significant changes in financial position (see paragraph 270-10-50-4) [APB 28, paragraph 30] }
i.
{ All of the following information about reportable operating segments determined according to the provisions of Topic 280,
including provisions related to restatement of segment information in previously issued financial statements: [APB 28,
paragraph 30] }
1.
{ Revenues from external customers [APB 28, paragraph 30] }
2.
{ Intersegment revenues [APB 28, paragraph 30] }
3.
{ A measure of segment profit or loss [APB 28, paragraph 30] }
4.
{ Total assets for which there has been a material change from the amount disclosed in the last annual report [APB 28,
paragraph 30] }
5.
{ A description of differences from the last annual report in the basis of segmentation or in the measurement of segment
profit or loss [APB 28, paragraph 30] }
6.
{ A reconciliation of the total of the reportable segments' measures of profit or loss to the entity's consolidated income
before income taxes and discontinued operations. [APB 28, paragraph 30] } { However, if, for example, an entity allocates
items such as income taxes to segments, the entity may choose to reconcile the total of the segments' measures of profit or
loss to consolidated income after those items. Significant reconciling items shall be separately identified and described in
that reconciliation. [APB 28, paragraph 30] }
j.
{ All of the following information about defined benefit pension plans and other defined benefit postretirement benefit plans,
disclosed for all periods presented pursuant to the provisions of Subtopic 715-20: [APB 28, paragraph 30] }
1.
{ The amount of net periodic benefit cost recognized, for each period for which a statement of income is presented, showing
separately the service cost component, the interest cost component, the expected return on plan assets for the period, the
gain or loss component, the prior service cost or credit component, the transition asset or obligation component, and the
gain or loss recognized due to a settlement or curtailment [APB 28, paragraph 30] }
03/09/2023 11:15 AM EST
2.
Page 132 / 1816
{ The total amount of the employer's contributions paid, and expected to be paid, during the current fiscal year, if
significantly different from amounts previously disclosed pursuant to paragraph 715-20-50-1. Estimated contributions may
be presented in the aggregate combining all of the following: [APB 28, paragraph 30] }
i.
{ Contributions required by funding regulations or laws [APB 28, paragraph 30] }
ii. { Discretionary contributions [APB 28, paragraph 30] }
iii. { Noncash contributions. [APB 28, paragraph 30] }
k.
{ The information about the use of fair value to measure assets and liabilities recognized in the statement of financial position
pursuant to Section 820-10-50 [APB 28, paragraph 30(l)] }
l.
{ The information about derivative instruments as required by Sections 815-10-50, 815-20-50, 815-25-50, 815-30-50, and
815-35-50 [APB 28, paragraph 30(m)] }
m. { The information about financial instruments as required by Section 825-10-50 [APB 28, paragraph 30] }
n.
{ The information about certain investments in debt and equity securities as required by Sections 320-10-50, 321-10-50, and
942-320-50 [APB 28, paragraph 30] }
o.
{ The information about credit losses and impairments as required by Topic 326 on measurement of credit losses [APB 28,
paragraph 30] } { and impairments as required by Section 321-10-50 [ASU 2016-01, paragraph 11] }
p.
{ All of the following information about the credit quality of financial assets and the allowance for credit losses determined in
accordance with the provisions of Subtopic 326-20 on financial instruments measured at amortized cost: [ASU 2010-20,
paragraph 28] }
1.
{ Nonaccrual and past due financial assets (see paragraphs ) [ASU 2010-20, paragraph 28] }
2.
{ Allowance for expected credit losses related to financial assets (see paragraphs ) [ASU 2010-20, paragraph 28] }
3.
[Subparagraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update] .
4.
{ Credit-quality information related to instruments within the scope of Subtopic 326-20 (see paragraphs ) [ASU 2010-20,
paragraph 28] }
5.
{ Modifications of financing receivables (see paragraphs ). [ASU 2010-20, paragraph 28] }
q.
{ The gross information and net information required by paragraphs . [ASU 2011-11, paragraph 6] }
r.
{ The information about changes in accumulated other comprehensive income required by paragraphs 220-10-45-14A and 22010-45-17 through 45-17B. [ASU 2013-02, paragraph 5] }
s.
{ The carrying amount of foreclosed residential real estate property as required by the last sentence of paragraph 310-10-50-11
and the amount of loans in the process of foreclosure as required by paragraph 310-10-50-35. [ASU 2014-04, paragraph 2] }
{ If summarized financial data are regularly reported on a quarterly basis, the foregoing information with respect to the current quarter
03/09/2023 11:15 AM EST
Page 133 / 1816
and the current year-to-date or the last 12 months to date should be furnished together with comparable data for the preceding year.
[APB 28, paragraph 30] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5 { Many publicly traded companies [APB 28, paragraph 30] } { report summarized financial information at periodic
interim dates in considerably less detail than that provided in annual financial statements. While this information provides more timely
information than would result if complete financial statements were issued at the end of each interim period, the timeliness of
presentation may be partially offset by a reduction in detail in the information provided. As a result, certain guides as to minimum
disclosure are desirable. [APB 28, paragraph 30] } { (It should be recognized that the minimum disclosures of summarized interim
financial data required of publicly traded companies do not constitute a fair presentation of financial position and results of operations
in conformity with generally accepted accounting principles [GAAP].) [APB 28, paragraph 30] } { If publicly traded companies report
summarized financial information at interim dates (including reports on fourth quarters), the following data should be reported, as a
minimum: [APB 28, paragraph 30] }
a.
{ Sales or gross revenues, provision for income taxes, net income, and comprehensive income [APB 28, paragraph 30] }
b.
{ Basic and diluted earnings per share data for each period presented, determined in accordance with the provisions of Topic 260
[APB 28, paragraph 30] }
c.
{ Seasonal revenue, costs, or expenses (see paragraph 270-10-45-11) [APB 28, paragraph 30] }
d.
{ Significant changes in estimates or provisions for income taxes (see paragraphs 740-270-30-2, 740-270-30-6, and 740-27030-8) [APB 28, paragraph 30] }
e.
{ Disposal of a component of an entity and unusual or infrequently occurring items (see paragraphs 270-10-45-11A and 270-1050-5) [APB 28, paragraph 30] }
f.
{ Contingent items (see paragraph 270-10-50-6) [APB 28, paragraph 30] }
g.
{ Changes in accounting principles or changes in accounting estimates (see paragraphs ) [APB 28, paragraph 30] }
h.
{ Significant changes in financial position (see paragraph 270-10-50-4) [APB 28, paragraph 30] }
i.
{ All of the following information about reportable operating segments determined according to the provisions of Topic 280,
including provisions related to restatement of segment information in previously issued financial statements: [APB 28,
paragraph 30] }
1.
{ Revenues from external customers [APB 28, paragraph 30] }
2.
{ Intersegment revenues [APB 28, paragraph 30] }
3.
{ A measure of segment profit or loss [APB 28, paragraph 30] }
4.
{ Total assets for which there has been a material change from the amount disclosed in the last annual report [APB 28,
paragraph 30] }
5.
{ A description of differences from the last annual report in the basis of segmentation or in the measurement of segment
profit or loss [APB 28, paragraph 30] }
6.
{ A reconciliation of the total of the reportable segments' measures of profit or loss to the entity's consolidated income
before income taxes and discontinued operations. [APB 28, paragraph 30] } { However, if, for example, an entity allocates
03/09/2023 11:15 AM EST
Page 134 / 1816
items such as income taxes to segments, the entity may choose to reconcile the total of the segments' measures of profit or
loss to consolidated income after those items. Significant reconciling items shall be separately identified and described in
that reconciliation. [APB 28, paragraph 30] }
j.
{ All of the following information about defined benefit pension plans and other defined benefit postretirement benefit plans,
disclosed for all periods presented pursuant to the provisions of Subtopic 715-20: [APB 28, paragraph 30] }
1.
{ The amount of net periodic benefit cost recognized, for each period for which a statement of income is presented, showing
separately the service cost component, the interest cost component, the expected return on plan assets for the period, the
gain or loss component, the prior service cost or credit component, the transition asset or obligation component, and the
gain or loss recognized due to a settlement or curtailment [APB 28, paragraph 30] }
2.
{ The total amount of the employer's contributions paid, and expected to be paid, during the current fiscal year, if
significantly different from amounts previously disclosed pursuant to paragraph 715-20-50-1. Estimated contributions may
be presented in the aggregate combining all of the following: [APB 28, paragraph 30] }
i.
{ Contributions required by funding regulations or laws [APB 28, paragraph 30] }
ii. { Discretionary contributions [APB 28, paragraph 30] }
iii. { Noncash contributions. [APB 28, paragraph 30] }
k.
{ The information about the use of fair value to measure assets and liabilities recognized in the statement of financial position
pursuant to Section 820-10-50 [APB 28, paragraph 30(l)] }
l.
{ The information about derivative instruments as required by Sections 815-10-50, 815-20-50, 815-25-50, 815-30-50, and
815-35-50 [APB 28, paragraph 30(m)] }
m. { The information about financial instruments as required by Section 825-10-50 [APB 28, paragraph 30] }
n.
{ The information about certain investments in debt and equity securities as required by Sections 320-10-50, 321-10-50, and
942-320-50 [APB 28, paragraph 30] }
o.
{ The information about credit losses and impairments as required by Topic 326 on measurement of credit losses [APB 28,
paragraph 30] } { and impairments as required by Section 321-10-50 [ASU 2016-01, paragraph 11] }
p.
{ All of the following information about the credit quality of financial assets and the allowance for credit losses determined in
accordance with the provisions of Subtopic 326-20 on financial instruments measured at amortized cost: [ASU 2010-20,
paragraph 28] }
1.
{ Nonaccrual and past due financial assets (see paragraphs ) [ASU 2010-20, paragraph 28] }
2.
{ Allowance for expected credit losses related to financial assets (see paragraphs ) [ASU 2010-20, paragraph 28] }
3.
[Subparagraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update] .
4.
{ Credit-quality information related to instruments within the scope of Subtopic 326-20 (see paragraphs ) [ASU 2010-20,
paragraph 28] }
03/09/2023 11:15 AM EST
5.
Page 135 / 1816
{ Modifications of financing receivables (see paragraphs 310-10-50-42 through 50-44 ). [ASU 2010-20, paragraph 28] }
q.
{ The gross information and net information required by paragraphs . [ASU 2011-11, paragraph 6] }
r.
{ The information about changes in accumulated other comprehensive income required by paragraphs 220-10-45-14A and 22010-45-17 through 45-17B. [ASU 2013-02, paragraph 5] }
s.
{ The carrying amount of foreclosed residential real estate property as required by the last sentence of paragraph 310-10-50-11
and the amount of loans in the process of foreclosure as required by paragraph 310-10-50-35. [ASU 2014-04, paragraph 2] }
{ If summarized financial data are regularly reported on a quarterly basis, the foregoing information with respect to the current quarter
and the current year-to-date or the last 12 months to date should be furnished together with comparable data for the preceding year.
[APB 28, paragraph 30] }
Is the entity in compliance with the guidance in ASC 270-10-501B?
FASB Codification:
50-1B
Pending Content:
Transition Date: (P) December 16, 2020; (N) December 16, 2021 Transition Guidance 105-10-65-6
105-10-65-6 { Costs and expenses incurred in an interim period that cannot be readily identified with the activities or benefits of other
interim periods shall be charged to the interim period in which incurred. Disclosure [APB 28, paragraph 15] } { in the notes to
financial statements [ASU 2020-10, paragraph 18] } { shall be made as to the nature and amount of such costs unless items of a
comparable nature are included in both the current interim period and in the corresponding interim period of the preceding year. [APB
28, paragraph 15] } { (See paragraph 270-10-45-8(b).) [ASU 2020-10, paragraph 18] }
Is the entity in compliance with the guidance in ASC 270-10-50-2?
FASB Codification:
50-2
{ If interim financial data and disclosures are not separately reported for the fourth quarter, users of the interim financial
information often make inferences about that quarter by subtracting data based on the third quarter interim report from the annual
results. In the absence of a separate fourth quarter report or disclosure of the results (as outlined in the preceding paragraph) for that
quarter in the annual report, disposals of components of an entity and unusual or infrequently occurring items recognized in the fourth
quarter, as well as the aggregate effect of year-end adjustments that are material to the results of that quarter (see paragraphs 270-1005-2 and 270-10-45-10) shall be disclosed in the annual report in a note to the annual financial statements. If a publicly traded
company that regularly reports interim information makes an accounting change during the fourth quarter of its fiscal year and does
not report the data specified by the preceding paragraph in a separate fourth quarter report or in its annual report, the disclosures
about the effect of the accounting change on interim periods that are required by paragraphs or by paragraph 250-10-45-15, as
appropriate, shall be made in a note to the annual financial statements for the fiscal year in which the change is made. [APB 28,
paragraph 31] }
Is the entity in compliance with the guidance in ASC 270-10-50-4?
03/09/2023 11:15 AM EST
Page 136 / 1816
FASB Codification:
50-4
{ Publicly traded companies are encouraged to publish balance sheet and cash flow data at interim dates since these data often
assist users of the interim financial information in their understanding and interpretation of the income data reported. If condensed
interim balance sheet information or cash flow data are not presented at interim reporting dates, significant changes since the last
reporting period with respect to liquid assets, net working capital, long-term liabilities, or stockholders' equity shall be disclosed. [APB
28, paragraph 33] }
Is the entity in compliance with the guidance in ASC 270-10-50:
Unusual or Infrequent Items and\n Disposals of Components?
FASB Codification:
>
Unusual or Infrequent Items and Disposals of Components
50-5
{ Matters such as unusual seasonal results, business combinations, and acquisitions by not-for-profit entities shall be
disclosed to provide information needed for a proper understanding of interim financial reports. [APB 28, paragraph 21] }
Pending Content:
Transition Date: (P) December 16, 2020; (N) December 16, 2021 Transition Guidance 105-10-65-6
105-10-65-6
Editor's Note: The heading that precedes paragraph 270-10-50-5 will be amended upon transition as shown below. The content of the
paragraph will not change.
> Unusual or Infrequent Items
{ Matters such as unusual seasonal results, business combinations, and acquisitions by not-for-profit entities shall be disclosed to
provide information needed for a proper understanding of interim financial reports. [APB 28, paragraph 21] }
Is the entity in compliance with the guidance in ASC 270-10-50:
Contingencies?
FASB Codification:
>
Contingencies
50-6
{ Contingencies and other uncertainties that could be expected to affect the fairness of presentation of financial data at an
interim date shall be disclosed in interim reports in the same manner required for annual reports. Such disclosures shall be repeated in
interim and annual reports until the contingencies have been removed, resolved, or have become immaterial. [APB 28, paragraph 22]
} { The significance of a contingency or uncertainty should be judged in relation to annual financial statements. Disclosures of such
items shall include, but not be limited to, those matters that form the basis of a qualification of an independent auditor's report. [APB
28, paragraph 22] }
Is the entity in compliance with the guidance in ASC 270-10-50:
Leases?
FASB Codification:
>
Leases
50-6A
Pending Content:
Transition Date: (P) December 16, 2018; (N) December 16, 2021 Transition Guidance 842-10-65-1
842-10-65-1 { A lessor shall disclose a table of all lease-related income items in its interim financial statements (see paragraph 84230-50-5 for lease-related income items). [ASU 2016-02, paragraph 18] }
03/09/2023 11:15 AM EST
Page 137 / 1816
Is the entity in compliance with the guidance in ASC 270-10-50:
Guidance Related to Disclosure of\n Other Topics at Interim Dates?
FASB Codification:
>
Guidance Related to Disclosure of Other Topics at Interim Dates
50-7
a.
The following may not represent all references to interim disclosure:
For business combinations and combinations accounted for by not-for-profit entities, see Sections 805-10-50, 805-20-50, 80530-50, 805-740-50, and 958-805-50.
b.
For compensation-related costs, see paragraphs 715-60-50-3 and 715-60-50-6.
c.
For disclosures required for entities with oil- and gas-producing activities, see paragraph 932-270-50-1.
d.
For disclosures related to prior interim periods of the current fiscal year, see paragraph 250-10-50-11.
e.
For fair value requirements, see Section 820-10-50.
f.
For guarantors, see Section 460-10-50.
g.
For pensions and other postretirement benefits, see paragraphs .
h.
For reportable segments, see paragraphs 280-10-50-39 and 280-10-55-16.
i.
For suspended well costs and interim reporting, see Section 932-235-50.
j.
For applicability of disclosure requirements related to risks and uncertainties, see paragraph 275-10-15-3.
k.
{ For discontinued operations, see paragraphs . [ASU 2014-08, paragraph 15] }
l.
{ For disposals of individually significant components of an entity, see paragraph 360-10-50-3A. [ASU 2014-08, paragraph 15]
}
m. { For insurance entities that account for short-duration contracts, see paragraphs 944-40-50-3 and 944-40-50-4E. [ASU 201509, paragraph 3] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 405-50-65-1
405-50-65-1 The following may not represent all references to interim disclosure:
a.
For business combinations and combinations accounted for by not-for-profit entities, see Sections 805-10-50, 805-20-50, 80530-50, 805-740-50, and 958-805-50.
b.
For compensation-related costs, see paragraphs 715-60-50-3 and 715-60-50-6.
c.
For disclosures required for entities with oil- and gas-producing activities, see paragraph 932-270-50-1.
d.
For disclosures related to prior interim periods of the current fiscal year, see paragraph 250-10-50-11.
e.
For fair value requirements, see Section 820-10-50.
03/09/2023 11:15 AM EST
Page 138 / 1816
f.
For guarantors, see Section 460-10-50.
g.
For pensions and other postretirement benefits, see paragraphs .
h.
For reportable segments, see paragraphs 280-10-50-39 and 280-10-55-16.
i.
For suspended well costs and interim reporting, see Section 932-235-50.
j.
For applicability of disclosure requirements related to risks and uncertainties, see paragraph 275-10-15-3.
k.
{ For discontinued operations, see paragraphs . [ASU 2014-08, paragraph 15] }
l.
{ For disposals of individually significant components of an entity, see paragraph 360-10-50-3A. [ASU 2014-08, paragraph 15]
}
ll. { For disclosure requirements on the amount of obligations outstanding under a supplier finance program, see paragraph 40550-50-4. [ASU 2022-04, paragraph 4] }
m. { For insurance entities that account for short-duration contracts, see paragraphs 944-40-50-3 and 944-40-50-4E. [ASU 201509, paragraph 3] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2024 Transition Guidance 944-40-65-2
944-40-65-2The following may not represent all references to interim disclosure:
a.
For business combinations and combinations accounted for by not-for-profit entities, see Sections 805-10-50, 805-20-50, 80530-50, 805-740-50, and 958-805-50.
b.
For compensation-related costs, see paragraphs 715-60-50-3 and 715-60-50-6.
c.
For disclosures required for entities with oil- and gas-producing activities, see paragraph 932-270-50-1.
d.
For disclosures related to prior interim periods of the current fiscal year, see paragraph 250-10-50-11.
e.
For fair value requirements, see Section 820-10-50.
f.
For guarantors, see Section 460-10-50.
g.
For pensions and other postretirement benefits, see paragraphs .
h.
For reportable segments, see paragraphs 280-10-50-39 and 280-10-55-16.
i.
For suspended well costs and interim reporting, see Section 932-235-50.
j.
For applicability of disclosure requirements related to risks and uncertainties, see paragraph 275-10-15-3.
k.
{ For discontinued operations, see paragraphs . [ASU 2014-08, paragraph 15] }
l.
{ For disposals of individually significant components of an entity, see paragraph 360-10-50-3A. [ASU 2014-08, paragraph 15]
}
03/09/2023 11:15 AM EST
Page 139 / 1816
ll. { For disclosure requirements on the amount of obligations outstanding under a supplier finance program, see paragraph 40550-50-4. [ASU 2022-04, paragraph 4] }
m. { For insurance entities that account for short-duration contracts, see paragraphs 944-40-50-3 and 944-40-50-4E. [ASU 201509, paragraph 3] }
n.
{ For insurance entities that account for long-duration contracts, see paragraphs , 944-40-50-6 through 50-7C, and . [ASU
2018-12, paragraph 23] }
Has the entity disclosed required information about the credit
quality of financing receivables and the allowance for credit losses
determined in accordance with the provisions of Topic 310: ASU
2010-20?
Presentation > 272 Limited Liability Entities > 10 Overall > 45 Other Presentation > General
Is a complete set of limited liability company financial statements
presented, including a statement of financial position, a statement
of operations, a statement of cash flows, and notes to financial
statements? Has the limited liability company presented
information related to changes in members' equity for the period as
separate statement, combined with the statement of operations, or
in the notes to the financial statements? [ASC 272-10-45-1]
FASB Codification:
45-1
{A complete set of limited liability company financial statements shall include all of the following: [PB 14, paragraph 8] }
a.
{A statement of financial position as of the end of the reporting period [PB 14, paragraph 8] }
b.
{A statement of operations for the period [PB 14, paragraph 8] }
c.
{A statement of cash flows for the period [PB 14, paragraph 8] }
d.
{Accompanying notes to financial statements. [PB 14, paragraph 8] }
{Additionally, the limited liability company shall present information related to changes in members' equity for the period. This
information may be presented as a separate statement, combined with the statement of operations, or in the notes to financial
statements. [PB 14, paragraph 8] }
Do the headings of the limited liability company's financial
statements identify clearly that the financial statements are those
of a limited liability company? [ASC 272-10-45-2]
FASB Codification:
45-2
{The headings of a limited liability company's financial statements shall identify clearly the financial statements as those of a
limited liability company. [PB 14, paragraph 9] }
03/09/2023 11:15 AM EST
Page 140 / 1816
Is the equity section of the limited liability company financial
statements presented similar to those of a partnership and
presented in accordance to the guidance in ASC 272-10-45-3? Are
limited liability company owners referred to as members and is the
equity section titled members' equity? [ASC 272-10-45-3]
FASB Codification:
45-3
{The financial statements of a limited liability company shall be similar in presentation to those of a partnership. The limited
liability company owners are referred to as members; therefore, the equity section in the statement of financial position shall be titled
members' equity. If more than one class of members exists, each having varying rights, preferences, and privileges, the limited liability
company is encouraged to report the equity of each class separately within the equity section. [PB 14, paragraph 10] }{As indicated in
paragraph 272-10-50-1, if the limited liability company does not report the amount of each class separately within the equity section,
it shall disclose those amounts in the notes to financial statements (see paragraph 272-10-50-3). [PB 14, paragraph 10] }
If the total balance of the members' equity account or accounts is
less than zero, has a deficit been reported in the statement of
financial position? [ASC 272-10-45-4]
FASB Codification:
45-4
{Even though a member's liability may be limited, if the total balance of the members' equity account or accounts described in
the preceding paragraph is less than zero, a deficit shall be reported in the statement of financial position. [PB 14, paragraph 11] }
Have amounts due from members for capital contributions been
presented as deductions from members' equity appropriately? [ASC
272-10-45-5]
FASB Codification:
45-5
{If the limited liability company records amounts due from members for capital contributions, such amounts shall be presented
as deductions from members' equity. Presenting such amounts as assets shall be inappropriate except in very limited circumstances
when there is substantial evidence of ability and intent to pay within a reasonably short period of time, as described in paragraph 50510-45-2. [PB 14, paragraph 13] }
If comparative financial statements are presented, are amounts
shown for comparative purposes comparable with those shown for
the most recent period, or are any exceptions to comparability
disclosed in the notes to financial statements? [ASC 272-10-45-6]
FASB Codification:
45-6
{Presentation of comparative financial statements is encouraged, but not required, by Section 205-10-45. [PB 14,
paragraph 14] }{If comparative financial statements are presented, amounts shown for comparative purposes shall be in fact
comparable with those shown for the most recent period, or any exceptions to comparability shall be disclosed in the notes to financial
statements (see paragraph 272-10-50-2). [PB 14, paragraph 14] }
03/09/2023 11:15 AM EST
Page 141 / 1816
If the formation of the limited liability company results in a new
reporting entity, is the guidance in paragraph 250-10-45-21 followed
and is the change retrospectively applied to the financial
statements of all prior periods presented to show financial
information for the new reporting entity for those periods? [ASC
272-10-45-7]
FASB Codification:
45-7
{If the formation of the limited liability company results in a new reporting entity, the guidance in paragraph 250-10-45-21
shall be followed and [PB 14, paragraph 14] }{the change shall be retrospectively applied to the financial statements of all prior
periods presented to show financial information for the new reporting entity for those periods. [ASU 2010-08, paragraph 7] }
Presentation > 272 Limited Liability Entities > 10 Overall > 50 Disclosure > General
Has the limited liability company presented the equity of each class
of its members separately within its equity section or within the
notes to the financial statements? [ASC 272-10-50-1]
FASB Codification:
50-1
{If the limited liability company does not report the equity of each class of its members separately within the equity section, it
shall disclose those amounts in the notes to financial statements (see paragraph 272-10-50-3). [PB 14, paragraph 10] }{If the limited
liability company maintains separate accounts for components of members' equity (for example, undistributed earnings, earnings
available for withdrawal, or unallocated capital), disclosure of those components, either on the face of the statement of financial
position or in the notes to financial statements, is permitted. [PB 14, paragraph 12] }
If comparative financial statements are presented, are the amounts
shown comparable with those shown in the most recent period and,
if exceptions exist, are these disclosed in the notes? [ASC 272-1050-2]
FASB Codification:
50-2
{As indicated in paragraph 272-10-45-6, if comparative financial statements are presented, amounts shown for comparative
purposes shall be comparable with those shown for the most recent period, or any exceptions to comparability shall be disclosed in the
notes to financial statements. [PB 14, paragraph 14] }{Situations may exist in which financial statements of the same reporting entity
for periods prior to the period of conversion are not comparable with those for the most recent period presented, for example, if
transactions such as spinoffs or other distributions of assets occurred prior to or as part of the limited liability company's formation. In
such situations, sufficient disclosure shall be made so the comparative financial statements are not misleading. [PB 14, paragraph 14]
}
Have the following been disclosed in the financial statements of a
limited liability company: (1) a description of any limitation of
members' liability and (2) different classes of members' interests
and each class respective rights, preferences, and privileges? If the
limited liability company does not report separately the amount of
each class in the equity section of the statement of financial
position, are those amounts disclosed? [ASC 272-10-50-3]
03/09/2023 11:15 AM EST
Page 142 / 1816
FASB Codification:
50-3
{Both of the following disclosures shall be made in the financial statements of a limited liability company: [PB 14,
paragraph 15] }
a.
{A description of any limitation of its members' liability [PB 14, paragraph 15] }
b.
{The different classes of members' interests and the respective rights, preferences, and privileges of each class. Additionally, as
discussed in paragraph 272-10-50-1, if the limited liability company does not report separately the amount of each class in the
equity section of the statement of financial position, those amounts shall be disclosed. [PB 14, paragraph 15] }
{If the limited liability company has a finite life, the date it will cease to exist shall be disclosed. [PB 14, paragraph 15] }
If the limited liability company is subject to income taxes, have
income tax specific disclosures required by ASC 740-10-50 been
made? [ASC 272-10-50-4]
FASB Codification:
50-4
{Section 740-10-50 requires specific disclosures relating to accounting for income taxes. Limited liability companies subject to
income tax in any jurisdiction shall make the relevant disclosures under that Section. [PB 14, paragraph 17] }
Presentation > 274 Personal Financial Statements > 10 Overall > 25 Recognition > General
Is the entity in compliance with the guidance in ASC 274-10-25:
The Methods of Presentation?
FASB Codification:
>
The Methods of Presentation
25-1
{Assets and liabilities shall be recognized on the accrual basis of accounting. [SOP 82-1, paragraph 7] }
Presentation > 274 Personal Financial Statements > 10 Overall > 35 Subsequent Measurement > General
Is the entity in compliance with the guidance in ASC 274-10-35-1?
FASB Codification:
35-1
{Personal financial statements shall present assets at their estimated current values and liabilities at their estimated current
amounts at the date of the financial statements. [SOP 82-1, paragraph 4] }
Is the entity in compliance with the guidance in ASC 274-10-35-2?
FASB Codification:
35-2
{Paragraph 274-10-25-1 states that assets and liabilities shall be recognized on the accrual basis of accounting. [SOP 82-1,
paragraph 7] }
Is the entity in compliance with the guidance in ASC 274-10-35-3?
03/09/2023 11:15 AM EST
Page 143 / 1816
FASB Codification:
35-3
{The methods used to determine the estimated current values of assets and the estimated current amounts of liabilities shall be
followed consistently from period to period unless the facts and circumstances dictate a change to different methods. [SOP 82-1,
paragraph 15] }
Is the entity in compliance with the guidance in ASC 274-10-35:
Assets?
FASB Codification:
>
Assets
> >
Receivables
35-4
{Personal financial statements shall present receivables at the discounted amounts of cash the person estimates will be collected,
using appropriate interest rates at the date of the financial statements. [SOP 82-1, paragraph 16] }
> >
Marketable Securities
35-5
{Marketable securities include both debt and equity securities for which market quotations are available. The estimated current
values of such securities are their quoted market prices. The estimated current values of securities traded on securities exchanges are
the closing prices of the securities on the date of the financial statements (valuation date) if the securities were traded on that date. If
the securities were not traded on that date but published bid and asked prices are available, the estimated current values of the
securities shall be within the range of those prices. [SOP 82-1, paragraph 17] }
> >
Over-the-Counter Securities
35-6
{For securities traded in the over-the-counter market, quotations of bid and asked prices are available from several sources,
including the financial press, various quotation publications and financial reporting services, and individual broker-dealers. For those
securities, the mean of the bid prices, of the bid and asked prices, or of the prices of a representative selection of broker-dealers
quoting the securities may be used as the estimated current values. [SOP 82-1, paragraph 18] }
35-7
{An investor may hold a large block of the equity securities of an entity. A large block of stock might not be salable at the price
at which a small number of shares were recently sold or quoted. Further, a large noncontrolling interest may be difficult to sell despite
isolated sales of a small number of shares. However, a controlling interest may be proportionately more valuable than noncontrolling
interests that were sold. Consideration of those factors may require adjustments to the price at which the security recently sold.
Moreover, restrictions on the transfer of a security may also suggest the need to adjust the recent market price in determining the
estimated current value. [SOP 82-1, paragraph 19] }
> >
Options
35-8
{If published prices of options are unavailable, their estimated current values shall be determined on the basis of the values of
the assets subject to option, considering such factors as the exercise prices and length of the option periods. [SOP 82-1, paragraph 20] }
> >
Life Insurance
35-9
{The estimated current value of an investment in life insurance is the cash value of the policy less the amount of any loans
against it. [SOP 82-1, paragraph 21] }
> >
35-10
Intangible Assets
{Intangible assets shall be presented at the discounted amounts of projected cash receipts and payments arising from the
planned use or sale of the assets if both the amounts and timing can be reasonably estimated. For example, a record of receipts under a
royalty agreement may provide sufficient information to determine its estimated current value. The cost of a purchased intangible shall
be used if no other information is available. [SOP 82-1, paragraph 25] }
> >
35-11
Future Interests and Similar Assets
{Nonforfeitable rights to receive future sums that have all the following characteristics shall be presented as assets at their
discounted amounts: [SOP 82-1, paragraph 26] }
03/09/2023 11:15 AM EST
Page 144 / 1816
a.
{The rights are for fixed or determinable amounts. [SOP 82-1, paragraph 26] }
b.
{The rights are not contingent on the holder's life expectancy or the occurrence of a particular event, such as disability or death.
[SOP 82-1, paragraph 26] }
c.
{The rights do not require future performance of service by the holder. [SOP 82-1, paragraph 26] }
Paragraph 274-10-55-7 identifies nonforfeitable rights that may have the preceding characteristics.
Is the entity in compliance with the guidance in ASC 274-10-35:
Liabilities?
FASB Codification:
>
Liabilities
> >
Payables and Other Liabilities
35-12
{Personal financial statements shall present payables and other liabilities at the discounted amounts of cash to be paid. The
discount rate shall be the rate implicit in the transaction in which the debt was incurred. If, however, the debtor is able to discharge the
debt currently at a lower amount, the debt shall be presented at the lower amount. [SOP 82-1, paragraph 27] }
> >
Noncancellable Commitments
35-13
{Noncancellable commitments to pay future sums that have all the following characteristics shall be presented as liabilities at
their discounted amounts: [SOP 82-1, paragraph 28] }
a.
{The commitments are for fixed or determinable amounts. [SOP 82-1, paragraph 28] }
b.
{The commitments are not contingent on others' life expectancies or the occurrence of a particular event, such as disability or
death. [SOP 82-1, paragraph 28] }
c.
{The commitments do not require future performance of service by others. [SOP 82-1, paragraph 28] }
{Noncancellable commitments that may have the preceding characteristics include fixed amounts of alimony for a definite future period
and charitable pledges. [SOP 82-1, paragraph 28] }
> >
35-14
Income Taxes Payable
{The liability for income taxes payable shall include unpaid income taxes for completed tax years and an estimated amount for
income taxes accrued for the elapsed portion of the current tax year to the date of the financial statements. That estimate shall be based
on the relationship of taxable income earned to date to total estimated taxable income for the year, net of taxes withheld or paid with
estimated income tax returns. [SOP 82-1, paragraph 29] }
> >
35-15
Certain Estimated Income Taxes
{A provision shall be made for estimated income taxes on the differences between the estimated current values of assets and
the estimated current amounts of liabilities and their tax bases, including consideration of negative tax bases of tax shelters, if any. The
provision shall be computed as if the estimated current values of all assets had been realized and the estimated current amounts of all
liabilities had been liquidated on the statement date, using applicable income tax laws and regulations, considering recapture
provisions and available carryovers. [SOP 82-1, paragraph 30] }For related implementation guidance, see paragraph 274-10-55-1.
Presentation > 274 Personal Financial Statements > 10 Overall > 45 Other Presentation > General
03/09/2023 11:15 AM EST
Page 145 / 1816
In its personal financial statements, have assets been presented at
their estimated current values and liabilities at their estimated
current amounts at the date of the financial statements? [ASC 27410-45-1]
FASB Codification:
45-1
{Paragraph 274-10-35-1 states that personal financial statements shall present assets at their estimated current values and
liabilities at their estimated current amounts at the date of the financial statements. [SOP 82-1, paragraph 4] }
Consideration Points:
This subtopic does not prohibit supplemental presentation of historical cost information [ASC 274-10-45-2]
Have the personal financial statements been prepared for an
individual, a husband and wife, or a family? [ASC 274-10-45-3]
FASB Codification:
>
Reporting Entity
45-3
{Personal financial statements may be prepared for any of the following: [SOP 82-1, paragraph 5] }
a.
{An individual [SOP 82-1, paragraph 5] }
b.
{A husband and wife [SOP 82-1, paragraph 5] }
c.
{A family. [SOP 82-1, paragraph 5] }
Do the personal financial statements consist of a statement of
financial condition and a statement of changes in net worth (the
presentation of comparative financial statements is optional)? [ASC
274-10-45-4 and 45-5]
03/09/2023 11:15 AM EST
Page 146 / 1816
FASB Codification:
>
Form of Statements
45-4
a.
{Personal financial statements consist of all of the following: [SOP 82-1, paragraph 6] }
{A statement of financial condition. A statement of financial condition is the basic personal financial statement and shall present
all of the following: [SOP 82-1, paragraph 6] }
1.
{Estimated current values of assets [SOP 82-1, paragraph 6] }
2.
{Estimated current amounts of liabilities [SOP 82-1, paragraph 6] }
3.
{Estimated income taxes on the differences between the estimated current values of assets and the estimated current
amounts of liabilities and their tax bases [SOP 82-1, paragraph 6] }
4.
b.
{Net worth at a specified date. [SOP 82-1, paragraph 6] }
{A statement of changes in net worth. [SOP 82-1, paragraph 6] }{The presentation of a statement of changes in net worth is
optional. [SOP 82-1, paragraph 6] }{A statement of changes in net worth shall present all of the following: [SOP 82-1,
paragraph 6] }
1.
{Major sources of increases in net worth, including any of the following: [SOP 82-1, paragraph 6] }
i.
{Income [SOP 82-1, paragraph 6] }
ii. {Increases in the estimated current values of assets [SOP 82-1, paragraph 6] }
iii. {Decreases in the estimated current amounts of liabilities [SOP 82-1, paragraph 6] }
iv. {Decreases in estimated income taxes on the differences between the estimated current values of assets and the
estimated current amounts of liabilities and their tax bases. [SOP 82-1, paragraph 6] }
2.
{Major sources of decreases in net worth, including any of the following: [SOP 82-1, paragraph 6] }
i.
{Expenses [SOP 82-1, paragraph 6] }
ii. {Decreases in the estimated current values of assets [SOP 82-1, paragraph 6] }
iii. {Increases in the estimated current amounts of liabilities [SOP 82-1, paragraph 6] }
iv. {Increases in estimated income taxes on the differences between the estimated current values of assets and the
estimated current amounts of liabilities and their tax bases. [SOP 82-1, paragraph 6] }
{Example 1 (paragraph 274-10-55-8) illustrates financial statements prepared based on the guidance in this Subtopic. [SOP 82-1,
paragraph 6] }
45-5
{The presentation of comparative financial statements of the current period and one or more prior periods may sometimes be
desirable. Such a presentation is more informative than the presentation of financial statements for only one period. The presentation of
comparative financial statements is optional. [SOP 82-1, paragraph 6] }
03/09/2023 11:15 AM EST
Page 147 / 1816
Does the method of presenting the personal financial statements
comply with ASC 274-10-45-6 through 45-10? [ASC 274-10-45-6
through 45-10]
FASB Codification:
>
Methods of Presentation
45-6
{Paragraph 274-10-25-1 states that assets and liabilities shall be recognized on the accrual basis of accounting. [SOP 82-1,
paragraph 7] }
45-7
{Assets and liabilities shall be presented by order of liquidity and maturity, without classification as current and noncurrent.
[SOP 82-1, paragraph 8] }
45-8
{If personal financial statements are prepared for one of a group of joint owners of assets, the statements shall include only the
person's interest as a beneficial owner, as determined under the property laws of the state having jurisdiction. If property is held in joint
tenancy, as community property, or through a similar joint ownership arrangement, the legal status of the separate equities of the
parties may not be evident. In that case, the person may require legal advice to determine whether an interest in the property shall be
included among the person's assets and, if so, the proper allocation of the equity in the property under the applicable state laws. [SOP
82-1, paragraph 9] }
45-9
{Business interests that constitute a large part of a person's total assets shall be shown separately from other investments. The
estimated current value of an investment in a separate entity, such as a closely held corporation, a partnership, or a sole
proprietorship, shall be shown in one amount as an investment if the entity is marketable as a going concern. Assets and liabilities of
the separate entity shall not be combined with similar personal items. [SOP 82-1, paragraph 10] }
45-10
{The estimated current values of assets and the estimated current amounts of liabilities of limited business activities not
conducted in a separate business entity, such as an investment in real estate and a related mortgage, shall be presented as separate
amounts, particularly if a large portion of the liabilities may be satisfied with funds from sources unrelated to the investment. [SOP 821, paragraph 11] }
Has the net investment in a business entity been presented in the
statement of financial condition? [ASC 274-10-45-11]
FASB Codification:
>
Closely Held Businesses
45-11
{The net investment in a business entity (not its assets and liabilities) shall be presented in the statement of financial condition.
The net investment shall be presented at its estimated current value at the date of the financial statement. [SOP 82-1, paragraph 22] }
Have estimated income taxes been presented between liabilities
and net worth in the statement of financial condition? [ASC 274-1045-12]
FASB Codification:
>
Certain Estimated Income Taxes
45-12
{Estimated income taxes shall be presented between liabilities and net worth in the statement of financial condition. [SOP 82-
1, paragraph 30] }
Have sufficient disclosures been included, either in the body of the
financial statements or in the notes, to make the statements
adequately informative? [ASC 274-10-45-13]
03/09/2023 11:15 AM EST
Page 148 / 1816
FASB Codification:
>
Adequate Disclosure
45-13
{Personal financial statements shall include sufficient disclosures to make the statements adequately informative. The
disclosures may be made in the body of the financial statements or in the notes to financial statements. [SOP 82-1, paragraph 31] }
Presentation > 274 Personal Financial Statements > 10 Overall > 50 Disclosure > General
Have sufficient disclosures been included, either in the body of the
financial statements or in the notes, to make the statements
adequately informative? [ASC 274-10-50-1]
FASB Codification:
50-1
{Paragraph 274-10-45-13 states that personal financial statements shall include sufficient disclosures to make the statements
adequately informative. That paragraph states that the disclosures may be made in the body of the financial statements or in the notes
to financial statements. [SOP 82-1, paragraph 31] }
Do the personal financial statements include the disclosures
outlined in ASC 274-10-50-2? [ASC 274-10-50-2]
FASB Codification:
50-2
{Personal financial statements disclosures shall include, but are not limited to, all of the following: [SOP 82-1, paragraph 31] }
a.
{A clear indication of the individuals covered by the financial statements [SOP 82-1, paragraph 31] }
b.
{That assets are presented at their estimated current values and liabilities are presented at their estimated current amounts
[SOP 82-1, paragraph 31] }
c.
Either of the following:
1.
{The methods used in determining the estimated current values of major assets and the estimated current amounts of major
liabilities [SOP 82-1, paragraph 31] }
2.
{The methods used in determining the major categories of assets and liabilities. [SOP 82-1, paragraph 31] }
d.
{Changes in item (c) methods from one period to the next [SOP 82-1, paragraph 31] }
e.
{If assets held jointly by the person and by others are included in the statements, the nature of the joint ownership [SOP 82-1,
paragraph 31] }
f.
{If the person's investment portfolio is material in relation to his or her other assets and is concentrated in one or a few
companies or industries, the names of the entities or industries and the estimated current values of the securities [SOP 82-1,
paragraph 31] }
g.
{If the person has a material investment in a closely held business, at least the following: [SOP 82-1, paragraph 31] }
1.
{The name of the entity and the person's percentage of ownership [SOP 82-1, paragraph 31] }
2.
{The nature of the business [SOP 82-1, paragraph 31] }
3.
{Summarized financial information about assets, liabilities, and results of operations for the most recent year based on the
03/09/2023 11:15 AM EST
Page 149 / 1816
financial statements of the business, including information about the basis of presentation (for example, generally accepted
accounting principles, income tax basis, or cash basis) and any significant loss contingencies. [SOP 82-1, paragraph 31] }
h.
{Descriptions of intangible assets and their estimated useful lives [SOP 82-1, paragraph 31] }
i.
{The face amount of life insurance the individuals own [SOP 82-1, paragraph 31] }
j.
{Nonforfeitable rights that do not have the characteristics discussed in paragraph 274-10-35-11, for example, pensions based on
life expectancy [SOP 82-1, paragraph 31] }
k.
{All of the following tax information: [SOP 82-1, paragraph 31] }
1.
{The methods and assumptions used to compute the estimated income taxes on the differences between the estimated
current values of assets and the estimated current amounts of liabilities and their tax bases [SOP 82-1, paragraph 31] }
2.
{A statement that the provision will probably differ from the amounts of income taxes that might eventually be paid
because those amounts are determined by the timing and the method of disposal, realization, or liquidation and the tax laws
and regulations in effect at the time of disposal, realization, or liquidation [SOP 82-1, paragraph 31] }
3.
{Unused operating loss and capital loss carryforwards [SOP 82-1, paragraph 31] }
4.
{Other unused deductions and credits, with their expiration periods, if applicable [SOP 82-1, paragraph 31] }
5.
{The differences between the estimated current values of major assets and the estimated current amounts of major
liabilities or categories of assets and liabilities and their tax bases [SOP 82-1, paragraph 31] }
6.
{The excess or deficit of the estimated current values of major assets or categories of assets over their tax bases. [SOP 821, paragraph 35] }
l.
{Maturities, interest rates, collateral, and other pertinent details relating to receivables and debt [SOP 82-1, paragraph 31] }
m. {Noncancellable commitments that do not have the characteristics discussed in paragraph 274-10-35-13, for example, operating
leases. [SOP 82-1, paragraph 31] }
Pending Content:
Transition Date: (P) December 16, 2018; (N) December 16, 2021 Transition Guidance 842-10-65-1
842-10-65-1{Personal financial statements disclosures shall include, but are not limited to, all of the following: [SOP 82-1,
paragraph 31] }
a.
{A clear indication of the individuals covered by the financial statements [SOP 82-1, paragraph 31] }
b.
{That assets are presented at their estimated current values and liabilities are presented at their estimated current amounts
[SOP 82-1, paragraph 31] }
c.
Either of the following:
1.
{The methods used in determining the estimated current values of major assets and the estimated current amounts of major
liabilities [SOP 82-1, paragraph 31] }
2.
{The methods used in determining the major categories of assets and liabilities. [SOP 82-1, paragraph 31] }
03/09/2023 11:15 AM EST
Page 150 / 1816
d.
{Changes in item (c) methods from one period to the next [SOP 82-1, paragraph 31] }
e.
{If assets held jointly by the person and by others are included in the statements, the nature of the joint ownership [SOP 82-1,
paragraph 31] }
f.
{If the person's investment portfolio is material in relation to his or her other assets and is concentrated in one or a few
companies or industries, the names of the entities or industries and the estimated current values of the securities [SOP 82-1,
paragraph 31] }
g.
{If the person has a material investment in a closely held business, at least the following: [SOP 82-1, paragraph 31] }
1.
{The name of the entity and the person's percentage of ownership [SOP 82-1, paragraph 31] }
2.
{The nature of the business [SOP 82-1, paragraph 31] }
3.
{Summarized financial information about assets, liabilities, and results of operations for the most recent year based on the
financial statements of the business, including information about the basis of presentation (for example, generally accepted
accounting principles, income tax basis, or cash basis) and any significant loss contingencies. [SOP 82-1, paragraph 31] }
h.
{Descriptions of intangible assets and their estimated useful lives [SOP 82-1, paragraph 31] }
i.
{The face amount of life insurance the individuals own [SOP 82-1, paragraph 31] }
j.
{Nonforfeitable rights that do not have the characteristics discussed in paragraph 274-10-35-11, for example, pensions based on
life expectancy [SOP 82-1, paragraph 31] }
k.
{All of the following tax information: [SOP 82-1, paragraph 31] }
1.
{The methods and assumptions used to compute the estimated income taxes on the differences between the estimated
current values of assets and the estimated current amounts of liabilities and their tax bases [SOP 82-1, paragraph 31] }
2.
{A statement that the provision will probably differ from the amounts of income taxes that might eventually be paid
because those amounts are determined by the timing and the method of disposal, realization, or liquidation and the tax laws
and regulations in effect at the time of disposal, realization, or liquidation [SOP 82-1, paragraph 31] }
3.
{Unused operating loss and capital loss carryforwards [SOP 82-1, paragraph 31] }
4.
{Other unused deductions and credits, with their expiration periods, if applicable [SOP 82-1, paragraph 31] }
5.
{The differences between the estimated current values of major assets and the estimated current amounts of major
liabilities or categories of assets and liabilities and their tax bases [SOP 82-1, paragraph 31] }
6.
{The excess or deficit of the estimated current values of major assets or categories of assets over their tax bases. [SOP 821, paragraph 35] }
l.
m.
{Maturities, interest rates, collateral, and other pertinent details relating to receivables and debt [SOP 82-1, paragraph 31] }
03/09/2023 11:15 AM EST
Page 151 / 1816
{Noncancellable commitments that do not have the characteristics discussed in paragraph 274-10-35-13. [SOP 82-1,
paragraph 31] }
Consideration Points:
Section 274-10-50 has been updated as the result of the issuance of ASU 2016-02. The pending content resulting from the
issuance of this ASU amended paragraph 274-10-50-2(m). The amendments in this ASU are effective for fiscal years
beginning after December 15, 2018, including interim periods within those fiscal years, for any of the following: * Public
business entities. * Not-for-profit entities that have issued, or are a conduit bond obligor for, securities that are traded,
listed, or quoted on an exchange or an over-the-counter market. * Employee benefit plans that file financial statements with
the SEC. For all other entities, the amendments in the ASU are effective for fiscal years beginning after December 15,
2019, and interim periods within fiscal years beginning after December 15, 2020. Early application of the amendments in
the ASU is permitted for all entities.
Presentation > 275 Risks and Uncertainties > 10 Overall > 50 Disclosure > General
Has the entity disclosed in the financial statements the risks and
uncertainties in the nature of operations, use of estimates in the
preparation of financial statements, certain significant estimates,
and current vulnerability due to certain concentrations existing as
of the date of those statements? [ASC 275-10-50-1]
FASB Codification:
50-1
{All of the disclosures required by this Subtopic shall be included in the basic financial statements. [SOP 94-6, paragraph 28
B44] }{Reporting entities shall make disclosures in their financial statements about the risks and uncertainties existing as of the date of
those statements in the following areas: [SOP 94-6, paragraph 8] }
a.
{Nature of operations [SOP 94-6, paragraph 8] }{, including the activities in which the entity is currently engaged if principal
operations have not commenced [ASU 2014-10, paragraph 8] }
b.
{Use of estimates in the preparation of financial statements [SOP 94-6, paragraph 8] }
c.
{Certain significant estimates [SOP 94-6, paragraph 8] }
d.
{Current vulnerability due to certain concentrations. [SOP 94-6, paragraph 8] }
{These four areas of disclosure are not mutually exclusive. The information required by some may overlap. Accordingly, the disclosures
required by this Subtopic may be combined in various ways, grouped together, or placed in diverse parts of the financial statements, or
included as part of the disclosures made pursuant to the requirements of other Topics. [SOP 94-6, paragraph 8] }
Consideration Points:
The pending content resulting from the issuance of ASU 2014-10 updated the disclosure requirements in ASC section 27510-50. The pending content resulting from the issuance of this ASU amended paragraph ASC 275-10-50-1. The resulting
amendments are effective for public business entities for annual reporting periods beginning after December 15, 2014, and
interim periods therein. For other entities, these amendments are effective for annual reporting periods beginning after
December 15, 2014, and interim reporting periods beginning after December 15, 2015. Early application of the
amendments is permitted for any annual reporting period or interim reporting period for which the entity's financial
statements have not been issued (public business entities) or made available for issuance (other entities).
Do the financial statements include a description of the major
products or services the reporting entity sells or provides and its
principal markets, including the locations of those markets? [ASC
275-10-50-2 through 50-3]
03/09/2023 11:15 AM EST
Page 152 / 1816
FASB Codification:
50-2
{If an entity has commenced planned principal operations, the entity’s [ASU 2014-10, paragraph 8] }{financial statements shall
include a description of the major products or services the reporting entity sells or provides and its principal markets, including the
locations of those markets. If the entity operates in more than one business, the disclosure also shall indicate the relative importance of
its operations in each business and the basis for this determination—for example, assets, revenues, or earnings. Not-for-profit entities'
(NFPs') disclosures should briefly describe the principal services performed by the entity and the revenue sources for the entity's
services. Disclosures about the nature of operations or activities need not be quantified; relative importance could be conveyed by use
of terms such as predominately, about equally, or major and other. [SOP 94-6, paragraph 10] }
Consideration Points:
The pending content resulting from the issuance of ASU 2014-10 updated the disclosure requirements in ASC section 27510-50. The pending content resulting from the issuance of this ASU amended paragraph ASC 275-10-50-2. The resulting
amendments are effective for public business entities for annual reporting periods beginning after December 15, 2014, and
interim periods therein. For other entities, these amendments are effective for annual reporting periods beginning after
December 15, 2014, and interim reporting periods beginning after December 15, 2015. Early application of the
amendments is permitted for any annual reporting period or interim reporting period for which the entity's financial
statements have not been issued (public business entities) or made available for issuance (other entities).
If the entity operates in more than one business, does the
disclosure also indicate the relative importance of its operations in
each business and the basis for this determination - for example,
assets, revenues, or earnings? [ASC 275-10-50-2]
Consideration Points:
To view the text of ASC 275-10-50-2, select 50-2 in the navigation tree.
If applicable, do not-for-profit entities' (NFPs') disclosures briefly
describe the principal services performed by the entity and the
revenue sources for the entity's services? [ASC 275-10-50-2]
Consideration Points:
To view the text of ASC 275-10-50-2, select 50-2 in the navigation tree.
Is the entity in compliance with the guidance in ASC 275-10-502A?
FASB Codification:
50-2A
{An entity that has not commenced principal operations shall provide disclosures about the risks and uncertainties related to
the activities in which the entity is currently engaged and an understanding of what those activities are being directed toward. [ASU
2014-10, paragraph 8] }
Consideration Points:
The pending content resulting from the issuance of ASU 2014-10 updated the disclosure requirements in ASC section 27510-50. The pending content resulting from the issuance of this ASU added paragraph ASC 275-10-50-2A. The resulting
amendments are effective for public business entities for annual reporting periods beginning after December 15, 2014, and
interim periods therein. For other entities, these amendments are effective for annual reporting periods beginning after
December 15, 2014, and interim reporting periods beginning after December 15, 2015. Early application of the
amendments is permitted for any annual reporting period or interim reporting period for which the entity's financial
statements have not been issued (public business entities) or made available for issuance (other entities).
03/09/2023 11:15 AM EST
Page 153 / 1816
Do the financial statements include an explanation that the
preparation of financial statements in conformity with generally
accepted accounting principles (GAAP) requires the use of
management's estimates? [ASC 275-10-50-4 and 50-5]
FASB Codification:
>
Use of Estimates in the Preparation of Financial Statements
50-4
{Financial statements shall include an explanation that the preparation of financial statements in conformity with generally
accepted accounting principles (GAAP) requires the use of management's estimates. [SOP 94-6, paragraph 11] }
50-5
See Example 3 (paragraph 275-10-55-6) for an illustration of the disclosure requirements of the pervasiveness of estimates in
the preparation of financial statements.
Has an entity included a discussion of estimates when, based on
known information available before the financial statements are
issued or are available to be issued, it is reasonably possible that
the estimate will change in the near term and the effect of the
change will be material? [ASC 275-10-50-6]
FASB Codification:
50-6
{This Subtopic requires discussion of estimates when, based on known information available before the financial statements are
issued or are available to be issued (as discussed in Section 855-10-25), it is reasonably possible that the estimate will change in the
near term and the effect of the change will be material. The estimate of the effect of a change in a condition, situation, or set of
circumstances that existed at the date of the financial statements shall be disclosed and the evaluation shall be based on known
information available before the financial statements are issued or are available to be issued (as discussed in Section 855-10-25).
[SOP 94-6, paragraph 28 B41] }
Consideration Points:
Refer to ASC 275-10-50-15 for examples of assets and liabilities and related revenues and expenses, and of disclosure of gain
or loss contingencies included in financial statements that, based on facts and circumstances existing at the date of the
financial statements, may be based on estimates that are particularly sensitive to change in the near term. ASU 2016-19
Section 275-10-50 has been updated as the result of the issuance of ASU 2016-19. The pending content resulting from the
issuance of this ASU amended paragraph 275-10-50-6. The amendments in this Update apply to all reporting entities
within the scope of the affected accounting guidance. Most of the amendments are effective upon issuance of this Update.
Early adoption is permitted for the amendments that require transition guidance and those are amendments to the following
Subtopics: Subtopic 350-40, Subtopic 360-20, Topic 820, Subtopic 405-40, Subtopic 860-20 and Subtopic 860-50.
Has disclosure regarding an estimate been made if known
information available before the financial statements are issued or
are available to be issued (as discussed in Section 855-10-25)
indicates that both of the following criteria are met: (1) it is at least
reasonably possible that the estimate of the effect on the financial
statements of a condition, situation, or set of circumstances that
existed at the date of the financial statements will change in the
near term due to one or more future confirming events; and (2) the
effect of the change would be material to the financial statements?
[ASC 275-10-50-8]
03/09/2023 11:15 AM EST
Page 154 / 1816
FASB Codification:
50-8
{Disclosure regarding an estimate shall be made when known information available before the financial statements are issued
or are available to be issued (as discussed in Section 855-10-25) indicates that both of the following criteria are met: [SOP 94-6,
paragraph 13] }
a.
{It is at least reasonably possible that the estimate of the effect on the financial statements of a condition, situation, or set of
circumstances that existed at the date of the financial statements will change in the near term due to one or more future
confirming events. [SOP 94-6, paragraph 13] }
b.
{The effect of the change would be material to the financial statements. [SOP 94-6, paragraph 13] }
Consideration Points:
In determining whether disclosure about an estimate of the useful life of an intangible asset is required under paragraph
275-10-50-8, the criterion in item (2) of that paragraph shall be considered met if the effect of either of the following would
be material to the financial statements, either individually or in aggregate by major intangible asset class: (1) a change in
the useful life of an intangible; or (2) change in the expected likelihood of renewal or extension of an intangible asset. ASU
2016-19 Section 275-10-50 has been updated as the result of the issuance of ASU 2016-19. The pending content resulting
from the issuance of this ASU amended paragraph 275-10-50-8. The amendments in this Update apply to all reporting
entities within the scope of the affected accounting guidance. Most of the amendments are effective upon issuance of this
Update. Early adoption is permitted for the amendments that require transition guidance and those are amendments to the
following Subtopics: Subtopic 350-40, Subtopic 360-20, Topic 820, Subtopic 405-40, Subtopic 860-20 and Subtopic 86050. ?
Has disclosure indicated the nature of the uncertainty and include
an indication that it is at least reasonably possible that a change in
the estimate will occur in the near term, and if the estimate
involves a loss contingency covered by Subtopic 450-20, has the
disclosure included an estimate of the possible loss or range of loss,
or state that such an estimate cannot be made? [ASC 275-10-50-9]
FASB Codification:
50-9
{The disclosure shall indicate the nature of the uncertainty and include an indication that it is at least reasonably possible that a
change in the estimate will occur in the near term. If the estimate involves a loss contingency covered by Subtopic 450-20, the
disclosure also shall include an estimate of the possible loss or range of loss, or state that such an estimate cannot be made. Disclosure
of the factors that cause the estimate to be sensitive to change is encouraged but not required. [SOP 94-6, paragraph 14] }{The words
reasonably possible need not be used in the disclosures required by this Subtopic. [SOP 94-6, paragraph 14] }
Consideration Points:
Disclosure of the factors that cause the estimate to be sensitive to change is encouraged but not required.
If an estimate (including estimates that involve contingencies
covered by Topic 450) meets the criteria for disclosure under
paragraph 275-10-50-8, has the entity disclosed an indication that
it is at least reasonably possible that a change in the estimate will
occur in the near term and if an estimate that does not involve a
contingency covered by Topic 450, such as estimates associated
with long-term operating assets and amounts reported under
profitable long-term contracts, meets the criteria in paragraph 27510-50-8, has the entity disclosed the nature of the estimate and an
indication that it is at least reasonably possible that a change in the
estimate will occur in the near term? [ASC 275-10-50-11]
03/09/2023 11:15 AM EST
Page 155 / 1816
FASB Codification:
50-11
{This Subtopic's disclosure requirements are separate from and do not change in any way the disclosure requirements or
criteria of Topic 450; rather, the disclosures required under this Subtopic supplement the disclosures required under that Topic as
follows: [SOP 94-6, paragraph 16] }
a.
{If an estimate (including estimates that involve contingencies covered by Topic 450) meets the criteria for disclosure under
paragraph 275-10-50-8, this Subtopic requires disclosure of an indication that it is at least reasonably possible that a change in
the estimate will occur in the near term; Topic 450 does not distinguish between near-term and long-term contingencies. [SOP
94-6, paragraph 16] }
b.
{An estimate that does not involve a contingency covered by Topic 450, such as estimates associated with long-term operating
assets and amounts reported under profitable long-term contracts, may meet the criteria in paragraph 275-10-50-8. This
Subtopic requires disclosure of the nature of the estimate and an indication that it is at least reasonably possible that a change in
the estimate will occur in the near term. [SOP 94-6, paragraph 16] }
Has the entity disclosed the concentrations as described in
paragraph 275-10-50-18 if, based on information known to
management before the financial statements are issued or are
available to be issued (as discussed in Section 855-10-25), all of the
following criteria are met: (1) the concentration exists at the date of
the financial statements; (2) the concentration makes the entity
vulnerable to the risk of a near-term severe impact; and (3) it is at
least reasonably possible that the events that could cause the
severe impact will occur in the near term? [ASC 275-10-50-16]
FASB Codification:
50-16
{Vulnerability from concentrations arises because an entity is exposed to risk of loss greater than it would have had it
mitigated its risk through diversification. Such risks of loss manifest themselves differently, depending on the nature of the
concentration, and vary in significance. [SOP 94-6, paragraph 20] }{Financial statements shall disclose the concentrations described in
paragraph 275-10-50-18 if, based on information known to management before the financial statements are issued or are available to
be issued (as discussed in Section 855-10-25), all of the following criteria are met: [SOP 94-6, paragraph 21] }
a.
{The concentration exists at the date of the financial statements. [SOP 94-6, paragraph 21] }
b.
{The concentration makes the entity vulnerable to the risk of a near-term severe impact. [SOP 94-6, paragraph 21] }
c.
{It is at least reasonably possible that the events that could cause the severe impact will occur in the near term. [SOP 94-6,
paragraph 21] }
Consideration Points:
Refer to 270-10-50-18 for categories of concentrations that may exist.
Does the disclosure of concentrations meeting the criteria of
paragraph 275-10-50-16 include information that is adequate to
inform users of the general nature of the risk associated with the
concentration? [ASC 275-10-50-20]
03/09/2023 11:15 AM EST
Page 156 / 1816
FASB Codification:
50-20
{Disclosure of concentrations meeting the criteria of paragraph 275-10-50-16 shall include information that is adequate to
inform users of the general nature of the risk associated with the concentration. For those concentrations of labor (see paragraph 27510-50-18(c)) subject to collective bargaining agreements and concentrations of operations located outside of the entity's home country
(see paragraph 275-10-50-18(d)) that meet the criteria in paragraph 275-10-50-16, the following specific disclosures are required:
[SOP 94-6, paragraph 24] }
a.
{For labor subject to collective bargaining agreements, disclosure shall include both the percentage of the labor force covered by
a collective bargaining agreement and the percentage of the labor force covered by a collective bargaining agreement that will
expire within one year. [SOP 94-6, paragraph 24] }
b.
{For operations located outside the entity's home country, disclosure shall include the carrying amounts of net assets and the
geographic areas in which they are located. [SOP 94-6, paragraph 24] }
{ This Subtopic does not, however, prohibit entities from also stating in disclosures of concentrations related to customers, grantors, or
contributors or operations located outside the entity's home country that the entity does not expect that the business relationship will be
lost or does not expect that the foreign operations will be disrupted if such is the case. [SOP 94-6, paragraph 28 B31] }
For those concentrations of labor (see paragraph 275-10-50-18(c))
subject to collective bargaining agreements and concentrations of
operations located outside of the entity's home country (see
paragraph 275-10-50-18(d)) that meet the criteria in paragraph
275-10-50-16, have the following specific disclosures been provided:
(1) for labor subject to collective bargaining agreements, disclosure
includes both the percentage of the labor force covered by a
collective bargaining agreement and the percentage of the labor
force covered by a collective bargaining agreement that will expire
within one year; (2) for operations located outside the entity's home
country, disclosure includes the carrying amounts of net assets and
the geographic areas in which they are located? [ASC 275-10-5020(a)-(b)]
Consideration Points:
To view the text of ASC 275-10-50-20, select 50-20 in the navigation tree.
Presentation > 280 Segment Reporting > 10 Overall > 50 Disclosure > General
ASC 280-10-50-1 through 50-9 provide characteristics of operating
segments. An entity should consider these characteristics when it
evaluates whether it is in compliance with the disclosure guidance
in ASC 280-10-50. Has the entity properly identified all of its
operating segments in accordance with the disclosure requirements
in ASC 280-10-50-1 through 50-9? [ASC 280-10-50-1 through 509]
Consideration Points:
Note: To review the disclosure requirements in paragraphs 50-1 through 50-9, click "Operating Segments" in the navigation
tree.
03/09/2023 11:15 AM EST
Page 157 / 1816
Has information about each reportable segment been disclosed
properly? [ASC 280-10-50-10]
FASB Codification:
>
Reportable Segments
50-10
{ A public entity shall report separately information about each operating segment that meets both of the following criteria:
[FAS 131, paragraph 16] }
a.
{Has been identified in accordance with paragraphs 280-10-50-1 and 280-10-50-3 through 50-9 or results from aggregating
two or more of those segments in accordance with the following paragraph [FAS 131, paragraph 16] }
b.
{Exceeds the quantitative thresholds in paragraph 280-10-50-12. [FAS 131, paragraph 16] }
{Paragraphs 280-10-50-13 through 50-18 specify other situations in which separate information about an operating segment shall be
reported. Paragraph 280-10-55-26 and Examples 1 and 2 (see paragraphs 280-10-55-27 through 55-45) illustrate how to apply the
main provisions in this Subtopic for identifying reportable operating segments. [FAS 131, paragraph 16] }
If two or more operating segments have been aggregated into a
single operating segment, have all of the aggregation criteria been
met? [ASC 280-10-50-11]
FASB Codification:
>
Aggregation Criteria
50-11
{Operating segments often exhibit similar long-term financial performance if they have similar economic characteristics. For
example, similar long-term average gross margins for two operating segments would be expected if their economic characteristics were
similar. Two or more operating segments may be aggregated into a single operating segment if aggregation is consistent with the
objective and basic principles of this Subtopic, if the segments have similar economic characteristics, and if the segments are similar in
all of the following areas (see paragraphs 280-10-55-7A through 55-7C and Example 2, Cases A and B [paragraphs 280-10-55-33
through 55-36]): [FAS 131, paragraph 17] }
a.
{The nature of the products and services [FAS 131, paragraph 17] }
b.
{The nature of the production processes [FAS 131, paragraph 17] }
c.
{The type or class of customer for their products and services [FAS 131, paragraph 17] }
d.
{The methods used to [FAS 131, paragraph 17] }{distribute their products or provide their services [FAS 131, paragraph 17] }
e.
{If applicable, the nature of the regulatory environment, for example, banking, insurance, or public utilities. [FAS 131,
paragraph 17] }
Has the entity reported separately information about its operating
segments when certain quantitative thresholds are met (or,
regardless of the threshold, if management believes the information
about the segment would be useful to readers of the financial
statements) and is the information disclosed properly? [ASC 28010-50-12 through 50-19]
03/09/2023 11:15 AM EST
Page 158 / 1816
FASB Codification:
>
Quantitative Thresholds
50-12
{A public entity shall report separately information about an operating segment that meets any of the following quantitative
thresholds (see Example 2, Cases C, D, and E [paragraphs 280-10-55-39 through 55-45]): [FAS 131, paragraph 18] }
a.
{Its reported revenue, including both sales to external customers and intersegment sales or transfers, is 10 percent or more of
the combined revenue, internal and external, of all operating segments. [FAS 131, paragraph 18] }
b.
{The absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount, of either: [FAS 131,
paragraph 18] }
c.
1.
{The combined reported profit of all operating segments that did not report a loss [FAS 131, paragraph 18] }
2.
{The combined reported loss of all operating segments that did report a loss. [FAS 131, paragraph 18] }
{Its assets are 10 percent or more of the combined assets of all operating segments. [FAS 131, paragraph 18] }
{ Operating segments that do not meet any of the quantitative thresholds may be considered reportable, and separately disclosed, if
management believes that information about the segment would be useful to readers of the financial statements. [FAS 131,
paragraph 18] }
50-13
{An entity may combine information about operating segments that do not meet the quantitative thresholds with information
about other operating segments that do not meet the quantitative thresholds to produce a reportable segment only if [FAS 131,
paragraph 19] }{aggregation is consistent with the objective and basic principles of this Topic, the segments have similar economic
characteristics, and [EITF 04-10, paragraph DISCUSSION] }{the operating segments share a majority of the aggregation criteria listed
in paragraph 280-10-50-11. [FAS 131, paragraph 19] }
50-14
{If total of external revenue reported by operating segments constitutes less than 75 percent of total consolidated revenue,
additional operating segments shall be identified as reportable segments (even if they do not meet the criteria in paragraph 280-1050-12) until at least 75 percent of total consolidated revenue is included in reportable segments. [FAS 131, paragraph 20] }
50-15
{Information about other business activities and operating segments that are not reportable shall be combined and disclosed in
an all other category separate from other reconciling items in the reconciliations required by paragraphs 280-10-50-30 through 5031. The sources of the revenue included in the all other category shall be described. [FAS 131, paragraph 21] }
50-16
{If management judges an operating segment identified as a reportable segment in the immediately preceding period to be of
continuing significance, information about that segment shall continue to be reported separately in the current period even if it no
longer meets the criteria for reportability in paragraph 280-10-50-12. [FAS 131, paragraph 22] }
50-17
{If an operating segment is identified as a reportable segment in the current period due to the quantitative thresholds, prior-
period segment data presented for comparative purposes shall be restated to reflect the newly reportable segment as a separate
segment even if that segment did not satisfy the criteria for reportability in paragraph 280-10-50-12 in the prior period unless it is
impracticable to do so. For purposes of this Subtopic, information is impracticable to present if the necessary information is not
available and the cost to develop it would be excessive. [FAS 131, paragraph 23] }
50-18
{There may be a practical limit to the number of reportable segments that a public entity separately discloses beyond which
segment information may become overly detailed. Although no precise limit has been determined, as the number of segments that are
reportable in accordance with paragraphs 280-10-50-12 through 50-17 increases above 10, the public entity should consider whether
a practical limit has been reached. [FAS 131, paragraph 24] }
50-18A
{An entity need not aggregate similar segments, and it may present segments that fall below the quantitative thresholds.
[FAS 131, paragraph 72] }
50-19
{Public entities are encouraged to report information about segments that do not meet the quantitative thresholds if
management believes that it is material. Those who are familiar with the particular circumstances of each public entity must decide
what constitutes material. [FAS 131, paragraph 78] }
03/09/2023 11:15 AM EST
Page 159 / 1816
Is required information about operating segments disclosed properly
for each period in which an income statement is presented and are
consolidate balance sheet amounts reconciled to the reportable
segments for each year in which the balance sheet is presented?
[ASC 280-10-50-20]
FASB Codification:
50-20
{A public entity shall disclose all of the following for each period for which an income statement is presented. [FAS 131,
paragraph 25] }{However, reconciliations of balance sheet amounts for reportable segments to consolidated balance sheet amounts are
required only for each year for which a balance sheet is presented. Previously reported information for prior periods shall be restated
as described in paragraphs 280-10-50-34 through 50-35. [FAS 131, paragraph 25] }
Has the entity disclosed the factors used to identify its reportable
segments and the types of products and services from which it
derives its revenues? [ASC 280-10-50-21]
FASB Codification:
>
General Information
50-21
{A public entity shall disclose the following general information (see Example 3, Case A [paragraph 280-10-55-47]): [FAS
131, paragraph 26] }
a.
{Factors used to identify the public entity's reportable segments, including the basis of organization (for example, whether
management has chosen to organize the public entity around differences in products and services, geographic areas, regulatory
environments, or a combination of factors and whether operating segments have been aggregated) [FAS 131, paragraph 26] }
b.
{Types of products and services from which each reportable segment derives its revenues. [FAS 131, paragraph 26] }
Is information about profit or loss and assets disclosed properly for
each reportable segment? [ASC 280-10-50-22 through 50-29]
FASB Codification:
>
Information about Profit or Loss and Assets
50-22
{A public entity shall report a measure of profit or loss and total assets for each reportable segment. A public entity also shall
disclose all of the following about each reportable segment if the specified amounts are included in the measure of segment profit or
loss reviewed by the chief operating decision maker or are otherwise regularly provided to the chief operating decision maker, even if
not included in that measure of segment profit or loss (see Example 3, Case B [paragraph 280-10-55-48]): [FAS 131, paragraph 27] }
a.
{Revenues from external customers [FAS 131, paragraph 27] }
b.
{Revenues from transactions with other operating segments of the same public entity [FAS 131, paragraph 27] }
c.
{Interest revenue [FAS 131, paragraph 27] }
d.
{Interest expense [FAS 131, paragraph 27] }
e.
{Depreciation, depletion, and amortization expense [FAS 131, paragraph 27] }
f.
{Unusual items as described in paragraph 220-20-45-1 [FAS 131, paragraph 27] }
03/09/2023 11:15 AM EST
Page 160 / 1816
g.
{Equity in the net income of investees accounted for by the equity method [FAS 131, paragraph 27] }
h.
{Income tax expense or benefit [FAS 131, paragraph 27] }
i.
[Subparagraph superseded by Accounting Standards Update No. 2015-01 superseded by Accounting Standards Update]
j.
{Significant noncash items other than depreciation, depletion, and amortization expense. [FAS 131, paragraph 27] }
{ A public entity shall report interest revenue separately from interest expense for each reportable segment unless a majority of the
segment’s revenues are from interest and the chief operating decision maker relies primarily on net interest revenue to assess the
performance of the segment and make decisions about resources to be allocated to the segment. In that situation, a public entity may
report that segment’s interest revenue net of its interest expense and disclose that it has done so. [FAS 131, paragraph 27] }
50-23
{Disclosure of interest revenue and interest expense included in reported segment profit or loss is intended to provide
information about the financing activities of a segment. [FAS 131, paragraph 95] }
50-24
{If a segment is primarily a financial operation, interest revenue probably constitutes most of segment revenues and interest
expense will constitute most of the difference between reported segment revenues and reported segment profit or loss. If the segment
has no financial operations or only immaterial financial operations, no information about interest is required. [FAS 131, paragraph 95]
}
50-25
{A public entity shall disclose both of the following about each reportable segment if the specified amounts are included in the
determination of segment assets reviewed by the chief operating decision maker or are otherwise regularly provided to the chief
operating decision maker, even if not included in the determination of segment assets: [FAS 131, paragraph 28] }
a.
{The amount of investment in equity method investees [FAS 131, paragraph 28] }
b.
{Total expenditures for additions to long-lived assets other than any of the following (see Example 3, Case B [paragraph 280-1055-48]): [FAS 131, paragraph 28] }
50-26
1.
{Financial instruments [FAS 131, paragraph 28] }
2.
{Long-term customer relationships of a financial institution [FAS 131, paragraph 28] }
3.
{Mortgage and other servicing rights [FAS 131, paragraph 28] }
4.
{Deferred policy acquisition costs [FAS 131, paragraph 28] }
5.
{Deferred tax assets. [FAS 131, paragraph 28] }
{If no asset information is provided for a reportable segment, that fact and the reason therefore shall be disclosed. [QA 131,
paragraph 4] }
> >
50-27
Measurement
{The amount of each segment item reported shall be the measure reported to the chief operating decision maker for purposes
of making decisions about allocating resources to the segment and assessing its performance. Adjustments and eliminations made in
preparing a public entity's general-purpose financial statements and allocations of revenues, expenses, and gains or losses shall be
included in determining reported segment profit or loss only if they are included in the measure of the segment’s profit or loss that is
used by the chief operating decision maker. Similarly, only those assets that are included in the measure of the segment’s assets that is
used by the chief operating decision maker shall be reported for that segment. If amounts are allocated to reported segment profit or
loss or assets, those amounts shall be allocated on a reasonable basis. [FAS 131, paragraph 29] }
50-28
{If the chief operating decision maker uses only one measure of a segment's profit or loss and only one measure of a segment’s
assets in assessing segment performance and deciding how to allocate resources, segment profit or loss and assets shall be reported at
03/09/2023 11:15 AM EST
Page 161 / 1816
those measures. If the chief operating decision maker uses more than one measure of a segment's profit or loss and more than one
measure of a segment’s assets, the reported measures shall be those that management believes are determined in accordance with the
measurement principles most consistent with those used in measuring the corresponding amounts in the public entity's consolidated
financial statements. [FAS 131, paragraph 30] }
50-29
{A public entity shall provide an explanation of the measurements of segment profit or loss and segment assets for each
reportable segment. At a minimum, a public entity shall disclose all of the following (see Example 3, Cases A through C [paragraphs
280-10-55-47 through 55-49]): [FAS 131, paragraph 31] }
a.
{The basis of accounting for any transactions between reportable segments. [FAS 131, paragraph 31] }
b.
{The nature of any differences between the measurements of the reportable segments' profits or losses and the public entity's
consolidated income before income taxes and discontinued operations (if not apparent from the reconciliations described in
paragraphs 280-10-50-30 through 50-31). Those differences could include accounting policies and policies for allocation of
centrally incurred costs that are necessary for an understanding of the reported segment information. [FAS 131, paragraph 31] }
c.
{The nature of any differences between the measurements of the reportable segments’ assets and the public entity's consolidated
assets (if not apparent from the reconciliations described in paragraphs 280-10-50-30 through 50-31). Those differences could
include accounting policies and policies for allocation of jointly used assets that are necessary for an understanding of the
reported segment information. [FAS 131, paragraph 31] }
d.
{The nature of any changes from prior periods in the measurement methods used to determine reported segment profit or loss
and the effect, if any, of those changes on the measure of segment profit or loss. [FAS 131, paragraph 31] }
e.
{The nature and effect of any asymmetrical allocations to segments. For example, a public entity might allocate depreciation
expense to a segment without allocating the related depreciable assets to that segment. [FAS 131, paragraph 31] }
Consideration Points:
Section 270-10-50 has been updated as the result of the issuance of ASU 2015-01. The pending content resulting from the
issuance of this ASU amended paragraphs 270-10-50-22(i) and 50-29(b). The amendments in this Update are effective for
fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply
the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods
presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning
of the fiscal year of adoption.
Has the entity provided reconciliations reportable segment
information to the consolidated financial information? [ASC 280-1050-30 and 50-31]
03/09/2023 11:15 AM EST
Page 162 / 1816
FASB Codification:
>
Reconciliations
50-30
{A public entity shall provide reconciliations of all of the following (see Example 3, Case C [paragraphs 280-10-55-49
through 55-50]): [FAS 131, paragraph 32] }
a.
{The total of the reportable segments’ revenues to the public entity's consolidated revenues. [FAS 131, paragraph 32] }
b.
{The total of the reportable segments’ measures of profit or loss to the public entity's consolidated income before income taxes
and discontinued operations. However, if a public entity allocates items such as income taxes to segments, the public entity may
choose to reconcile the total of the segments’ measures of profit or loss to consolidated income after those items. [FAS 131,
paragraph 32] }
c.
{The total of the reportable segments’ assets to the public entity's consolidated assets. [FAS 131, paragraph 32] }
d.
{The total of the reportable segments’ amounts for every other significant item of information disclosed to the corresponding
consolidated amount. For example, a public entity may choose to disclose liabilities for its reportable segments, in which case the
public entity would reconcile the total of reportable segments’ liabilities for each segment to the public entity's consolidated
liabilities if the segment liabilities are significant. [FAS 131, paragraph 32] }
50-31
{All significant reconciling items shall be separately identified and described. For example, the amount of each significant
adjustment to reconcile accounting methods used in determining segment profit or loss to the public entity's consolidated amounts shall
be separately identified and described. [FAS 131, paragraph 32] }
Consideration Points:
Section 280-10-50 has been updated as the result of the issuance of ASU 2015-01. The pending content resulting from the
issuance of this ASU amended paragraphs 280-10-50-30(b). The amendments in this Update are effective for fiscal years,
and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the
amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented
in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the
fiscal year of adoption
Is information about each reportable segment disclosed properly in
condensed financial statements of interim periods? [ASC 280-1050-32 and 50-33]
03/09/2023 11:15 AM EST
Page 163 / 1816
FASB Codification:
>
Interim Period Information
50-32
{A public entity shall disclose all of the following about each reportable segment in condensed financial statements of interim
periods: [FAS 131, paragraph 33] }
a.
{Revenues from external customers [FAS 131, paragraph 33] }
b.
{Intersegment revenues [FAS 131, paragraph 33] }
c.
{A measure of segment profit or loss [FAS 131, paragraph 33] }
d.
{Total assets for which there has been a material change from the amount disclosed in the last annual report [FAS 131,
paragraph 33] }
e.
{A description of differences from the last annual report in the basis of segmentation or in the basis of measurement of segment
profit or loss [FAS 131, paragraph 33] }
f.
{A reconciliation of the total of the reportable segments’ measures of profit or loss to the public entity's consolidated income
before income taxes and discontinued operations. However, if a public entity allocates items such as income taxes to segments,
the public entity may choose to reconcile the total of the segments’ measures of profit or loss to consolidated income after those
items. Significant reconciling items shall be separately identified and described in that reconciliation. [FAS 131, paragraph 33] }
50-33
{Interim disclosures are required for the current quarter and year-to-date amounts. [QA 131, paragraph 19] }{Paragraph
270-10-50-1 states that when [QA 131, paragraph 19] }{summarized financial data are regularly reported on a quarterly basis, the
information in the previous paragraph with respect to the current quarter and the current year-to-date or the last 12 months to date
should be furnished together with comparable data for the preceding year. [QA 131, paragraph 19] }
Consideration Points:
Section 280-10-50 has been updated as the result of the issuance of ASU 2015-01. The pending content resulting from the
issuance of this ASU amended paragraphs 280-10-50-32(f). The amendments in this Update are effective for fiscal years,
and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the
amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented
in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the
fiscal year of adoption.
If the composition of an entity's reportable segments has changed,
is the corresponding information for earlier periods restated
properly? [ASC 280-10-50-34 through 50-36]
03/09/2023 11:15 AM EST
Page 164 / 1816
FASB Codification:
>
Restatement of Previously Reported Information
50-34
{If a public entity changes the structure of its internal organization in a manner that causes the composition of its reportable
segments to change, the corresponding information for earlier periods, including interim periods, shall be restated unless it is
impracticable to do so. Accordingly, a public entity shall restate those individual items of disclosure that it can practicably restate but
need not restate those individual items, if any, that it cannot practicably restate. Following a change in the composition of its reportable
segments, a public entity shall disclose whether it has restated the corresponding items of segment information for earlier periods.
[FAS 131, paragraph 34] }
50-34A
{For example, a fundamental reorganization of an entity may cause it to be very difficult and expensive to restate segment
information and therefore it may not be practicable. [FAS 131, paragraph 100] }
50-35
{If a public entity has changed the structure of its internal organization in a manner that causes the composition of its
reportable segments to change and if segment information for earlier periods, including interim periods, is not restated to reflect the
change, the public entity shall disclose in the year in which the change occurs segment information for the current period under both the
old basis and the new basis of segmentation unless it is impracticable to do so. [FAS 131, paragraph 35] }
50-36
{Although restatement is not required to reflect a change in measurement of segment profit and loss, it is preferable to show
all segment information on a comparable basis to the extent it is practicable to do so. If prior years' information is not restated,
paragraph 280-10-50-29(d) nonetheless requires disclosure of the nature of any changes from prior periods in the measurement
methods used to determine reported segment profit or loss and the effect, if any, of those changes on the measure of segment profit or
loss. [QA 131, paragraph 19A] }
50-37
[Paragraph Not Used not used]
If not already provided as part of the reportable segment
information, is entity-wide information about products and services,
geographic area and major customers (as required by paragraphs
280-10-50-40 through 40-42) provided on an annual basis? [ASC
280-10-50-38 and 50-42]
FASB Codification:
>
Entity-Wide Information
50-38
{Paragraphs 280-10-50-40 through 50-42 apply to all public entities subject to this Subtopic including those public entities
that have a single reportable segment. Some public entities' business activities are not organized on the basis of differences in related
products and services or differences in geographic areas of operations. That is, a public entity's segments may report revenues from a
broad range of essentially different products and services, or more than one of its reportable segments may provide essentially the
same products and services. Similarly, a public entity's segments may hold assets in different geographic areas and report revenues
from customers in different geographic areas, or more than one of its segments may operate in the same geographic area. Information
required by paragraphs 280-10-50-40 through 50-42 need be provided only if it is not provided as part of the reportable operating
segment information required by this Subtopic. [FAS 131, paragraph 36] }
50-39
{Entity-wide disclosures are required only for annual reporting. [QA 131, paragraph 18] }
Consideration Points:
To view paragraphs 280-10-50-40 through 50-42, click Disclosure Requirements in the navigation tree and scroll to the end
of the page.
Assets > 310 Receivables > 10 Overall > 25 Recognition > General
Is the entity in compliance with the guidance in ASC 310-10-25:
Recognition of Certain Types of Receivables?
FASB Codification:
03/09/2023 11:15 AM EST
>
Page 165 / 1816
Recognition of Certain Types of Receivables
25-2
The following guidance addresses issues related to recognition of various types of receivables, specifically:
a.
Factoring arrangements
b.
Loan syndications and loan participations
c.
Standby commitments
d.
Credit card portfolio purchased
e.
Secured loans.
Such receivables may be originated by an entity or purchased from a third party.
> >
Factoring Arrangements
25-3
{Transfers of receivables under factoring arrangements meeting the sale criteria of paragraph 860-10-40-5 shall be accounted
for by the factor as purchases of receivables. [SOP 01-6, paragraph 8] }{The acquisition of receivables and accounting for purchase
discounts such as factoring commissions shall be recognized in accordance with Subtopic 310-20. [SOP 01-6, paragraph 8] }{Factoring
commissions under these arrangements shall be recognized over the period of the loan contract in accordance with that Subtopic. That
period begins when a finance company or an entity with financing activities including trade receivables funds a customer’s credit and
ends when the customer’s account is settled. [SOP 01-6, paragraph 8] }
> >
Loan Syndications and Loan Participations
25-4
{Each lender in a syndication shall account for the amounts it is owed by the borrower. Repayments by the borrower may be
made to a lead lender that then distributes the collections to the other lenders of the syndicate. In those circumstances, the lead lender
is simply functioning as a servicer and, therefore, shall not recognize the aggregate loan as an asset. [FAS 140, paragraph 103] }
25-5
See paragraph 860-10-55-61 for guidance on accounting for loan participations.
> >
Standby Commitments to Purchase Loans
25-6
{Paragraph 815-10-15-70 states that commitments to purchase or sell mortgage loans or other types of loans at a future date
[DIG C13, paragraph RESPONSE] }{must be evaluated under the definition of a derivative instrument to determine whether Subtopic
815-10 applies. [DIG C13, paragraph RESPONSE] }{This paragraph applies only to a standby commitment to purchase loans and only
if that commitment is within the scope of this Subtopic. It does not apply to other customary kinds of commitments to purchase loans,
nor does it apply to commitments to originate loans. [SOP 01-6, paragraph 8] }{If the settlement date is within a reasonable period,
for example, a normal loan commitment period, and the entity has the intent and ability to accept delivery without selling assets, a
standby commitment within the scope of this Subtopic shall be viewed as part of the normal production of loans. [SOP 01-6,
paragraph 8] }{ However, if the settlement date is not within a reasonable period, or the entity does not have the intent and ability to
accept delivery without selling assets, the standby commitment shall be accounted for as a written put option. [SOP 01-6, paragraph 8]
}
> >
Credit Card Portfolio Purchased
25-7
{When an entity purchases a credit card portfolio that includes the cardholder relationships at an amount that exceeds the sum of
the amounts due under the credit card receivables, the difference between the amount paid and the sum of the balances of the credit
card loans at the date of purchase (the premium) shall be allocated between the cardholder relationships acquired and the loans
acquired. [EITF 88-20, paragraph DISCUSSION] }{The premium relating to the cardholder relationships represents an identifiable
intangible asset that shall be accounted for in accordance with Topic 350. [EITF 88-20, paragraph DISCUSSION] }
> >
Secured Loans
25-8
{Transfers not meeting the sale criteria in paragraph 860-10-40-5 shall be accounted for as secured loans, that is, loans
collateralized by customer accounts or receivables. Paragraph 860-30-25-5 provides additional guidance in those situations. [SOP 01-
03/09/2023 11:15 AM EST
Page 166 / 1816
6, paragraph 8] }
Is the entity in compliance with the guidance in ASC 310-10-25:
Recognition of Interest and Fees for Certain Types of Receivables?
FASB Codification:
>
Recognition of Interest and Fees for Certain Types of Receivables
25-9
The following guidance addresses the recognition of interest income and certain fees for various types of receivables,
specifically:
a.
Interest income on receivables
b.
Impact of rebates on accrued interest income
c.
Prepayment fees
d.
Delinquency fees.
Such interest or fees may relate to receivables that are originated by the entity or purchased from a third party.
> >
25-10
Interest Income on Receivables
{See Subtopic 835-30 for guidance on the imputation of interest for receivables that represent contractual rights to receive
money or contractual obligations to pay money on fixed or determinable dates, whether or not there is any stated provision for interest.
[APB 21, paragraph 2] }
> >
25-11
Impact of Rebates on Accrued Interest Income
{Accrual of interest income on installment loans or trade receivables shall not be affected by the possibility that rebates may
be calculated on a method different from the interest method, except that the possibility of rebates affects the accounting resulting from
the application of paragraph 310-20-35-18(a). Differences between rebate calculations and accrual of interest income merely adjust
original estimates of interest income and shall be recognized in income when loans or trade receivables are prepaid or renewed. [SOP
01-6, paragraph 8] }
> >
25-12
Prepayment Fees
{Prepayment penalties shall not be recognized in income until loans or trade receivables, if applicable, are prepaid, except
that the existence of prepayment penalties may affect the accounting resulting from the application of paragraph 310-20-35-18(a).
[SOP 01-6, paragraph 8] }
> >
25-13
Delinquency Fees
{Delinquency fees shall be recognized in income when chargeable, assuming collectibility is reasonably assured. [SOP 01-6,
paragraph 8] }
Assets > 310 Receivables > 10 Overall > 25 Recognition > Acquisition, Development, and Construction Arrangements
Is the entity in compliance with the guidance in ASC 310-10-25:
Characteristics Implying Investment in Real Estate or Joint
Ventures?
03/09/2023 11:15 AM EST
Page 167 / 1816
FASB Codification:
>
Characteristics Implying Investment in Real Estate or Joint Ventures
25-19
{In an acquisition, development, and construction arrangement in which the lender participates in expected residual profit, in
addition to the lender's participation in expected residual profit, the following characteristics suggest that the risks and rewards of the
arrangement are similar to those associated with an investment in real estate or joint venture: [PB 01, paragraph 8] }
a.
{The lender agrees to provide all or substantially all necessary funds to acquire, develop, or construct the property. The borrower
has title to but little or no equity in the underlying property. [PB 01, paragraph 8] }
b.
{The lender funds the commitment or origination fees or both by including them in the amount of the loan. [PB 01, paragraph 8]
}
c.
{The lender funds all or substantially all interest and fees during the term of the loan by adding them to the loan balance. [PB
01, paragraph 8] }
d.
{The lender's only security is the acquisition, development, and construction project. The lender has no recourse to other assets
of the borrower, and the borrower does not guarantee the debt. [PB 01, paragraph 8] }
e.
{In order for the lender to recover the investment in the project, the property must be sold to independent third parties, the
borrower must obtain refinancing from another source, or the property must be placed in service and generate sufficient net cash
flow to service debt principal and interest. [PB 01, paragraph 8] }
f.
{The arrangement is structured so that foreclosure during the project's development as a result of delinquency is unlikely because
the borrower is not required to make any payments until the project is complete, and, therefore, the loan normally cannot
become delinquent. [PB 01, paragraph 8] }
Is the entity in compliance with the guidance in ASC 310-10-25:
Characteristics Implying Loans?
FASB Codification:
>
Characteristics Implying Loans
25-20
{Even though the lender participates in expected residual profit, the following characteristics suggest that the risks and
rewards of an acquisition, development, and construction arrangement are similar to those associated with a loan: [PB 01,
paragraph 9] }
a.
{The lender participates in less than a majority of the expected residual profit. [PB 01, paragraph 9] }
b.
{The borrower has an equity investment, substantial to the project, not funded by the lender. The investment may be in the form
of cash payments by the borrower or contribution by the borrower of land (without considering value expected to be added by
future development or construction) or other assets. The value attributed to the land or other assets should be net of
encumbrances. There may be little value to assets with substantial prior liens that make foreclosure to collect less likely.
Recently acquired property generally shall be valued at no higher than cost. [PB 01, paragraph 9] }
c.
{The lender has either of the following: [PB 01, paragraph 9] }
1.
{Recourse to substantial tangible, saleable assets of the borrower, with a determinable sales value, other than the
acquisition, development, and construction project that are not pledged as collateral under other loans [PB 01,
paragraph 9] }
2.
{An irrevocable letter of credit from a creditworthy, independent third party provided by the borrower to the lender for a
03/09/2023 11:15 AM EST
Page 168 / 1816
substantial amount of the loan over the entire term of the loan. [PB 01, paragraph 9] }
d.
{A take-out commitment for the full amount of the lender's loans has been obtained from a creditworthy, independent third party.
Take-out commitments often are conditional. If so, the conditions should be reasonable and their attainment probable. [PB 01,
paragraph 9] }
e.
{Noncancelable sales contracts or lease commitments from creditworthy, independent third parties are currently in effect that will
provide sufficient net cash flow on completion of the project to service normal loan amortization, that is, principal and interest.
Any associated conditions should be probable of attainment. [PB 01, paragraph 9] }
25-21
{Some acquisition, development, and construction arrangements include personal guarantees of the borrower and/or a third
party. [PB 01, paragraph 10] }{The existence of a personal guarantee alone rarely provides a sufficient basis for concluding that an
acquisition, development, and construction arrangement should be accounted for as a loan. [PB 01, paragraph 10] }{In instances where
the substance of the guarantee and the ability of the guarantor to perform can be reliably measured, and the guarantee covers a
substantial amount of the loan, concluding that an acquisition, development, and construction arrangement supported by a personal
guarantee should be accounted for as a loan may be justified. [PB 01, paragraph 10] }
25-22
{The substance of a personal guarantee depends on all of the following: [PB 01, paragraph 11] }
a.
{The ability of the guarantor to perform under the guarantee [PB 01, paragraph 11] }
b.
{The practicality of enforcing the guarantee in the applicable jurisdiction [PB 01, paragraph 11] }
c.
{A demonstrated intent to enforce the guarantee. [PB 01, paragraph 11] }
25-23
{Examples of personal guarantees that have the ability to perform would include those supported by liquid assets placed in
escrow, pledged marketable securities, or irrevocable letters of credit from a creditworthy, independent third party in amounts
sufficient to provide necessary equity support for an acquisition, development, and construction arrangement to be considered a loan. In
the absence of such support for the guarantee, the financial statements and other information of the guarantor may be considered to
determine the guarantor's ability to perform. [PB 01, paragraph 12] }
25-24
{Particular emphasis should be placed on the following factors when considering the financial statements of the guarantor: [PB
01, paragraph 13] }
a.
{Liquidity and net worth of the guarantor. There should be evidence of sufficient liquidity to perform under the guarantee. There
may be little substance to a personal guarantee if the guarantor's net worth consists primarily of assets pledged to secure other
debt. [PB 01, paragraph 13] }
b.
{Guarantees provided by the guarantor to other projects. If the financial statements do not disclose and quantify such information,
inquiries should be made as to other guarantees. Also, it may be appropriate to obtain written representation from the guarantor
regarding other contingent liabilities. [PB 01, paragraph 13] }
25-25
{The enforceability of the guarantee in the applicable jurisdiction should also be determined. Even if the guarantee is legally
enforceable, business reasons that might preclude the lender from pursuing the guarantee shall be assessed. Those business reasons
could include the length of time required to enforce a personal guarantee, whether it is normal business practice in that jurisdiction to
enforce guarantees on similar transactions, and whether the lender must choose between pursuing the guarantee or the project's assets,
but cannot pursue both. [PB 01, paragraph 14] }
25-26
{Some acquisition, development, and construction arrangements recognize value, not funded by the lender, for the builder's
efforts after inception of the arrangement, sometimes referred to as sweat equity. Sweat equity is not at risk by the borrower at the
inception of an acquisition, development, and construction project. Consequently, sweat equity shall not be considered a substantial
equity investment on the part of the borrower in determining whether the acquisition, development, and construction arrangement
should be treated as a loan. [PB 01, paragraph 15] }
03/09/2023 11:15 AM EST
Page 169 / 1816
Is the entity in compliance with the guidance in ASC 310-10-25:
Accounting for an Arrangement as a Loan or an Investment in Real
Estate?
FASB Codification:
>
Accounting for an Arrangement as a Loan or an Investment in Real Estate
25-27
a.
An acquisition, development, and construction arrangement shall be accounted for as follows:
{If the lender is expected to receive over 50 percent of the expected residual profit from the project, the lender shall account for
income or loss from the arrangement as a real estate investment as specified by Topic 970. [PB 01, paragraph 16] }
b.
{If the lender is expected to receive 50 percent or less of the expected residual profit, the entire arrangement shall be accounted
for either as a loan or as a real estate joint venture, depending on the circumstances. At least one of the characteristics identified
in paragraph 310-10-25-20(b) through (e) or a qualifying personal guarantee shall be present for the arrangement to be
accounted for as a loan. Otherwise, real estate joint venture accounting would be appropriate. [PB 01, paragraph 16] }
25-28
{If the arrangement is accounted for as a loan, interest and fees shall be recognized as income subject to recoverability. [PB
01, paragraph 16] }{Topic 974 provides guidance that may be relevant in assessing the recoverability of such loan amounts and
accrued interest. [PB 01, paragraph 16] }
25-29
{If the arrangement is accounted for as a real estate joint venture, the provisions of Subtopics 970-323 and 835-20 provide
guidance for such accounting. In particular, paragraph 970-835-35-1 provides guidance on the circumstances under which interest
income shall not be recognized. [PB 01, paragraph 16] }
Is the entity in compliance with the guidance in ASC 310-10-25:
Participations in Acquisition, Development, and Construction
Arrangements?
FASB Codification:
>
Participations in Acquisition, Development, and Construction Arrangements
25-30
{Many participations in loans or whole loans are bought and sold. The accounting treatment for a purchase that involves
acquisition, development, and construction arrangements shall be based on a review of the transaction at the time of purchase in
accordance with this guidance. In applying this guidance, a participant would look to its individual percentage of expected residual
profit. For example, a participant who will not share in any of the expected residual profit is not subject to this guidance. [PB 01,
paragraph 23] }{ However, the responsibility to review collectibility and provide allowances applies equally to purchased acquisition,
development, and construction arrangements. [PB 01, paragraph 23] }{Any reciprocal transactions between institutions, including
multiparty transactions, shall be viewed in their entirety and accounted for in accordance with their combined effects. [PB 01,
paragraph 23] }
Assets > 310 Receivables > 10 Overall > 30 Initial Measurement > General
Is the entity in compliance with the guidance in ASC 310-10-30:
Certain Receivables?
03/09/2023 11:15 AM EST
Page 170 / 1816
FASB Codification:
>
Certain Receivables
30-1
The following provides initial measurement guidance for certain notes receivable, specifically those exchanged for cash and
those exchanged for property, goods, or services. Such notes may be originated by an entity or purchased from a third party.
> >
Notes Exchanged for Cash
30-2
{ As indicated in paragraph 835-30-25-4, when a note is received solely for cash and no other right or privilege is exchanged,
it is presumed to have a present value at issuance measured by the cash proceeds exchanged. [APB 21, paragraph 11] }{ If cash and
some other rights or privileges are exchanged for a note, the value of the rights or privileges shall be given accounting recognition as
described in paragraph 835-30-25-6. [APB 21, paragraph 11] }
> >
Notes Exchanged for Property, Goods, or Services
30-3
{As indicated in paragraph 835-30-25-8, notes exchanged for property, goods, or services are valued and accounted for at the
present value of the consideration exchanged between the contracting parties at the date of the transaction in a manner similar to that
followed for a cash transaction. [APB 21, paragraph 8] }
30-4
{ As indicated in paragraph 835-30-25-2, if determinable, the established exchange price (which, presumably, is the same as
the price for a cash sale) of property, goods, or services acquired or sold in consideration for a note may be used to establish the
present value of the note. [APB 21, paragraph 9] }{That paragraph explains that, when notes are traded in an open market, the
market rate of interest and quoted prices of the notes provide the evidence of the present value. [APB 21, paragraph 9] }{That
paragraph notes that these methods are preferable means of establishing the present value of the note. [APB 21, paragraph 9] }
30-5
{As indicated in paragraph 835-30-25-10, in circumstances where interest is not stated, the stated amount is unreasonable, or
the stated face amount of the note is materially different from the current cash sales price for the same or similar items or from the
fair value of the note at the date of the transaction, the note, the sales price, and the cost of the property, goods, or services exchanged
for the note shall be recorded at the fair value of the property, goods, or services or at an amount that reasonably approximates the fair
value of the note, whichever is the more clearly determinable. [APB 21, paragraph 12] }
30-6
{Paragraph 835-30-25-11 explains that, in the absence of established exchange prices for the related property, goods, or
services or evidence of the fair value of the note (as described in paragraph 835-30-25-2), the present value of a note that stipulates
either no interest or a rate of interest that is clearly unreasonable shall be determined by discounting all future payments on the notes
using an imputed rate of interest as described in Subtopic 835-30. [APB 21, paragraph 12] }{Paragraph 835-30-25-11 explains that
this determination shall be made at the time the note is acquired; any subsequent changes in prevailing interest rates shall be ignored.
[APB 21, paragraph 12] }
Is the entity in compliance with the guidance in ASC 310-10-30:
Standby Commitments to Purchase Loans?
FASB Codification:
>
Standby Commitments to Purchase Loans
30-7
{If a standby commitment to purchase loans is viewed under paragraph 310-10-25-6 as part of the normal production of loans,
an entity shall record loans purchased under the standby commitment at cost on the settlement date, net of the standby commitment fee
received, in conformity with Subtopic 310-20. [SOP 01-6, paragraph 8] }{ If a standby commitment is accounted for as a written
option as discussed in paragraph 310-10-25-6, the option premium received (standby commitment fee) shall be recorded as a liability
representing the fair value of the standby commitment on the trade date. [SOP 01-6, paragraph 8] }
Assets > 310 Receivables > 10 Overall > 35 Subsequent Measurement > General
Is the entity in compliance with the guidance in ASC 310-10-35-1?
03/09/2023 11:15 AM EST
Page 171 / 1816
FASB Codification:
35-1
This Subsection provides the following subsequent measurement guidance:
a.
Loan impairment
b.
Credit losses for loans and trade receivables
c.
Credit losses for standby letters of credit and certain loan commitments
d.
Subsequent measurement of specific types of receivables.
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
Consideration Points:
Section 310-10-35 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU superseded paragraph 310-10-35-1. For public business entities that are U.S. Securities and Exchange
Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after December 15, 2019,
including interim periods within those fiscal years. For all other public business entities, the amendments in the ASU are
effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. For all
other entities, including not-for-profit entities and employee benefit plans within the scope of ASC 960 through ASC 965 on
plan accounting, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, and interim
periods within fiscal years beginning after December 15, 2021. All entities may adopt the amendments in this Update
earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.
Is the entity in compliance with the guidance in ASC 310-10-35:
Impairment of Loans and Receivables?
FASB Codification:
>
Impairment of Loans and Receivables
35-2
{Subtopic 450-20 provides the basic guidance for recognition of impairment losses for all receivables (except those receivables
specifically addressed by other Topics, such as debt securities). This Subsection provides more specific guidance on measurement and
disclosure for a subset of the population of loans. That subset consists of loans that are identified for evaluation and that are
individually deemed to be impaired (because it is probable that the creditor will be unable to collect all the contractual interest and
principal payments as scheduled in the loan agreement). It also includes all loans that are restructured in a troubled debt restructuring
involving a modification of terms, except for those loans that are excluded from the scope of this guidance, as discussed in paragraph
310-10-35-13(b) through (d). [EITF D-080, paragraph 1] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-35-2 will be superseded upon transition, together with its heading.
> Impairment of Loans and Receivables
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-3
This Subsection addresses both the impairment concepts applicable to all receivables, with references to the guidance in Subtopic
450-20 where appropriate, and the impairment concepts related to loans that are identified for evaluation and that are individually
deemed to be impaired, as discussed in paragraph 310-10-35-2.
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
03/09/2023 11:15 AM EST
Page 172 / 1816
> >
General Concepts
35-4
{The following provides an overview of generally accepted accounting principles (GAAP) for loan impairment: [EITF D-080,
paragraph ] }
a.
{It is usually difficult, even with hindsight, to identify any single event that made a particular loan uncollectible. However, the
concept in GAAP is that impairment of receivables shall be recognized when, based on all available information, it is probable
that a loss has been incurred based on past events and conditions existing at the date of the financial statements. [EITF D-080,
paragraph ] }
b.
{Losses shall not be recognized before it is probable that they have been incurred, even though it may be probable based on past
experience that losses will be incurred in the future. It is inappropriate to consider possible or expected future trends that may
lead to additional losses. Recognition of losses shall not be deferred to periods after the period in which the losses have been
incurred. [EITF D-080, paragraph ] }
c.
{GAAP does not permit the establishment of allowances that are not supported by appropriate analyses. The approach for
determination of the allowance shall be well documented and applied consistently from period to period. [EITF D-080,
paragraph ] }
d.
{Under Subtopic 450-20, the threshold for recognition of impairment shall be the same whether the creditor has many loans or
has only one loan. Paragraph 310-10-35-9 requires that if the conditions of paragraph 450-20-25-2 are met, accrual shall be
made even though the particular receivables that are uncollectible may not be identifiable. [EITF D-080, paragraph ] }
e.
{The guidance in this Subsection is more specific than Subtopic 450-20 in that it requires certain methods of measurement for
loans that are individually considered impaired, but it does not fundamentally change the recognition criteria for loan losses.
[EITF D-080, paragraph ] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-35-4 will be superseded upon transition, together with its heading.
> > General Concepts
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
> >
Impairment of Receivables
35-5
The following discusses the general principles for measurement impairment of receivables under Subtopic 450-20, specifically:
a.
Applicability
b.
Losses from uncollectible receivables.
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-35-5 will be superseded upon transition, together with its heading.
> > Impairment of Receivables
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
> > >
35-6
Applicability
{A creditor needs to apply judgment based on individual facts and circumstances to determine what represents large groups of
03/09/2023 11:15 AM EST
Page 173 / 1816
smaller-balance homogeneous loans. Paragraphs 310-10-35-7 through 35-11 would apply to those groups of smaller-balance loans as
well as loans that are not identified for evaluation or that are evaluated but are not individually considered impaired. [EITF D-080,
paragraph 2] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-35-6 will be superseded upon transition, together with its heading.
> > > Applicabiity
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
> > >
35-7
Losses from Uncollectible Receivables
{The conditions under which receivables exist usually involve some degree of uncertainty about their collectibility, in which case
a contingency exists. [FAS 005, paragraph 22] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-35-7 will be superseded upon transition, together with its heading.
> > > Losses from Uncollectible Receivables
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-8
{Subtopic 450-20 requires recognition of a loss when both of the following conditions are met: [EITF D-080, paragraph 5] }
a.
{Information available before the financial statements are issued or are available to be issued (as discussed in Section 855-1025) indicates that it is probable that an asset has been impaired at the date of the financial statements. [EITF D-080,
paragraph 5] }
b.
{The amount of the loss can be reasonably estimated. [EITF D-080, paragraph 5] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-9
{Losses from uncollectible receivables shall be accrued when both of the preceding conditions are met. Those conditions may be
considered in relation to individual receivables or in relation to groups of similar types of receivables. If the conditions are met,
accrual shall be made even though the particular receivables that are uncollectible may not be identifiable. [FAS 005, paragraph 22] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-10
{If, based on current information and events, it is probable that the entity will be unable to collect all amounts due according to
the contractual terms of the receivable, the condition in paragraph 450-20-25-2(a) is met. As used here, all amounts due according to
the contractual terms means that both the contractual interest payments and the contractual principal payments will be collected as
scheduled according to the receivable's contractual terms. However, a creditor need not consider an insignificant delay or insignificant
shortfall in amount of payments as meeting the condition in paragraph 450-20-25-2(a). Whether the amount of loss can be reasonably
estimated (the condition in paragraph 450-20-25-2(b)) will normally depend on, among other things, the experience of the entity,
information about the ability of individual debtors to pay, and appraisal of the receivables in light of the current economic environment.
In the case of an entity that has no experience of its own, reference to the experience of other entities in the same business may be
appropriate. [FAS 005, paragraph 23] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
03/09/2023 11:15 AM EST
35-11
Page 174 / 1816
{The inability to make a reasonable estimate of the amount of loss from uncollectible receivables (that is, failure to satisfy the
condition in paragraph 450-20-25-2(b)) precludes accrual and may, if there is significant uncertainty as to collection, suggest that the
cost recovery method, [FAS 005, paragraph 23] }{the cash-basis method, or some other method shall be used. [ASU 2014-09,
paragraph 25] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
> >
Loans That Are Identified for Evaluation or That Are Individually Considered Impaired
35-12
The following addresses impairment of loans that are identified for evaluation or that are individually considered impaired,
specifically:
a.
Applicability
b.
Identifying loans for evaluation
c.
Assessing whether a loan is impaired
d.
Measurement of impairment
e.
Interaction with loss contingencies
f.
Changes in the net carrying amount of an impaired loan.
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-35-12 will be superseded upon transition, together with its heading.
> > Loans That Are Identified for Evaluation or That Are Individually Considered Impaired
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
> > >
35-13
Applicability
{This guidance applies to all creditors. It addresses the accounting by creditors for impairment of a loan by specifying how
allowances for credit losses related to certain loans shall be determined. [FAS 114, paragraph 5] }{The accounting for impaired loans
shall be consistent among all creditors and for all types of lending except for loans that are measured at fair value or at the lower of
cost or fair value in accordance with specialized industry practice. [FAS 114, paragraph 36] }{Therefore, this guidance applies to all
loans that are identified for evaluation, uncollateralized as well as collateralized, except the following: [FAS 114, paragraph 6] }
a.
{Large groups of smaller-balance homogeneous loans that are collectively evaluated for impairment. Those loans may include but
are not limited to credit card, residential mortgage, and consumer installment loans. [FAS 114, paragraph 6] }
b.
{Loans that are measured at fair value or at the lower of cost or fair value, for example, in accordance with Topic 948 or other
specialized industry practice. [FAS 114, paragraph 6] }
c.
{Leases as defined in Topic 840. [FAS 114, paragraph 6] }
d.
{Debt securities as defined in Topic 320. [FAS 114, paragraph 6] }
{This guidance does not address when a creditor should record a direct write-down of an impaired loan, nor does it address how a
creditor should assess the overall adequacy of the allowance for credit losses. [FAS 114, paragraph 7] }
Pending Content:
03/09/2023 11:15 AM EST
Page 175 / 1816
Transition Date: (P) December 16, 2018; (N) December 16, 2021 Transition Guidance 842-10-65-1
842-10-65-1{This guidance applies to all creditors. It addresses the accounting by creditors for impairment of a loan by specifying how
allowances for credit losses related to certain loans shall be determined. [FAS 114, paragraph 5] }{The accounting for impaired loans
shall be consistent among all creditors and for all types of lending except for loans that are measured at fair value or at the lower of
cost or fair value in accordance with specialized industry practice. [FAS 114, paragraph 36] }{Therefore, this guidance applies to all
loans that are identified for evaluation, uncollateralized as well as collateralized, except the following: [FAS 114, paragraph 6] }
a.
{Large groups of smaller-balance homogeneous loans that are collectively evaluated for impairment. Those loans may include but
are not limited to credit card, residential mortgage, and consumer installment loans. [FAS 114, paragraph 6] }
b.
{Loans that are measured at fair value or at the lower of cost or fair value, for example, in accordance with Topic 948 or other
specialized industry practice. [FAS 114, paragraph 6] }
c.
[Subparagraph superseded by Accounting Standards Update No. 2016-02 superseded by Accounting Standards Update] .
d.
{Debt securities as defined in Topic 320. [FAS 114, paragraph 6] }
{This guidance does not address when a creditor should record a direct write-down of an impaired loan, nor does it address how a
creditor should assess the overall adequacy of the allowance for credit losses. [FAS 114, paragraph 7] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-35-13 will be superseded upon transition, together with its heading.
> > > Applicability
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
> > >
35-14
Identifying Loans for Evaluation
{This guidance does not specify how a creditor should identify loans that are to be evaluated for collectibility. [FAS 114,
paragraph 7] }{A creditor shall apply its normal loan review procedures in making that judgment. [FAS 114, paragraph 7] }{Sources
of information useful in identifying loans for evaluation include the following: [FAS 114, paragraph 7] }
a.
{A specific materiality criterion [FAS 114, paragraph 7] }
b.
{Regulatory reports of examination [FAS 114, paragraph 7] }
c.
{Internally generated listings such as watch lists, past due reports, overdraft listings, and listings of loans to insiders [FAS 114,
paragraph 7] }
d.
{Management reports of total loan amounts by borrower [FAS 114, paragraph 7] }
e.
{Historical loss experience by type of loan [FAS 114, paragraph 7] }
f.
{Loan files lacking current financial data related to borrowers and guarantors [FAS 114, paragraph 7] }
g.
{Borrowers experiencing problems such as operating losses, marginal working capital, inadequate cash flow, or business
interruptions [FAS 114, paragraph 7] }
h.
{Loans secured by collateral that is not readily marketable or that is susceptible to deterioration in realizable value [FAS 114,
paragraph 7] }
03/09/2023 11:15 AM EST
i.
{Loans to borrowers in industries or countries experiencing economic instability [FAS 114, paragraph 7] }
j.
{Loan documentation and compliance exception reports. [FAS 114, paragraph 7] }
Page 176 / 1816
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-35-14 will be superseded upon transition, together with its heading.
> > > Identifying Loans for Evaluation
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-15
{After a loan has been individually identified for evaluation, a creditor shall not aggregate loans with common risk
characteristics when assessing whether loans are impaired. [EITF D-080, paragraph 13] }{Only if a creditor can identify which
individual loans (if any) are impaired (because it is probable that the creditor will be unable to collect all the contractual interest and
principal payments as scheduled in the loan agreement) shall an allowance be measured for individual loans under this Subsection.
[EITF D-080, paragraph 13] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
> > >
35-16
Assessing Whether a Loan Is Impaired
{A loan is impaired when, based on current information and events, it is probable that a creditor will be unable to collect all
amounts due according to the contractual terms of the loan agreement. [FAS 114, paragraph 8] }{ All amounts due according to the
contractual terms means that both the contractual interest payments and the contractual principal payments of a loan will be collected
as scheduled in the loan agreement. [FAS 114, paragraph 8] }See Subtopic 310-40 for specific application of this guidance to loans
restructured in a troubled debt restructuring.
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-35-16 will be superseded upon transition, together with its heading.
> > > Assessing Whether a Loan Is Impaired
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-17
{This guidance does not specify how a creditor should determine that it is probable that it will be unable to collect all amounts
due according to the contractual terms of a loan. [FAS 114, paragraph 8] }{A creditor shall apply its normal loan review procedures in
making that judgment. [FAS 114, paragraph 8] }{An insignificant delay or insignificant shortfall in amount of payments does not
require application of this guidance. [FAS 114, paragraph 8] }{A loan is not impaired during a period of delay in payment if the
creditor expects to collect all amounts due including interest accrued at the contractual interest rate for the period of delay. [FAS 114,
paragraph 8] }{Thus, a demand loan or other loan with no stated maturity is not impaired if the creditor expects to collect all amounts
due including interest accrued at the contractual interest rate during the period the loan is outstanding. [FAS 114, paragraph 8] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-18
{The term probable is used consistent with its use in Subtopic 450-20, which defines probable as an area within a range of the
likelihood that a future event or events will occur confirming the fact of the loss. That range is from probable to remote, as follows:
[FAS 114, paragraph 10] }
a.
{Probable. The future event or events are likely to occur. [FAS 114, paragraph 10] }
b.
{Reasonably possible. The chance of the future event or events occurring is more than remote but less than likely. [FAS 114,
03/09/2023 11:15 AM EST
Page 177 / 1816
paragraph 10] }
c.
{Remote. The chance of the future event or events occurring is slight. [FAS 114, paragraph 10] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-19
{ The term probable is further described in paragraph 450-20-25-3, which indicates that [FAS 114, paragraph 10] }{ the
conditions for accrual in paragraph 450-20-25-2(a) are not intended to be so rigid that they require virtual certainty before a loss is
accrued. They require only that it be probable that an asset has been impaired or a liability has been incurred and that the amount of
loss be reasonably estimable. [FAS 114, paragraph 10] }{Application of the term probable in practice requires judgment, and probable
does not mean virtually certain. Probable is a higher level of likelihood than more likely than not. [EITF D-080, paragraph 8] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
> > >
35-20
Measurement of Impairment
{Measuring impairment of a loan requires judgment and estimates, and the eventual outcomes may differ from those
estimates. Creditors shall have latitude to develop measurement methods that are practical in their circumstances. [FAS 114,
paragraph 11] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-35-20 will be superseded upon transition, together with its heading.
> > > Measurement of Impairment
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-21
{Some impaired loans have risk characteristics that are unique to an individual borrower, and the creditor shall apply the
measurement methods described in paragraphs 310-30-30-2; 310-10-35-22 through 35-28; and 310-10-35-37 on a loan-by-loan
basis. However, some impaired loans may have risk characteristics in common with other impaired loans. A creditor may aggregate
those loans and may use historical statistics, such as average recovery period and average amount recovered, along with a composite
effective interest rate as a means of measuring impairment of those loans. [FAS 114, paragraph 12] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-22
{When a loan is impaired (see paragraphs 310-10-35-16 through 35-17), a creditor shall measure impairment based on the
present value of expected future cash flows discounted at the loan's effective interest rate, except that as a practical expedient, a
creditor may measure impairment based on a loan's observable market price, or the fair value of the collateral if the loan is a
collateral-dependent loan. [FAS 114, paragraph 13] }{If that practical expedient is used, Topic 820 shall apply. [ASU 2011-04,
paragraph 85] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-23
{If a creditor uses the fair value of the collateral to measure impairment of a collateral-dependent loan and repayment or
satisfaction of a loan is dependent on the sale of the collateral, the fair value of the collateral shall be adjusted to consider estimated
costs to sell. [FAS 114, paragraph 46] }{However, if repayment or satisfaction of the loan is dependent only on the operation, rather
than the sale, of the collateral, the measure of impairment shall not incorporate estimated costs to sell the collateral. [FAS 114,
paragraph 46] }
Pending Content:
03/09/2023 11:15 AM EST
Page 178 / 1816
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-24
{The creditor may choose a measurement method on a loan-by-loan basis. A creditor shall consider estimated costs to sell, on a
discounted basis, in the measure of impairment if those costs are expected to reduce the cash flows available to repay or otherwise
satisfy the loan. If the present value of expected future cash flows (or, alternatively, the observable market price of the loan or the fair
value of the collateral) is less than the recorded investment in the loan (including accrued interest, net deferred loan fees or costs,
and unamortized premium or discount), a creditor shall recognize an impairment by creating a valuation allowance with a
corresponding charge to bad-debt expense or by adjusting an existing valuation allowance for the impaired loan with a corresponding
charge or credit to bad-debt expense. [FAS 114, paragraph 13] }{The term recorded investment in the loan is distinguished from net
carrying amount of the loan because the latter term is net of a valuation allowance, while the former term is not. The recorded
investment in the loan does, however, reflect any direct write-down of the investment. [FAS 114, paragraph 13] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-25
{If a creditor bases its measure of loan impairment on a present value amount, the creditor shall calculate that present value
amount based on an estimate of the expected future cash flows of the impaired loan, discounted at the loan's effective interest rate.
[FAS 114, paragraph 14] }{A creditor's recorded investment in a loan at origination and during the life of the loan, as long as the loan
performs according to its contractual terms, is the sum of the present values of the future cash flows that are designated as interest and
the future cash flows that are designated as principal discounted at the effective interest rate implicit in the loan. A loan that becomes
impaired (because it is probable that the creditor will be unable to collect all the contractual interest payments and contractual principal
payments as scheduled in the loan agreement) shall continue to be carried at an amount that considers the discounted value of all
expected future cash flows in a manner consistent with the loan's measurement before it became impaired. [EITF D-080, paragraph 20]
}
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-26
{If a creditor bases its measure of loan impairment on a present value calculation, the estimates of expected future cash flows
shall be the creditor's best estimate based on reasonable and supportable assumptions and projections. All available evidence, including
estimated costs to sell if those costs are expected to reduce the cash flows available to repay or otherwise satisfy the loan, shall be
considered in developing the estimate of expected future cash flows. The weight given to the evidence shall be commensurate with the
extent to which the evidence can be verified objectively. If a creditor estimates a range for either the amount or timing of possible cash
flows, the likelihood of the possible outcomes shall be considered in determining the best estimate of expected future cash flows. [FAS
114, paragraph 15] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-27
{In addition, a creditor shall consider all available information reflecting past events and current conditions when developing
the estimate of expected future cash flows. All available information would include existing environmental factors, for example,
existing industry, geographical, economic, and political factors that are relevant to the collectibility of that loan and that indicate that it
is probable that an asset had been impaired at the date of the financial statements. [EITF D-080, paragraph 16] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-28
{If the loan's contractual interest rate varies based on subsequent changes in an independent factor, such as an index or rate,
for example, the prime rate, the London Interbank Offered Rate (LIBOR), or the U.S. Treasury bill weekly average, that loan's effective
interest rate may be calculated based on the factor as it changes over the life of the loan or may be fixed at the rate in effect at the
date the loan meets the impairment criterion in paragraphs 310-10-35-16 through 35-17. The creditor's choice shall be applied
consistently for all loans whose contractual interest rate varies based on subsequent changes in an independent factor. Projections of
changes in the factor shall not be made for purposes of determining the effective interest rate or estimating expected future cash flows.
03/09/2023 11:15 AM EST
Page 179 / 1816
[FAS 114, paragraph 14] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-29
{The measurement method selected for an individual impaired loan shall be applied consistently to that loan. A change in
method shall be justified by a change in circumstance. [FAS 114, paragraph 53] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-30
There are two considerations related to measurement of impairment:
a.
Impact of hedging
b.
Measurement of impairment when foreclosure is probable.
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
> > > >
35-31
Impact of Hedging
{Section 815-25-35 implicitly affects the measurement of impairment under this Topic by requiring the present value of
expected future cash flows to be discounted by the new effective rate based on the adjusted recorded investment in a hedged loan. [DIG
F04, paragraph RESPONSE] }{When the recorded investment of a loan has been adjusted under fair value hedge accounting, the
effective rate is the discount rate that equates the present value of the loan’s future cash flows with that adjusted recorded investment.
[DIG F04, paragraph RESPONSE] }{The adjustment under fair value hedge accounting of the loan’s carrying amount for changes in fair
value attributable to the hedged risk under Section 815-25-35 shall be considered to be an adjustment of the loan’s recorded
investment. [DIG F04, paragraph RESPONSE] }{Paragraph 815-25-35-11 explains that the loan’s original effective interest rate
becomes irrelevant once the recorded amount of the loan is adjusted for any changes in its fair value. [DIG F04,
paragraph RESPONSE] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-35-31 will be superseded upon transition, together with its heading.
> > > > Impact of Hedging
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-31A
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2023 Transition Guidance 815-20-65-6
815-20-65-6{Paragraph 815-25-35-11 also explains that an entity shall not adjust the recorded investment or the discount rate of the
individual assets or individual beneficial interest included in the closed portfolio for a basis adjustment that is maintained on the closed
portfolio basis in accordance with paragraph 815-25-35-1(c). [ASU 2022-01, paragraph 4] }
> > > >
35-32
Measurement of Impairment When Foreclosure Is Probable
{Regardless of the measurement method, a creditor shall measure impairment based on the fair value of the collateral when
the creditor determines that foreclosure is probable. [FAS 114, paragraph 13] }{When a creditor determines that foreclosure is
probable, a creditor shall remeasure the loan at the fair value of the collateral so that loss recognition is not delayed until actual
foreclosure. [FAS 114, paragraph 69] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
03/09/2023 11:15 AM EST
Page 180 / 1816
Editor's Note: Paragraph 310-10-35-32 will be superseded upon transition, together with its heading.
> > > > Measurement of Impairment When Foreclosure Is Probable
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
> > >
35-33
Interaction with Subtopic 450-20
The following provides guidance on the interaction between the impairment guidance for receivables in general, which is
discussed in Subtopic 450-20, and the impairment guidance for loans that are identified for evaluation or that are individually
considered impaired discussed in this Subsection.
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-35-33 will be superseded upon transition, together with its heading.
> > > Interaction with Subtopic 450-20
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-34
{In addition to the allowance calculated in accordance with the guidance in this Subsection, a creditor shall continue to
recognize an allowance for credit losses necessary to comply with Subtopic 450-20. [FAS 114, paragraph 7] }{The total allowance for
credit losses related to loans includes those amounts that have been determined in accordance with that Subtopic and with this
Subsection. [FAS 114, paragraph 20A] }{Double counting by applying this Subsection and then applying that Subtopic to measure the
same loss again is inappropriate. [EITF D-080, paragraph 5] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-35
{If a creditor concludes that an individual loan specifically identified for evaluation is impaired, the creditor shall not establish
an allowance in addition to one measured under this Subsection. [EITF D-080, paragraph 11] }{The allowance provided for a specific
loan under this Subsection shall not be supplemented by an additional allowance under Subtopic 450-20. The allowance established
under this Subsection shall be the sole measure of impairment for that loan. (See boxes C and G in the flowchart in paragraph 310-1055-1). [EITF D-080, paragraph 11] }{For a loan that is impaired, no additional loss recognition is appropriate under Subtopic 450-20
even if the measurement of impairment under this Subsection results in no allowance. For example, a creditor might conclude for a
collateral-dependent loan that it is impaired (because it is probable that the creditor will be unable to collect all the contractual interest
and principal payments as scheduled in the loan agreement). The creditor might measure the impairment using the fair value of the
collateral, which could result in no allowance if the fair value of the collateral is greater than the recorded investment in the loan.
Another example would be when the recorded investment of an impaired loan has been written down to a level where no allowance is
required. [EITF D-080, paragraph 12] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-36
{If a creditor concludes that an individual loan specifically identified for evaluation is not impaired under this Subsection, that
loan may be included in the assessment of the allowance for loan losses under Subtopic 450-20, [EITF D-080, paragraph 10] }{but
only if specific characteristics of the loan indicate that it is probable that there would be an incurred loss in a group of loans with those
characteristics. Characteristics or risk factors must be specifically identified to support an accrual for losses that have been incurred but
that have not yet reached the point where it is probable that amounts will not be collected on a specific individual loan. A creditor shall
not ignore factors and information obtained in the evaluation of the loan's collectibility. For example, if an individual loan specifically
identified for evaluation is fully collateralized with risk-free assets, then consideration of that loan as sharing characteristics with a
group of uncollateralized loans is inappropriate. Under Subtopic 450-20, a loss is recognized if characteristics of a loan indicate that it
is probable that a group of similar loans includes some losses even though the loss could not be identified to a specific loan. However, a
loss would be recognized only if it is probable that the loss has been incurred at the date of the financial statements and the amount of
loss can be reasonably estimated. (See boxes D, E, and F in the flowchart in paragraph 310-10-55-1.) [EITF D-080, paragraph 10] }
03/09/2023 11:15 AM EST
Page 181 / 1816
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
> > >
35-37
Changes in the Net Carrying Amount of an Impaired Loan
{After the initial measurement of impairment, if there is a significant change (increase or decrease) in the amount or timing of
an impaired loan's expected future cash flows, or if actual cash flows are significantly different from the cash flows previously
projected, a creditor shall recalculate the impairment by applying the procedures specified in paragraphs 310-10-35-21 through 3522 and 310-10-35-24 through 35-26 and by adjusting the valuation allowance. Similarly, a creditor that measures impairment based
on the observable market price of an impaired loan or the fair value of the collateral of an impaired collateral-dependent loan shall
adjust the valuation allowance if there is a significant change (increase or decrease) in either of those bases. However, the net carrying
amount of the loan shall at no time exceed the recorded investment in the loan. [FAS 114, paragraph 16] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-35-37 will be superseded upon transition, together with its heading.
> > > Changes in the Net Carrying Amount of an Impaired Loan
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-38
{When an asset is carried on a discounted basis, the present value of expected future cash flows will increase from one
reporting period to the next as a result of the passage of time. The present value also may change from changes in estimates of the
timing or amount of expected future cash flows. Similarly, the observable market price of an impaired loan or the fair value of the
collateral of an impaired collateral-dependent loan may change from one reporting period to the next. Because the net carrying amount
of an impaired loan shall be the present value of expected future cash flows (or the observable market price or the fair value of the
collateral) not only at the date at which impairment initially is recognized but also at each subsequent reporting period, recognition of
changes in that measure is required. However, the net carrying amount of the loan shall never exceed the recorded investment in the
loan. [EITF D-080, paragraph 28] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-39
{Except as noted in the next paragraph, this Subsection does not address how a creditor should recognize, measure, or display
interest income on an impaired loan. Some accounting methods for recognizing income may result in a recorded investment in an
impaired loan that is less than the present value of expected future cash flows (or, alternatively, the observable market price of the loan
or the fair value of the collateral). In that case, while the loan would meet the definition of an impaired loan in paragraphs 310-10-3516 through 35-17, no additional impairment would be recognized. Those accounting methods include recognition of interest income
using a cost-recovery method, a cash-basis method, or some combination of those methods. The recorded investment in an impaired
loan also may be less than the present value of expected future cash flows (or, alternatively, the observable market price of the loan or
the fair value of the collateral) because the creditor has charged off part of the loan. [FAS 114, paragraph 17] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-40
{The following are two alternative income recognition methods to account for changes in the net carrying amount of an
impaired loan subsequent to the initial measure of impairment: [FAS 118, paragraph 4] }
a.
{Under the first income recognition method, a creditor shall accrue interest on the net carrying amount of the impaired loan and
report other changes in the net carrying amount of the loan as an adjustment to bad-debt expense. [FAS 118, paragraph 4] }
b.
{Under the second income recognition method, a creditor shall recognize all changes in the net carrying amount of the loan as an
adjustment to bad-debt expense. [FAS 118, paragraph 4] }See paragraph 310-10-50-19 for a disclosure requirement related to
this method.
03/09/2023 11:15 AM EST
Page 182 / 1816
{Those income recognition methods are not required, and a creditor is not precluded from using either of those methods. [FAS 118,
paragraph 4] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
Consideration Points:
Section 310-10-35 has been updated as the result of the issuance of ASU 2015-10. The pending content resulting from the
issuance of this ASU amends the structure of the headings for paragraph 310-10-35-2 and 35-3 for the purpose of
discerning which guidance pertains to loans, trade receivables, both loans and trade receivables, or other forms of credit.
The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after
December 15, 2015. Early application of the amendments is permitted for any fiscal year or interim period for which the
entity’s financial statements have not yet been issued (public business entities) or for which financial statements are
available to be issued (all other entities). An entity may elect to apply the amendments retrospectively.
Is the entity in compliance with the guidance in ASC 310-10-35:
General Concepts?
03/09/2023 11:15 AM EST
Page 183 / 1816
FASB Codification:
>
General Concepts
35-4
{The following provides an overview of generally accepted accounting principles (GAAP) for loan impairment: [EITF D-080,
paragraph ] }
a.
{It is usually difficult, even with hindsight, to identify any single event that made a particular loan uncollectible. However, the
concept in GAAP is that impairment of receivables shall be recognized when, based on all available information, it is probable
that a loss has been incurred based on past events and conditions existing at the date of the financial statements. [EITF D-080,
paragraph ] }
b.
{Losses shall not be recognized before it is probable that they have been incurred, even though it may be probable based on past
experience that losses will be incurred in the future. It is inappropriate to consider possible or expected future trends that may
lead to additional losses. Recognition of losses shall not be deferred to periods after the period in which the losses have been
incurred. [EITF D-080, paragraph ] }
c.
{GAAP does not permit the establishment of allowances that are not supported by appropriate analyses. The approach for
determination of the allowance shall be well documented and applied consistently from period to period. [EITF D-080,
paragraph ] }
d.
{Under Subtopic 450-20, the threshold for recognition of impairment shall be the same whether the creditor has many loans or
has only one loan. Paragraph 310-10-35-9 requires that if the conditions of paragraph 450-20-25-2 are met, accrual shall be
made even though the particular receivables that are uncollectible may not be identifiable. [EITF D-080, paragraph ] }
e.
{The guidance in this Subsection is more specific than Subtopic 450-20 in that it requires certain methods of measurement for
loans that are individually considered impaired, but it does not fundamentally change the recognition criteria for loan losses.
[EITF D-080, paragraph ] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-35-4 will be superseded upon transition, together with its heading.
> > General Concepts
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
Is the entity in compliance with the guidance in ASC 310-10-35:
Impairment of Receivables?
FASB Codification:
>
Impairment of Receivables
35-5
The following discusses the general principles for measurement impairment of receivables under Subtopic 450-20, specifically:
a.
Applicability
b.
Losses from uncollectible receivables.
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
03/09/2023 11:15 AM EST
Page 184 / 1816
Editor's Note: Paragraph 310-10-35-5 will be superseded upon transition, together with its heading.
> > Impairment of Receivables
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
> >
Applicability
35-6
{A creditor needs to apply judgment based on individual facts and circumstances to determine what represents large groups of
smaller-balance homogeneous loans. Paragraphs 310-10-35-7 through 35-11 would apply to those groups of smaller-balance loans as
well as loans that are not identified for evaluation or that are evaluated but are not individually considered impaired. [EITF D-080,
paragraph 2] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-35-6 will be superseded upon transition, together with its heading.
> > > Applicabiity
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
> >
Losses from Uncollectible Receivables
35-7
{The conditions under which receivables exist usually involve some degree of uncertainty about their collectibility, in which case
a contingency exists. [FAS 005, paragraph 22] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-35-7 will be superseded upon transition, together with its heading.
> > > Losses from Uncollectible Receivables
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-8
{Subtopic 450-20 requires recognition of a loss when both of the following conditions are met: [EITF D-080, paragraph 5] }
a.
{Information available before the financial statements are issued or are available to be issued (as discussed in Section 855-1025) indicates that it is probable that an asset has been impaired at the date of the financial statements. [EITF D-080,
paragraph 5] }
b.
{The amount of the loss can be reasonably estimated. [EITF D-080, paragraph 5] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-9
{Losses from uncollectible receivables shall be accrued when both of the preceding conditions are met. Those conditions may be
considered in relation to individual receivables or in relation to groups of similar types of receivables. If the conditions are met,
accrual shall be made even though the particular receivables that are uncollectible may not be identifiable. [FAS 005, paragraph 22] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-10
{If, based on current information and events, it is probable that the entity will be unable to collect all amounts due according to
the contractual terms of the receivable, the condition in paragraph 450-20-25-2(a) is met. As used here, all amounts due according to
the contractual terms means that both the contractual interest payments and the contractual principal payments will be collected as
scheduled according to the receivable's contractual terms. However, a creditor need not consider an insignificant delay or insignificant
shortfall in amount of payments as meeting the condition in paragraph 450-20-25-2(a). Whether the amount of loss can be reasonably
estimated (the condition in paragraph 450-20-25-2(b)) will normally depend on, among other things, the experience of the entity,
03/09/2023 11:15 AM EST
Page 185 / 1816
information about the ability of individual debtors to pay, and appraisal of the receivables in light of the current economic environment.
In the case of an entity that has no experience of its own, reference to the experience of other entities in the same business may be
appropriate. [FAS 005, paragraph 23] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-11
{The inability to make a reasonable estimate of the amount of loss from uncollectible receivables (that is, failure to satisfy the
condition in paragraph 450-20-25-2(b)) precludes accrual and may, if there is significant uncertainty as to collection, suggest that the
cost recovery method, [FAS 005, paragraph 23] }{the cash-basis method, or some other method shall be used. [ASU 2014-09,
paragraph 25] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
Is the entity in compliance with the guidance in ASC 310-10-35:
Loans That Are Identified for Evaluation or That Are Individually
Considered Impaired?
FASB Codification:
>
Loans That Are Identified for Evaluation or That Are Individually Considered Impaired
35-12
The following addresses impairment of loans that are identified for evaluation or that are individually considered impaired,
specifically:
a.
Applicability
b.
Identifying loans for evaluation
c.
Assessing whether a loan is impaired
d.
Measurement of impairment
e.
Interaction with loss contingencies
f.
Changes in the net carrying amount of an impaired loan.
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-35-12 will be superseded upon transition, together with its heading.
> > Loans That Are Identified for Evaluation or That Are Individually Considered Impaired
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
> >
Applicability
35-13
{This guidance applies to all creditors. It addresses the accounting by creditors for impairment of a loan by specifying how
allowances for credit losses related to certain loans shall be determined. [FAS 114, paragraph 5] }{The accounting for impaired loans
shall be consistent among all creditors and for all types of lending except for loans that are measured at fair value or at the lower of
cost or fair value in accordance with specialized industry practice. [FAS 114, paragraph 36] }{Therefore, this guidance applies to all
loans that are identified for evaluation, uncollateralized as well as collateralized, except the following: [FAS 114, paragraph 6] }
a.
{Large groups of smaller-balance homogeneous loans that are collectively evaluated for impairment. Those loans may include but
03/09/2023 11:15 AM EST
Page 186 / 1816
are not limited to credit card, residential mortgage, and consumer installment loans. [FAS 114, paragraph 6] }
b.
{Loans that are measured at fair value or at the lower of cost or fair value, for example, in accordance with Topic 948 or other
specialized industry practice. [FAS 114, paragraph 6] }
c.
{Leases as defined in Topic 840. [FAS 114, paragraph 6] }
d.
{Debt securities as defined in Topic 320. [FAS 114, paragraph 6] }
{This guidance does not address when a creditor should record a direct write-down of an impaired loan, nor does it address how a
creditor should assess the overall adequacy of the allowance for credit losses. [FAS 114, paragraph 7] }
Pending Content:
Transition Date: (P) December 16, 2018; (N) December 16, 2021 Transition Guidance 842-10-65-1
842-10-65-1{This guidance applies to all creditors. It addresses the accounting by creditors for impairment of a loan by specifying how
allowances for credit losses related to certain loans shall be determined. [FAS 114, paragraph 5] }{The accounting for impaired loans
shall be consistent among all creditors and for all types of lending except for loans that are measured at fair value or at the lower of
cost or fair value in accordance with specialized industry practice. [FAS 114, paragraph 36] }{Therefore, this guidance applies to all
loans that are identified for evaluation, uncollateralized as well as collateralized, except the following: [FAS 114, paragraph 6] }
a.
{Large groups of smaller-balance homogeneous loans that are collectively evaluated for impairment. Those loans may include but
are not limited to credit card, residential mortgage, and consumer installment loans. [FAS 114, paragraph 6] }
b.
{Loans that are measured at fair value or at the lower of cost or fair value, for example, in accordance with Topic 948 or other
specialized industry practice. [FAS 114, paragraph 6] }
c.
[Subparagraph superseded by Accounting Standards Update No. 2016-02 superseded by Accounting Standards Update] .
d.
{Debt securities as defined in Topic 320. [FAS 114, paragraph 6] }
{This guidance does not address when a creditor should record a direct write-down of an impaired loan, nor does it address how a
creditor should assess the overall adequacy of the allowance for credit losses. [FAS 114, paragraph 7] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-35-13 will be superseded upon transition, together with its heading.
> > > Applicability
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
> >
Identifying Loans for Evaluation
35-14
{This guidance does not specify how a creditor should identify loans that are to be evaluated for collectibility. [FAS 114,
paragraph 7] }{A creditor shall apply its normal loan review procedures in making that judgment. [FAS 114, paragraph 7] }{Sources
of information useful in identifying loans for evaluation include the following: [FAS 114, paragraph 7] }
a.
{A specific materiality criterion [FAS 114, paragraph 7] }
b.
{Regulatory reports of examination [FAS 114, paragraph 7] }
c.
{Internally generated listings such as watch lists, past due reports, overdraft listings, and listings of loans to insiders [FAS 114,
paragraph 7] }
03/09/2023 11:15 AM EST
Page 187 / 1816
d.
{Management reports of total loan amounts by borrower [FAS 114, paragraph 7] }
e.
{Historical loss experience by type of loan [FAS 114, paragraph 7] }
f.
{Loan files lacking current financial data related to borrowers and guarantors [FAS 114, paragraph 7] }
g.
{Borrowers experiencing problems such as operating losses, marginal working capital, inadequate cash flow, or business
interruptions [FAS 114, paragraph 7] }
h.
{Loans secured by collateral that is not readily marketable or that is susceptible to deterioration in realizable value [FAS 114,
paragraph 7] }
i.
{Loans to borrowers in industries or countries experiencing economic instability [FAS 114, paragraph 7] }
j.
{Loan documentation and compliance exception reports. [FAS 114, paragraph 7] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-35-14 will be superseded upon transition, together with its heading.
> > > Identifying Loans for Evaluation
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-15
{After a loan has been individually identified for evaluation, a creditor shall not aggregate loans with common risk
characteristics when assessing whether loans are impaired. [EITF D-080, paragraph 13] }{Only if a creditor can identify which
individual loans (if any) are impaired (because it is probable that the creditor will be unable to collect all the contractual interest and
principal payments as scheduled in the loan agreement) shall an allowance be measured for individual loans under this Subsection.
[EITF D-080, paragraph 13] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
> >
35-16
Assessing Whether a Loan Is Impaired
{A loan is impaired when, based on current information and events, it is probable that a creditor will be unable to collect all
amounts due according to the contractual terms of the loan agreement. [FAS 114, paragraph 8] }{ All amounts due according to the
contractual terms means that both the contractual interest payments and the contractual principal payments of a loan will be collected
as scheduled in the loan agreement. [FAS 114, paragraph 8] }See Subtopic 310-40 for specific application of this guidance to loans
restructured in a troubled debt restructuring.
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-35-16 will be superseded upon transition, together with its heading.
> > > Assessing Whether a Loan Is Impaired
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-17
{This guidance does not specify how a creditor should determine that it is probable that it will be unable to collect all amounts
due according to the contractual terms of a loan. [FAS 114, paragraph 8] }{A creditor shall apply its normal loan review procedures in
making that judgment. [FAS 114, paragraph 8] }{An insignificant delay or insignificant shortfall in amount of payments does not
require application of this guidance. [FAS 114, paragraph 8] }{A loan is not impaired during a period of delay in payment if the
03/09/2023 11:15 AM EST
Page 188 / 1816
creditor expects to collect all amounts due including interest accrued at the contractual interest rate for the period of delay. [FAS 114,
paragraph 8] }{Thus, a demand loan or other loan with no stated maturity is not impaired if the creditor expects to collect all amounts
due including interest accrued at the contractual interest rate during the period the loan is outstanding. [FAS 114, paragraph 8] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-18
{The term probable is used consistent with its use in Subtopic 450-20, which defines probable as an area within a range of the
likelihood that a future event or events will occur confirming the fact of the loss. That range is from probable to remote, as follows:
[FAS 114, paragraph 10] }
a.
{Probable. The future event or events are likely to occur. [FAS 114, paragraph 10] }
b.
{Reasonably possible. The chance of the future event or events occurring is more than remote but less than likely. [FAS 114,
paragraph 10] }
c.
{Remote. The chance of the future event or events occurring is slight. [FAS 114, paragraph 10] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-19
{ The term probable is further described in paragraph 450-20-25-3, which indicates that [FAS 114, paragraph 10] }{ the
conditions for accrual in paragraph 450-20-25-2(a) are not intended to be so rigid that they require virtual certainty before a loss is
accrued. They require only that it be probable that an asset has been impaired or a liability has been incurred and that the amount of
loss be reasonably estimable. [FAS 114, paragraph 10] }{Application of the term probable in practice requires judgment, and probable
does not mean virtually certain. Probable is a higher level of likelihood than more likely than not. [EITF D-080, paragraph 8] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
> >
35-20
Measurement of Impairment
{Measuring impairment of a loan requires judgment and estimates, and the eventual outcomes may differ from those
estimates. Creditors shall have latitude to develop measurement methods that are practical in their circumstances. [FAS 114,
paragraph 11] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-35-20 will be superseded upon transition, together with its heading.
> > > Measurement of Impairment
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-21
{Some impaired loans have risk characteristics that are unique to an individual borrower, and the creditor shall apply the
measurement methods described in paragraphs 310-30-30-2; 310-10-35-22 through 35-28; and 310-10-35-37 on a loan-by-loan
basis. However, some impaired loans may have risk characteristics in common with other impaired loans. A creditor may aggregate
those loans and may use historical statistics, such as average recovery period and average amount recovered, along with a composite
effective interest rate as a means of measuring impairment of those loans. [FAS 114, paragraph 12] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-22
{When a loan is impaired (see paragraphs 310-10-35-16 through 35-17), a creditor shall measure impairment based on the
present value of expected future cash flows discounted at the loan's effective interest rate, except that as a practical expedient, a
03/09/2023 11:15 AM EST
Page 189 / 1816
creditor may measure impairment based on a loan's observable market price, or the fair value of the collateral if the loan is a
collateral-dependent loan. [FAS 114, paragraph 13] }{If that practical expedient is used, Topic 820 shall apply. [ASU 2011-04,
paragraph 85] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-23
{If a creditor uses the fair value of the collateral to measure impairment of a collateral-dependent loan and repayment or
satisfaction of a loan is dependent on the sale of the collateral, the fair value of the collateral shall be adjusted to consider estimated
costs to sell. [FAS 114, paragraph 46] }{However, if repayment or satisfaction of the loan is dependent only on the operation, rather
than the sale, of the collateral, the measure of impairment shall not incorporate estimated costs to sell the collateral. [FAS 114,
paragraph 46] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-24
{The creditor may choose a measurement method on a loan-by-loan basis. A creditor shall consider estimated costs to sell, on a
discounted basis, in the measure of impairment if those costs are expected to reduce the cash flows available to repay or otherwise
satisfy the loan. If the present value of expected future cash flows (or, alternatively, the observable market price of the loan or the fair
value of the collateral) is less than the recorded investment in the loan (including accrued interest, net deferred loan fees or costs,
and unamortized premium or discount), a creditor shall recognize an impairment by creating a valuation allowance with a
corresponding charge to bad-debt expense or by adjusting an existing valuation allowance for the impaired loan with a corresponding
charge or credit to bad-debt expense. [FAS 114, paragraph 13] }{The term recorded investment in the loan is distinguished from net
carrying amount of the loan because the latter term is net of a valuation allowance, while the former term is not. The recorded
investment in the loan does, however, reflect any direct write-down of the investment. [FAS 114, paragraph 13] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-25
{If a creditor bases its measure of loan impairment on a present value amount, the creditor shall calculate that present value
amount based on an estimate of the expected future cash flows of the impaired loan, discounted at the loan's effective interest rate.
[FAS 114, paragraph 14] }{A creditor's recorded investment in a loan at origination and during the life of the loan, as long as the loan
performs according to its contractual terms, is the sum of the present values of the future cash flows that are designated as interest and
the future cash flows that are designated as principal discounted at the effective interest rate implicit in the loan. A loan that becomes
impaired (because it is probable that the creditor will be unable to collect all the contractual interest payments and contractual principal
payments as scheduled in the loan agreement) shall continue to be carried at an amount that considers the discounted value of all
expected future cash flows in a manner consistent with the loan's measurement before it became impaired. [EITF D-080, paragraph 20]
}
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-26
{If a creditor bases its measure of loan impairment on a present value calculation, the estimates of expected future cash flows
shall be the creditor's best estimate based on reasonable and supportable assumptions and projections. All available evidence, including
estimated costs to sell if those costs are expected to reduce the cash flows available to repay or otherwise satisfy the loan, shall be
considered in developing the estimate of expected future cash flows. The weight given to the evidence shall be commensurate with the
extent to which the evidence can be verified objectively. If a creditor estimates a range for either the amount or timing of possible cash
flows, the likelihood of the possible outcomes shall be considered in determining the best estimate of expected future cash flows. [FAS
114, paragraph 15] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-27
{In addition, a creditor shall consider all available information reflecting past events and current conditions when developing
03/09/2023 11:15 AM EST
Page 190 / 1816
the estimate of expected future cash flows. All available information would include existing environmental factors, for example,
existing industry, geographical, economic, and political factors that are relevant to the collectibility of that loan and that indicate that it
is probable that an asset had been impaired at the date of the financial statements. [EITF D-080, paragraph 16] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-28
{If the loan's contractual interest rate varies based on subsequent changes in an independent factor, such as an index or rate,
for example, the prime rate, the London Interbank Offered Rate (LIBOR), or the U.S. Treasury bill weekly average, that loan's effective
interest rate may be calculated based on the factor as it changes over the life of the loan or may be fixed at the rate in effect at the
date the loan meets the impairment criterion in paragraphs 310-10-35-16 through 35-17. The creditor's choice shall be applied
consistently for all loans whose contractual interest rate varies based on subsequent changes in an independent factor. Projections of
changes in the factor shall not be made for purposes of determining the effective interest rate or estimating expected future cash flows.
[FAS 114, paragraph 14] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-29
{The measurement method selected for an individual impaired loan shall be applied consistently to that loan. A change in
method shall be justified by a change in circumstance. [FAS 114, paragraph 53] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-30
There are two considerations related to measurement of impairment:
a.
Impact of hedging
b.
Measurement of impairment when foreclosure is probable.
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
> > >
35-31
Impact of Hedging
{Section 815-25-35 implicitly affects the measurement of impairment under this Topic by requiring the present value of
expected future cash flows to be discounted by the new effective rate based on the adjusted recorded investment in a hedged loan. [DIG
F04, paragraph RESPONSE] }{When the recorded investment of a loan has been adjusted under fair value hedge accounting, the
effective rate is the discount rate that equates the present value of the loan’s future cash flows with that adjusted recorded investment.
[DIG F04, paragraph RESPONSE] }{The adjustment under fair value hedge accounting of the loan’s carrying amount for changes in fair
value attributable to the hedged risk under Section 815-25-35 shall be considered to be an adjustment of the loan’s recorded
investment. [DIG F04, paragraph RESPONSE] }{Paragraph 815-25-35-11 explains that the loan’s original effective interest rate
becomes irrelevant once the recorded amount of the loan is adjusted for any changes in its fair value. [DIG F04,
paragraph RESPONSE] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-35-31 will be superseded upon transition, together with its heading.
> > > > Impact of Hedging
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-31A
Pending Content:
03/09/2023 11:15 AM EST
Page 191 / 1816
Transition Date: (P) December 16, 2022; (N) December 16, 2023 Transition Guidance 815-20-65-6
815-20-65-6{Paragraph 815-25-35-11 also explains that an entity shall not adjust the recorded investment or the discount rate of the
individual assets or individual beneficial interest included in the closed portfolio for a basis adjustment that is maintained on the closed
portfolio basis in accordance with paragraph 815-25-35-1(c). [ASU 2022-01, paragraph 4] }
> > >
35-32
Measurement of Impairment When Foreclosure Is Probable
{Regardless of the measurement method, a creditor shall measure impairment based on the fair value of the collateral when
the creditor determines that foreclosure is probable. [FAS 114, paragraph 13] }{When a creditor determines that foreclosure is
probable, a creditor shall remeasure the loan at the fair value of the collateral so that loss recognition is not delayed until actual
foreclosure. [FAS 114, paragraph 69] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-35-32 will be superseded upon transition, together with its heading.
> > > > Measurement of Impairment When Foreclosure Is Probable
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
> >
35-33
Interaction with Subtopic 450-20
The following provides guidance on the interaction between the impairment guidance for receivables in general, which is
discussed in Subtopic 450-20, and the impairment guidance for loans that are identified for evaluation or that are individually
considered impaired discussed in this Subsection.
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-35-33 will be superseded upon transition, together with its heading.
> > > Interaction with Subtopic 450-20
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-34
{In addition to the allowance calculated in accordance with the guidance in this Subsection, a creditor shall continue to
recognize an allowance for credit losses necessary to comply with Subtopic 450-20. [FAS 114, paragraph 7] }{The total allowance for
credit losses related to loans includes those amounts that have been determined in accordance with that Subtopic and with this
Subsection. [FAS 114, paragraph 20A] }{Double counting by applying this Subsection and then applying that Subtopic to measure the
same loss again is inappropriate. [EITF D-080, paragraph 5] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-35
{If a creditor concludes that an individual loan specifically identified for evaluation is impaired, the creditor shall not establish
an allowance in addition to one measured under this Subsection. [EITF D-080, paragraph 11] }{The allowance provided for a specific
loan under this Subsection shall not be supplemented by an additional allowance under Subtopic 450-20. The allowance established
under this Subsection shall be the sole measure of impairment for that loan. (See boxes C and G in the flowchart in paragraph 310-1055-1). [EITF D-080, paragraph 11] }{For a loan that is impaired, no additional loss recognition is appropriate under Subtopic 450-20
even if the measurement of impairment under this Subsection results in no allowance. For example, a creditor might conclude for a
collateral-dependent loan that it is impaired (because it is probable that the creditor will be unable to collect all the contractual interest
and principal payments as scheduled in the loan agreement). The creditor might measure the impairment using the fair value of the
collateral, which could result in no allowance if the fair value of the collateral is greater than the recorded investment in the loan.
Another example would be when the recorded investment of an impaired loan has been written down to a level where no allowance is
required. [EITF D-080, paragraph 12] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
03/09/2023 11:15 AM EST
Page 192 / 1816
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-36
{If a creditor concludes that an individual loan specifically identified for evaluation is not impaired under this Subsection, that
loan may be included in the assessment of the allowance for loan losses under Subtopic 450-20, [EITF D-080, paragraph 10] }{but
only if specific characteristics of the loan indicate that it is probable that there would be an incurred loss in a group of loans with those
characteristics. Characteristics or risk factors must be specifically identified to support an accrual for losses that have been incurred but
that have not yet reached the point where it is probable that amounts will not be collected on a specific individual loan. A creditor shall
not ignore factors and information obtained in the evaluation of the loan's collectibility. For example, if an individual loan specifically
identified for evaluation is fully collateralized with risk-free assets, then consideration of that loan as sharing characteristics with a
group of uncollateralized loans is inappropriate. Under Subtopic 450-20, a loss is recognized if characteristics of a loan indicate that it
is probable that a group of similar loans includes some losses even though the loss could not be identified to a specific loan. However, a
loss would be recognized only if it is probable that the loss has been incurred at the date of the financial statements and the amount of
loss can be reasonably estimated. (See boxes D, E, and F in the flowchart in paragraph 310-10-55-1.) [EITF D-080, paragraph 10] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
> >
35-37
Changes in the Net Carrying Amount of an Impaired Loan
{After the initial measurement of impairment, if there is a significant change (increase or decrease) in the amount or timing of
an impaired loan's expected future cash flows, or if actual cash flows are significantly different from the cash flows previously
projected, a creditor shall recalculate the impairment by applying the procedures specified in paragraphs 310-10-35-21 through 3522 and 310-10-35-24 through 35-26 and by adjusting the valuation allowance. Similarly, a creditor that measures impairment based
on the observable market price of an impaired loan or the fair value of the collateral of an impaired collateral-dependent loan shall
adjust the valuation allowance if there is a significant change (increase or decrease) in either of those bases. However, the net carrying
amount of the loan shall at no time exceed the recorded investment in the loan. [FAS 114, paragraph 16] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-35-37 will be superseded upon transition, together with its heading.
> > > Changes in the Net Carrying Amount of an Impaired Loan
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-38
{When an asset is carried on a discounted basis, the present value of expected future cash flows will increase from one
reporting period to the next as a result of the passage of time. The present value also may change from changes in estimates of the
timing or amount of expected future cash flows. Similarly, the observable market price of an impaired loan or the fair value of the
collateral of an impaired collateral-dependent loan may change from one reporting period to the next. Because the net carrying amount
of an impaired loan shall be the present value of expected future cash flows (or the observable market price or the fair value of the
collateral) not only at the date at which impairment initially is recognized but also at each subsequent reporting period, recognition of
changes in that measure is required. However, the net carrying amount of the loan shall never exceed the recorded investment in the
loan. [EITF D-080, paragraph 28] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-39
{Except as noted in the next paragraph, this Subsection does not address how a creditor should recognize, measure, or display
interest income on an impaired loan. Some accounting methods for recognizing income may result in a recorded investment in an
impaired loan that is less than the present value of expected future cash flows (or, alternatively, the observable market price of the loan
or the fair value of the collateral). In that case, while the loan would meet the definition of an impaired loan in paragraphs 310-10-3516 through 35-17, no additional impairment would be recognized. Those accounting methods include recognition of interest income
using a cost-recovery method, a cash-basis method, or some combination of those methods. The recorded investment in an impaired
loan also may be less than the present value of expected future cash flows (or, alternatively, the observable market price of the loan or
03/09/2023 11:15 AM EST
Page 193 / 1816
the fair value of the collateral) because the creditor has charged off part of the loan. [FAS 114, paragraph 17] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-40
{The following are two alternative income recognition methods to account for changes in the net carrying amount of an
impaired loan subsequent to the initial measure of impairment: [FAS 118, paragraph 4] }
a.
{Under the first income recognition method, a creditor shall accrue interest on the net carrying amount of the impaired loan and
report other changes in the net carrying amount of the loan as an adjustment to bad-debt expense. [FAS 118, paragraph 4] }
b.
{Under the second income recognition method, a creditor shall recognize all changes in the net carrying amount of the loan as an
adjustment to bad-debt expense. [FAS 118, paragraph 4] }See paragraph 310-10-50-19 for a disclosure requirement related to
this method.
{Those income recognition methods are not required, and a creditor is not precluded from using either of those methods. [FAS 118,
paragraph 4] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
Consideration Points:
ASU 2022-01 The pending content resulting from the issuance of ASU 2022-01 added paragraph 310-10-35-31A. The ASU
amends the guidance in ASU 2017-12 that, among other things, established the “last-of-layer” method for making the fair
value hedge accounting for these portfolios more accessible. ASU 2022-01 renames that method the “portfolio layer”
method and addresses feedback from stakeholders regarding its application. ASU 2022-01’s amendments are effective as
follows: • For public business entities, fiscal years beginning after December 15, 2022, and interim periods within those
fiscal years. • For all other entities, fiscal years beginning after December 15, 2023, and interim periods within those fiscal
years. The guidance may be early adopted if an entity has adopted ASU 2017-12 for the corresponding period.
Is the entity in compliance with the guidance in ASC 310-10-35:
Credit Losses for Loans and Trade Receivables?
03/09/2023 11:15 AM EST
Page 194 / 1816
FASB Codification:
>
Credit Losses for Loans and Trade Receivables
35-41
{Credit losses for loans and trade receivables, which may be for all or part of a particular loan or trade receivable, shall be
deducted from the allowance. The related loan or trade receivable balance shall be charged off in the period in which the loans or trade
receivables are deemed uncollectible. Recoveries of loans and trade receivables previously charged off shall be recorded when
received. [SOP 01-6, paragraph 8] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-35-41 will be superseded upon transition, together with its heading.
> Credit Losses for Loans and Trade Receivables
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-42
{Practices differ between entities as some industries typically credit recoveries directly to earnings while financial institutions
typically credit the allowance for loan losses for recoveries. [SOP 01-6, paragraph 8] }{The combination of this practice and the
practice of frequently reviewing the adequacy of the allowance for loan losses results in the same credit to earnings in an indirect
manner. [SOP 01-6, paragraph 8] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
Consideration Points:
Section 310-10-35 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU superseded paragraphs 310-10-35-41 through 35-42. For public business entities that are U.S.
Securities and Exchange Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2019, including interim periods within those fiscal years. For all other public business entities, the
amendments in the ASU are effective for fiscal years beginning after December 15, 2020, including interim periods within
those fiscal years. For all other entities, including not-for-profit entities and employee benefit plans within the scope of ASC
960 through ASC 965 on plan accounting, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. All entities may adopt the
amendments in this Update earlier as of the fiscal years beginning after December 15, 2018, including interim periods
within those fiscal years.
Is the entity in compliance with the guidance in ASC 310-10-35:
Credit Losses for Standby Letters of Credit and Certain Loan
Commitments ?
FASB Codification:
>
Credit Losses for Standby Letters of Credit and Certain Loan Commitments
35-43
{Paragraph 825-10-35-1 states that an accrual for credit loss on a financial instrument with off-balance-sheet risk (including
standby letters of credit and certain loan commitments) shall be recorded separate from a valuation account related to a recognized
financial instrument and provides related guidance. [SOP 01-6, paragraph 8] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-35-43 will be superseded upon transition, together with its heading.
> Credit Losses for Standby Letters of Credit and Certain Loan Commitments
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
03/09/2023 11:15 AM EST
Page 195 / 1816
Consideration Points:
Section 310-10-35 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU superseded paragraphs 310-10-35-43. For public business entities that are U.S. Securities and
Exchange Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after December 15,
2019, including interim periods within those fiscal years. For all other public business entities, the amendments in the
ASU are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.
For all other entities, including not-for-profit entities and employee benefit plans within the scope of ASC 960 through ASC
965 on plan accounting, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, and
interim periods within fiscal years beginning after December 15, 2021. All entities may adopt the amendments in this
Update earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.
Is the entity in compliance with the guidance in ASC 310-10-35:
Subsequent Measurement of Specific Types of Receivables?
FASB Codification:
>
Subsequent Measurement of Specific Types of Receivables
35-44
The following provides guidance on aspects of subsequent measurement for various types of receivables, specifically:
a.
Financial assets subject to prepayment
b.
Standby commitments to purchase loans
c.
Loans and trade receivables not held for sale
d.
Nonmortgage loans held for sale
e.
Loans not previously held for sale
f.
Amortization of discount or premium on notes
g.
Premium allocated to loans purchased in a credit card portfolio
h.
Hedged portfolios of loans.
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1The following provides guidance on aspects of subsequent measurement for various types of receivables, specifically:
a.
Financial assets subject to prepayment
b.
Standby commitments to purchase loans
c.
Loans and trade receivables not held for sale
d.
Nonmortgage loans held for sale
e.
Loans not previously held for sale
f.
Amortization of discount or premium on notes
g.
Premium allocated to loans purchased in a credit card portfolio
03/09/2023 11:15 AM EST
h.
Hedged portfolios of loans
i.
{Interest income. [ASU 2016-13, paragraph 10] }
> >
35-45
Page 196 / 1816
Financial Assets Subject to Prepayment
{Paragraph 860-20-35-2 requires that financial assets, except for instruments that are within the scope of Subtopic 815-10,
that can contractually be prepaid or otherwise settled in such a way that the holder would not recover substantially all of its recorded
investment be subsequently measured like investments in debt securities classified as available for sale or trading under Topic 320.
[FAS 140, paragraph 14] }
> >
35-46
Standby Commitments to Purchase Loans
{This paragraph applies only to standby commitments to purchase loans. It does not apply to other customary kinds of
commitments to purchase loans, nor does it apply to commitments to originate loans. [SOP 01-6, paragraph 8] }If a standby
commitment is accounted for as a written put option as discussed in paragraph 310-10-25-6,{ the liability recorded at the amount of
the option premium received (representing the fair value of the standby commitment on the trade date) shall thereafter be accounted
for at the greater of the initial standby commitment fee or the fair value of the written put option. Unrealized gains (that is, recoveries
of unrealized losses) or losses shall be credited or charged to current operations. [SOP 01-6, paragraph 8] }However, see Subtopic
815-10 for guidance on accounting for written put options that are within the scope of that Subtopic.
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{This paragraph applies only to standby commitments to purchase loans. It does not apply to other customary kinds of
commitments to purchase loans, nor does it apply to commitments to originate loans. [SOP 01-6, paragraph 8] }If a standby
commitment is recorded at the amount of the option as discussed in paragraph 310-10-25-6,{ the liability recorded at the amount of
the option premium received (representing the fair value of the standby commitment on the trade date) shall thereafter be accounted
for at the greater of the initial standby commitment fee or the fair value of the written put option. Unrealized gains (that is, recoveries
of unrealized losses) or losses shall be credited or charged to current operations. [SOP 01-6, paragraph 8] }However, see Subtopic
815-10 for guidance on accounting for written put options that are within the scope of that Subtopic.
> >
35-47
Loans and Trade Receivables Not Held for Sale
{Loans and trade receivables that management has the intent and ability to hold for the foreseeable future or until maturity or
payoff shall be reported in the balance sheet at outstanding principal adjusted for any chargeoffs, the allowance for loan losses (or the
allowance for doubtful accounts), any deferred fees or costs on originated loans, and any unamortized premiums or discounts on
purchased loans. [SOP 01-6, paragraph 8] }{(Discounts offered as a result of the pricing of a sale or a product or service may be
termed sales discounts. This Subsection does not address these discounts.) [SOP 01-6, paragraph 8] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{Loans and trade receivables that management has the intent and ability to hold for the foreseeable future or until maturity
or payoff shall be reported in the balance sheet at outstanding principal adjusted for any writeoffs, the allowance for credit losses, any
deferred fees or costs on originated loans, and any unamortized premiums or discounts on purchased loans. [SOP 01-6, paragraph 8] }
{(Discounts offered as a result of the pricing of a sale or a product or service may be termed sales discounts. This Subsection does not
address these discounts.) [SOP 01-6, paragraph 8] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-2
326-10-65-2
Editor's Note: Paragraph 310-10-35-47 will be amended upon transition, together with its heading:
> > Nonmortgage Loans and Trade Receivables Not Held for Sale
{Trade receivables that management has the intent and ability to hold for the foreseeable future or until maturity or payoff shall be
reported in the balance sheet at amortized cost basis. [SOP 01-6, paragraph 8] }{(Discounts offered as a result of the pricing of a
03/09/2023 11:15 AM EST
Page 197 / 1816
sale or a product or service may be termed sales discounts. This Subsection does not address these discounts.) [SOP 01-6, paragraph 8]
}{For financial instruments measured at amortized cost basis, see Subtopic 326-20 for additional guidance on credit losses. [ASU
2019-04, paragraph 8] }
35-47A
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-2
326-10-65-2{Nonmortgage loans that management has the intent and ability to hold for the foreseeable future or until maturity or
payoff shall be reported in the balance sheet at their amortized cost bases. See Subtopic 326-20 for guidance on the measurement of
credit losses for financial instruments measured at amortized cost basis. See Topic 948 for guidance on mortgage loans classified as
held-for-long-term-investment. [ASU 2019-04, paragraph 8] }
> >
Nonmortgage Loans Held for Sale
35-48
{Nonmortgage loans held for sale shall be reported at the lower of cost or fair value. [SOP 01-6, paragraph 8] }{This
paragraph applies only to nonmortgage loans. See Topic 948 for guidance related to mortgage loans classified as held for sale. [SOP
01-6, paragraph 8] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{Nonmortgage loans held for sale shall be reported at the lower of amortized cost basis or fair value. [SOP 01-6,
paragraph 8] }{This paragraph applies only to nonmortgage loans. See Topic 948 for guidance related to mortgage loans classified as
held for sale. [SOP 01-6, paragraph 8] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-2
326-10-65-2{Nonmortgage loans held for sale shall be reported at the lower of amortized cost basis or fair value. [SOP 01-6,
paragraph 8] }{The amount by which amortized cost basis exceeds fair value shall be accounted for as a valuation allowance. Changes
in the valuation allowance shall be included in the determination of net income of the period in which the change occurs. [ASU 201904, paragraph 8] }{This paragraph applies only to nonmortgage loans. See Topic 948 for guidance related to mortgage loans classified
as held for sale. [SOP 01-6, paragraph 8] }
> >
Transfers of Nonmortgage Loans between Classifications
35-48A
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-2
326-10-65-2{For a nonmortgage loan that is transferred into the held-for-sale classification from the nonmortgage loan not-held-for-sale
classification, an entity shall reverse in earnings any allowance for credit losses previously recorded on the nonmortgage loan not held
for sale at the transfer date. An entity shall then reclassify and transfer the nonmortgage loan into the held-for-sale classification at its
amortized cost basis (which is reduced by any previous writeoffs but excludes any allowance for credit losses). An entity shall then
determine if a valuation allowance is necessary by following the guidance in Subtopic 310-10. [ASU 2019-04, paragraph 8] }
35-48B
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-2
326-10-65-2{For a nonmortgage loan that is transferred into the not-held-for-sale classification from the nonmortgage loans held-forsale classification, an entity shall reverse in earnings any valuation allowance previously recorded on the nonmortgage loan held for
sale at the transfer date. An entity shall then reclassify and transfer the nonmortgage loan into the not-held-for-sale classification at its
amortized cost basis (which is reduced by any previous writeoffs but excludes any valuation allowance). An entity shall then determine
if an allowance for credit losses is necessary by following the guidance in Subtopic 326-20. [ASU 2019-04, paragraph 8] }
> >
35-49
Loans Not Previously Held for Sale
{This paragraph applies to both mortgage and nonmortgage loans. [SOP 01-6, paragraph 8] }{Once a decision has been made
to sell loans not previously classified as held for sale, such loans shall be transferred into the held-for-sale classification and carried at
the lower of cost or fair value. [SOP 01-6, paragraph 8] }{At the time of the transfer into the held-for-sale classification, any amount
03/09/2023 11:15 AM EST
Page 198 / 1816
by which cost exceeds fair value shall be accounted for as a valuation allowance. [SOP 01-6, paragraph 8] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-35-49 will be superseded upon transition, together with its heading.
> > Loans Not Previously Held for Sale
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
> >
Amortization of Discount or Premium on Notes
35-50
See paragraph 835-30-35-2 for guidance related to amortization of discounts or premiums.
35-51
See Subtopic 835-30 for further guidance on situations in which interest shall be imputed.
> >
Premium Allocated to Loans Purchased in a Credit Card Portfolio
35-52
When an entity purchases a credit card portfolio that includes the cardholder relationships as discussed in paragraph 310-10-
25-7, {at an amount that exceeds the sum of the amounts due under the credit card receivables, [EITF 88-20, paragraph ISSUE] }{the
premium allocated to the loans shall be amortized over the life of the loans in accordance with Subtopic 310-20. [EITF 88-20,
paragraph DISCUSSION] }{If the credit card agreement provides for a repayment period beyond expiration of the card if the card is not
renewed, that period shall be considered in determining the life of the credit card loan. [EITF 88-20, paragraph DISCUSSION] }
> >
Hedged Portfolios of Loans
35-53
Entities sometimes wish to hedge risk associated with portfolios of loans or specific loan cash flows. See Section 815-20-55 for
implementation guidance in such situations.
> >
Interest Income
35-53A
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{Except as noted in paragraphs 310-10-35-53B through 35-53C, this Subsection does not address how a creditor should
recognize, measure, or display interest income on a financial asset with a credit loss. Some accounting methods for recognizing income
may result in an amortized cost basis of a financial asset that is less than the amount expected to be collected (or, alternatively, the fair
value of the collateral). Those accounting methods include recognition of interest income using a cost-recovery method, a cash-basis
method, or some combination of those methods. [FAS 114, paragraph 17] }
35-53B
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{When recognizing interest income on purchased financial assets with credit deterioration within the scope of Topic
326, an entity shall not recognize as interest income the discount embedded in the purchase price that is attributable to the acquirer’s
assessment of expected credit losses at the date of acquisition. The entity shall accrete or amortize as interest income the non-creditrelated discount or premium of a purchased financial asset with credit deterioration in accordance with existing applicable guidance in
Section 310-20-35 or 325-40-35. [ASU 2016-13, paragraph 10] }
35-53C
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{Recognition of income on purchased financial assets with credit deterioration is dependent on having a reasonable
expectation about the amount expected to be collected. Subsequent to purchase, this Subtopic does not prohibit placing financial assets
on nonaccrual status, including use of the cost recovery method or cash basis method of income recognition, when appropriate. For
example, if the timing of either a sale of the financial asset into the secondary market or a sale of collateral in essentially the same
condition as received upon foreclosure is indeterminate, the creditor likely does not have the information necessary to reasonably
estimate cash flows expected and shall cease recognizing income on the financial asset. However, the ability to place a financial asset
03/09/2023 11:15 AM EST
Page 199 / 1816
on nonaccrual shall not be used to circumvent recognition of a credit loss. If the financial asset is acquired primarily for the rewards of
ownership of the underlying collateral, accrual of income is inappropriate. Such rewards of ownership would include use of the
collateral in operations of the entity or improving the collateral for resale. [SOP 03-3, paragraph 6] }{Consistent with paragraph 31020-35-18, interest income shall not be recognized to the extent that the net investment in the financial asset would increase to an
amount greater than the payoff amount. [ASU 2016-13, paragraph 10] }
Consideration Points:
Section 310-10-35 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU amended paragraphs 310-10-35-44, 35-46 through 35-48 and superseded 35-49. For public business
entities that are U.S. Securities and Exchange Commission (SEC) filers, the amendments in the ASU are effective for fiscal
years beginning after December 15, 2019, including interim periods within those fiscal years. For all other public business
entities, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, including interim
periods within those fiscal years. For all other entities, including not-for-profit entities and employee benefit plans within
the scope of ASC 960 through ASC 965 on plan accounting, the amendments in the ASU are effective for fiscal years
beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. All entities
may adopt the amendments in this Update earlier as of the fiscal years beginning after December 15, 2018, including
interim periods within those fiscal years.
Is the entity in compliance with the guidance in ASC 310-10-35:
Transfers of Nonmortgage Loans between Classifications?
FASB Codification:
>
Transfers of Nonmortgage Loans between Classifications
35-48A
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-2
326-10-65-2{For a nonmortgage loan that is transferred into the held-for-sale classification from the nonmortgage loan not-held-for-sale
classification, an entity shall reverse in earnings any allowance for credit losses previously recorded on the nonmortgage loan not held
for sale at the transfer date. An entity shall then reclassify and transfer the nonmortgage loan into the held-for-sale classification at its
amortized cost basis (which is reduced by any previous writeoffs but excludes any allowance for credit losses). An entity shall then
determine if a valuation allowance is necessary by following the guidance in Subtopic 310-10. [ASU 2019-04, paragraph 8] }
35-48B
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-2
326-10-65-2{For a nonmortgage loan that is transferred into the not-held-for-sale classification from the nonmortgage loans held-forsale classification, an entity shall reverse in earnings any valuation allowance previously recorded on the nonmortgage loan held for
sale at the transfer date. An entity shall then reclassify and transfer the nonmortgage loan into the not-held-for-sale classification at its
amortized cost basis (which is reduced by any previous writeoffs but excludes any valuation allowance). An entity shall then determine
if an allowance for credit losses is necessary by following the guidance in Subtopic 326-20. [ASU 2019-04, paragraph 8] }
If the entity has transferred a nonmortgage loan into the held-forsale classification from the nonmortgage loan not-held-for-sale
classification, has the entity reversed any allowance for credit losses
previously recorded on the transfer date through earnings? Has the
entity then reclassified and transferred the nonmortgage loan into
the held-for-sale classification at its amortized cost basis, which is
reduced by any previous write-offs but excludes any allowance for
credit losses? If the entity determines that a valuation allowance is
necessary, has it been recorded in accordance with guidance in
Subtopic 310-10?
03/09/2023 11:15 AM EST
Page 200 / 1816
FASB Codification:
35-48A
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-2
326-10-65-2{For a nonmortgage loan that is transferred into the held-for-sale classification from the nonmortgage loan not-held-for-sale
classification, an entity shall reverse in earnings any allowance for credit losses previously recorded on the nonmortgage loan not held
for sale at the transfer date. An entity shall then reclassify and transfer the nonmortgage loan into the held-for-sale classification at its
amortized cost basis (which is reduced by any previous writeoffs but excludes any allowance for credit losses). An entity shall then
determine if a valuation allowance is necessary by following the guidance in Subtopic 310-10. [ASU 2019-04, paragraph 8] }
Consideration Points:
Sections 310-10-35 and 310-10-45 have been updated as a result of the issuance of ASU 2019-04. If an entity has not yet
adopted ASU 2016-13 (Topic 326), the amendments in this ASU that relate to amendments to Topic 326 are effective and
use the same transition provisions as ASU 2016-13. For entities that have already adopted ASU 2016-13, the amendments
in the Update are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.
If the entity has transferred a nonmortgage loan into the not-heldfor-sale classification from the nonmortgage loan held-for-sale
classification, has the entity reversed any valuation allowance
previously recorded on the transfer date through earnings? Has the
entity then reclassified and transferred the nonmortgage loan into
the not-held-for-sale classification at its amortized cost basis, which
is reduced by any previous write-offs but excludes any valuation
allowance? If the entity determines that an allowance for credit
losses is necessary, has it recorded the allowance in accordance
with guidance in Subtopic 326-20?
FASB Codification:
35-48B
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-2
326-10-65-2{For a nonmortgage loan that is transferred into the not-held-for-sale classification from the nonmortgage loans held-forsale classification, an entity shall reverse in earnings any valuation allowance previously recorded on the nonmortgage loan held for
sale at the transfer date. An entity shall then reclassify and transfer the nonmortgage loan into the not-held-for-sale classification at its
amortized cost basis (which is reduced by any previous writeoffs but excludes any valuation allowance). An entity shall then determine
if an allowance for credit losses is necessary by following the guidance in Subtopic 326-20. [ASU 2019-04, paragraph 8] }
Consideration Points:
Sections 310-10-35 and 310-10-45 have been updated as a result of the issuance of ASU 2019-04. If an entity has not yet
adopted ASU 2016-13 (Topic 326), the amendments in this ASU that relate to amendments to Topic 326 are effective and
use the same transition provisions as ASU 2016-13. For entities that have already adopted ASU 2016-13, the amendments
in the Update are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.
Is the entity in compliance with the guidance in ASC 310-10-35:
Interest Income?
03/09/2023 11:15 AM EST
Page 201 / 1816
FASB Codification:
>
Interest Income
35-53A
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{Except as noted in paragraphs 310-10-35-53B through 35-53C, this Subsection does not address how a creditor should
recognize, measure, or display interest income on a financial asset with a credit loss. Some accounting methods for recognizing income
may result in an amortized cost basis of a financial asset that is less than the amount expected to be collected (or, alternatively, the fair
value of the collateral). Those accounting methods include recognition of interest income using a cost-recovery method, a cash-basis
method, or some combination of those methods. [FAS 114, paragraph 17] }
35-53B
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{When recognizing interest income on purchased financial assets with credit deterioration within the scope of Topic
326, an entity shall not recognize as interest income the discount embedded in the purchase price that is attributable to the acquirer’s
assessment of expected credit losses at the date of acquisition. The entity shall accrete or amortize as interest income the non-creditrelated discount or premium of a purchased financial asset with credit deterioration in accordance with existing applicable guidance in
Section 310-20-35 or 325-40-35. [ASU 2016-13, paragraph 10] }
35-53C
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{Recognition of income on purchased financial assets with credit deterioration is dependent on having a reasonable
expectation about the amount expected to be collected. Subsequent to purchase, this Subtopic does not prohibit placing financial assets
on nonaccrual status, including use of the cost recovery method or cash basis method of income recognition, when appropriate. For
example, if the timing of either a sale of the financial asset into the secondary market or a sale of collateral in essentially the same
condition as received upon foreclosure is indeterminate, the creditor likely does not have the information necessary to reasonably
estimate cash flows expected and shall cease recognizing income on the financial asset. However, the ability to place a financial asset
on nonaccrual shall not be used to circumvent recognition of a credit loss. If the financial asset is acquired primarily for the rewards of
ownership of the underlying collateral, accrual of income is inappropriate. Such rewards of ownership would include use of the
collateral in operations of the entity or improving the collateral for resale. [SOP 03-3, paragraph 6] }{Consistent with paragraph 31020-35-18, interest income shall not be recognized to the extent that the net investment in the financial asset would increase to an
amount greater than the payoff amount. [ASU 2016-13, paragraph 10] }
Consideration Points:
Section 310-10-35 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU amended paragraphs 310-10-35-44, 35-46 through 35-48, superseded 35-49 and added 35-53A
through 53C. For public business entities that are U.S. Securities and Exchange Commission (SEC) filers, the amendments
in the ASU are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal
years. For all other public business entities, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2020, including interim periods within those fiscal years. For all other entities, including not-for-profit
entities and employee benefit plans within the scope of ASC 960 through ASC 965 on plan accounting, the amendments in
the ASU are effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning
after December 15, 2021. All entities may adopt the amendments in this Update earlier as of the fiscal years beginning
after December 15, 2018, including interim periods within those fiscal years.
Assets > 310 Receivables > 10 Overall > 35 Subsequent Measurement > Acquisition, Development, and Construction
Arrangements
Is the entity in compliance with the guidance in ASC 310-10-35:
Changes in Initial Determination Factors?
03/09/2023 11:15 AM EST
Page 202 / 1816
FASB Codification:
>
Changes in Initial Determination Factors
35-55
{The factors that were evaluated in determining the accounting treatment at inception subsequently change for some
acquisition, development, and construction arrangements, for example, as a result of a renegotiation of the terms. [PB 01,
paragraph 20] }{Consequently, the accounting treatment for an acquisition, development, and construction arrangement shall be
periodically reassessed. [PB 01, paragraph 20] }
35-56
{An acquisition, development, and construction arrangement originally classified as an investment or joint venture could
subsequently be treated as a loan if the risk to the lender diminishes significantly, and the lender will not be receiving over 50 percent
of the expected residual profit in the project. [PB 01, paragraph 20] }{The lender shall demonstrate a change in the facts relied upon
when initially making the accounting decision, not just the absence of, or reduced participation in, the expected residual profit. [PB 01,
paragraph 20] }{For instance, risk may be reduced if a valid take-out commitment from another lender who has the capability to
perform under the commitment is obtained and all conditions affecting the take-out commitment have been met, thus assuring the
primary lender recovery of its funds. [PB 01, paragraph 20] }
35-57
{Conversely, if the lender assumes further risks or rewards in an acquisition, development, and construction arrangement by,
for example, releasing collateral supporting a guarantee or increasing its percentage of profit participation to over 50 percent, the
lender's position may change to that of an investor in real estate. [PB 01, paragraph 20] }
35-58
{Neither an improvement in the economic prospects for the project or successful, ongoing development of the project nor a
deterioration in the economic prospects for the project justifies a change in classification of an acquisition, development, and
construction arrangement. [PB 01, paragraph 20] }
35-59
{A change in classification is expected to occur infrequently and shall be supported by appropriate documentation. [PB 01,
paragraph 20] }{The change in factors in an acquisition, development, and construction arrangement shall be evaluated based on the
guidance in this Subsection and accounted for prospectively. [PB 01, paragraph 20] }
35-60
{If an acquisition, development, and construction arrangement accounted for as a real estate joint venture continues into a
permanent phase with the project generating a positive cash flow and paying debt service currently, income shall be recognized in
accordance with Topic 970. [PB 01, paragraph 21] }
Is the entity in compliance with the guidance in ASC 310-10-35:
Other Matters?
FASB Codification:
>
Other Matters
35-61
{Regardless of the accounting treatment for an acquisition, development, and construction arrangement, management shall on
a continuing basis review the collectibility of uncollected principal, accrued interest, and fees and provide for appropriate allowances.
[PB 01, paragraph 22] }
Assets > 310 Receivables > 10 Overall > 40 Derecognition > General
Is the entity in compliance with the guidance in ASC 310-10-40:
Classification and Measurement of Certain Government-Guaranteed
Mortgage Loans upon Foreclosure?
03/09/2023 11:15 AM EST
Page 203 / 1816
FASB Codification:
>
Classification and Measurement of Certain Government-Guaranteed Mortgage Loans upon Foreclosure
40-1A
{For guidance on the classification and measurement of certain government-guaranteed mortgage loans upon foreclosure by a
creditor, see paragraphs 310-40-40-7A through 40-7B. [ASU 2014-14, paragraph 2] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{For guidance on the classification and measurement of certain government-guaranteed mortgage loans upon foreclosure by
a creditor, see paragraphs 310-20-40-7 through 40-8. [ASU 2014-14, paragraph 2] }
Consideration Points:
ASU 2022-02 The pending content resulting from the issuance of ASU 2022-02 amended paragraphs 310-10-05-1, 310-1040-1A, and 310-10-50-11, superseded paragraphs 310-10-50-31 through 50-34 and 310-10-55-12 and the related headings,
and added paragraphs 310-10-50-36 through 50-48 and 310-10- 55-12A, 310-10-55-12B, 310-10-55-12F, and 310-10-55-12I
and their related headings, with a link to transition paragraph 326-10-65-5, and paragraphs 310-10-55-12C through 5512E, 310-10-55-12G, 310-10-55-12H, 310-10-55-12J, and 310-10-55-12K. ASU 2022-02 eliminated the accounting
guidance on troubled debt restructurings (TDRs) for creditors in ASC 310-40 and amended the guidance on “vintage
disclosures” to require disclosure of current-period gross write-offs by year of origination. The ASU also updated the
requirements related to accounting for credit losses under ASC 326 and added enhanced disclosures for creditors with
respect to loan refinancings and restructurings for borrowers experiencing financial difficulty. ASU 2022-02 superseded the
accounting guidance for TDRs for creditors in ASC 310-40 in its entirety and requires entities to evaluate all receivable
modifications under ASC 310-20-35-9 through 35-11 to determine whether a modification made to a borrower results in a
new loan or a continuation of the existing loan. ASU 2022-02’s amendments are effective as follows: • For entities that have
already adopted ASU 2016-13, the amendments in ASU 2022-02 are effective for fiscal years beginning after December 15,
2022, including interim periods within those fiscal years. • For entities that have not yet adopted ASU 2016-13, the
amendments in ASU 2022-02 are effective upon adoption of ASU 2016-13. Entities are permitted to early adopt these
amendments, including adoption in any interim period, provided that the amendments are adopted as of the beginning of the
annual reporting period that includes the interim period of adoption. In addition, entities are permitted to elect to early
adopt the amendments related to TDR accounting and related disclosure enhancements separately from the amendments
related to the vintage disclosures.
Assets > 310 Receivables > 10 Overall > 40 Derecognition > Acquisition, Development, and Construction
Arrangements
Is the entity in compliance with the guidance in ASC 310-10-40-3?
FASB Codification:
40-3
{The lender's share of the expected residual profit in a project may be sold to the borrower or a third party for cash or other
consideration. If the expected residual profit in an acquisition, development, and construction arrangement accounted for as a loan is
sold, the proceeds from the sale shall be recognized prospectively as additional interest over the remaining term of the loan. The
expected residual profit is considered additional compensation to the lender, and the sale results in a quantification of the profit. [PB
01, paragraph 18] }
Is the entity in compliance with the guidance in ASC 310-10-40-4?
FASB Codification:
40-4
{If an acquisition, development, and construction arrangement is accounted for as an investment in real estate or joint venture
and the expected residual profit is sold, [PB 01, paragraph 18] }{the entity shall apply the guidance in Topic 860 on transfers and
servicing. [ASU 2014-09, paragraph 27] }
Is the entity in compliance with the guidance in ASC 310-10-40-5?
03/09/2023 11:15 AM EST
Page 204 / 1816
FASB Codification:
40-5
{If a financial institution was the seller of the property at the initiation of the project, [PB 01, paragraph 19] }{the entity shall
apply the guidance in paragraphs 360-10-40-3A through 40-3B. However, if the sale is part of a sale-leaseback transaction, [ASU
2014-09, paragraph 27] }{gain recognition, if any, should be determined by reference to Section 360-20-40. [PB 01, paragraph 19] }
Pending Content:
Transition Date: (P) December 16, 2018; (N) December 16, 2021 Transition Guidance 842-10-65-1
842-10-65-1{If a financial institution was the seller of the property at the initiation of the project, [PB 01, paragraph 19] }{the entity
shall apply the guidance in paragraphs 360-10-40-3A through 40-3B. However, if the sale is part of a sale and leaseback transaction,
[ASU 2014-09, paragraph 27] }{gain recognition, if any, should be determined by reference to Subtopic 842-40. [PB 01,
paragraph 19] }
Consideration Points:
ASU 2016-02 Section 310-10-40 has been updated as the result of the issuance of ASU 2016-02. The pending content
resulting from the issuance of this ASU amended paragraph 310-10-40-5. The amendments in this ASU are effective for
fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, for any of the following:
* Public business entities. * Not-for-profit entities that have issued, or are a conduit bond obligor for, securities that are
traded, listed, or quoted on an exchange or an over-the-counter market. * Employee benefit plans that file financial
statements with the SEC. For all other entities, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early application of the
amendments in the ASU is permitted for all entities.
Assets > 310 Receivables > 10 Overall > 45 Other Presentation > General
Are major categories of loans or trade receivables presented
separately either in the balance sheet or in the notes to the
financial statements? [ASC 310-10-45-2]
FASB Codification:
>
Loans or Trade Receivables
45-2
{Loans or trade receivables may be presented on the balance sheet as aggregate amounts. However, such receivables held for
sale shall be a separate balance sheet category. [SOP 01-6, paragraph 13] }{Major categories of loans or trade receivables shall be
presented separately either in the balance sheet or in the notes to the financial statements. [SOP 01-6, paragraph 13] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2021 Transition Guidance 326-10-65-2
326-10-65-2
Editor's Note: Paragraph 310-10-45-2 will be amended upon transition, together with its heading:
> Nonmortgage Loans or Trade Receivables
{Nonmortgage loans or trade receivables may be presented on the balance sheet as aggregate amounts. However, such receivables
held for sale shall be a separate balance sheet category. [SOP 01-6, paragraph 13] }{Major categories of nonmortgage loans or trade
receivables shall be presented separately either in the balance sheet or in the notes to financial statements. [SOP 01-6, paragraph 13]
}{An entity shall present the amounts reversed or established for the valuation allowance and the allowance for credit losses, as
applicable, related to the transfer of nonmortgage loans (see paragraphs 310-10-35-48A through 35-48B) on a gross basis in the
income statement. An entity may present those amounts on the income statement or in the notes to financial statements. [ASU 201904, paragraph 8] }
Consideration Points:
Loans or trade receivables may be presented on the balance sheet as aggregate amounts. However, such receivables held for
sale shall be a separate balance sheet category.
03/09/2023 11:15 AM EST
Page 205 / 1816
Has the entity appropriately presented the amounts reversed or
established for the valuation allowance and the allowance for credit
losses, as applicable, related to the transfer of nonmortgage loans
on a gross basis in the income statement or a note to the financial
statements?
FASB Codification:
45-2
{Loans or trade receivables may be presented on the balance sheet as aggregate amounts. However, such receivables held for
sale shall be a separate balance sheet category. [SOP 01-6, paragraph 13] }{Major categories of loans or trade receivables shall be
presented separately either in the balance sheet or in the notes to the financial statements. [SOP 01-6, paragraph 13] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2021 Transition Guidance 326-10-65-2
326-10-65-2
Editor's Note: Paragraph 310-10-45-2 will be amended upon transition, together with its heading:
> Nonmortgage Loans or Trade Receivables
{Nonmortgage loans or trade receivables may be presented on the balance sheet as aggregate amounts. However, such receivables
held for sale shall be a separate balance sheet category. [SOP 01-6, paragraph 13] }{Major categories of nonmortgage loans or trade
receivables shall be presented separately either in the balance sheet or in the notes to financial statements. [SOP 01-6, paragraph 13]
}{An entity shall present the amounts reversed or established for the valuation allowance and the allowance for credit losses, as
applicable, related to the transfer of nonmortgage loans (see paragraphs 310-10-35-48A through 35-48B) on a gross basis in the
income statement. An entity may present those amounts on the income statement or in the notes to financial statements. [ASU 201904, paragraph 8] }
Consideration Points:
Sections 310-10-35 and 310-10-45 have been updated as a result of the issuance of ASU 2019-04. If an entity has not yet
adopted ASU 2016-13 (Topic 326), the amendments in this ASU that relate to amendments to Topic 326 are effective and
use the same transition provisions as ASU 2016-13. For entities that have already adopted ASU 2016-13, the amendments
in the Update are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.
Is the entity in compliance with the classification and disclosure
requirements of ASC 310-10-45 regarding foreclosed or repossessed
assets? [ASC 310-10-45-3]
FASB Codification:
>
Foreclosed or Repossessed Assets
45-3
{Foreclosed and repossessed assets shall be classified as a separate balance sheet amount or included in other assets on the
balance sheet with separate disclosures in the notes to financial statements. [SOP 01-6, paragraph 13] }{Certain returned or
repossessed assets, such as inventory, shall not be classified separately if the assets subsequently are to be utilized by the entity in
operations. [SOP 01-6, paragraph 13] }
Consideration Points:
Foreclosed and repossessed assets shall be classified as a separate balance sheet amount or included in other assets on the
balance sheet with separate disclosures in the notes to financial statements. Certain returned or repossessed assets, such
as inventory, shall not be classified separately if the assets subsequently are to be utilized by the entity in operations.
Has the entity deducted valuation allowances from the assets or
groups of assets to which the allowances relate? [ASC 310-10-45-4]
03/09/2023 11:15 AM EST
Page 206 / 1816
FASB Codification:
>
Allowances
45-4
45-4A
[Paragraph superseded by Accounting Standards Update No. 2012-04 superseded by Accounting Standards Update]
{See the guidance in paragraph 210-10-45-13 for asset valuation allowances. [ASU 2012-04, paragraph 175] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2021 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-45-4A will be superseded upon transition, together with its heading.
> Allowances
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
Consideration Points:
See paragraph 310-10-50-14 for a related disclosure requirement ASU 2016-13: Section 310-10-45 has been updated as the
result of the issuance of ASU 2016-13. The pending content resulting from the issuance of this ASU superseded paragraph
310-10-45-4A. For public business entities that are U.S. Securities and Exchange Commission (SEC) filers, the
amendments in the ASU are effective for fiscal years beginning after December 15, 2019, including interim periods within
those fiscal years. For all other public business entities, the amendments in the ASU are effective for fiscal years beginning
after December 15, 2020, including interim periods within those fiscal years. For all other entities, including not-for-profit
entities and employee benefit plans within the scope of ASC 960 through ASC 965 on plan accounting, the amendments in
the ASU are effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning
after December 15, 2021. All entities may adopt the amendments in this Update earlier as of the fiscal years beginning
after December 15, 2018, including interim periods within those fiscal years.
Has the entity complied with the presentation requirements
regarding bad-debt expense as described in ASC 310-10-45? [ASC
310-10-45-5 and 45-6]
FASB Codification:
>
Bad-Debt Expense
45-5
{The change in present value from one reporting period to the next may result not only from the passage of time but also from
changes in estimates of the timing or amount of expected future cash flows. [FAS 114, paragraph 58] }{A creditor that measures
impairment based on the present value of expected future cash flows is permitted to report the entire change in present value as baddebt expense. Alternatively, a creditor may report the change in present value attributable to the passage of time as interest income.
[FAS 114, paragraph 59] }See paragraph 310-10-50-19 for a disclosure requirement applicable to creditors that choose the latter
alternative and report changes in present value attributable to the passage of time as interest income.
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2021 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-45-5 will be superseded upon transition, together with its heading.
> Bad-Debt Expense
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
45-6
{The observable market price of an impaired loan or the fair value of the collateral of an impaired collateral-dependent loan
may change from one reporting period to the next. [FAS 114, paragraph 58] }{Changes in observable market prices or the fair value
of the collateral shall be reported as bad-debt expense or a reduction in bad-debt expense. [FAS 114, paragraph 59] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2021 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
03/09/2023 11:15 AM EST
Page 207 / 1816
Consideration Points:
Section 310-10-45 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU superseded paragraphs 310-10-45-5 and 45-6. For public business entities that are U.S. Securities
and Exchange Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after December
15, 2019, including interim periods within those fiscal years. For all other public business entities, the amendments in the
ASU are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.
For all other entities, including not-for-profit entities and employee benefit plans within the scope of ASC 960 through ASC
965 on plan accounting, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, and
interim periods within fiscal years beginning after December 15, 2021. All entities may adopt the amendments in this
Update earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.
Have unearned discounts (other than cash or quantity discounts
and similar items), finance charges, and interest included in the
face amount of receivables been shown as a deduction from the
related receivables? [ASC 310-10-45-8]
FASB Codification:
>
Unearned Discounts
45-8
{Unearned discounts (other than cash or quantity discounts and similar items), finance charges, and interest included in the face
amount of receivables shall be shown as a deduction from the related receivables. [ARB 43, paragraph Ch. 3A Par. 10] }
Is the entity in compliance with the guidance in ASC 310-10-45:
Receivables Classified as Current Assets?
FASB Codification:
>
Receivables Classified as Current Assets
45-9
{ As indicated in its definition for accounting purposes, the term current assets is used to designate cash and other assets or
resources commonly identified as those that are reasonably expected to be realized in cash or sold or consumed during the normal
operating cycle of the business. [ARB 43, paragraph Ch. 3A Par. 4] }{Paragraph 210-10-45-1 notes that the term current assets
comprehends the following types of receivables: [ARB 43, paragraph Ch. 3A Par. 4] }
a.
{Trade accounts, notes, and acceptances receivable [ARB 43, paragraph Ch. 3A Par. 4] }
b.
{Receivables from officers, employees, affiliates, and others, if collectible in the ordinary course of business within a year [ARB
43, paragraph Ch. 3A Par. 4] }
c.
{Installment or deferred accounts and notes receivable if they conform generally to normal trade practices and terms within the
business. [ARB 43, paragraph Ch. 3A Par. 4] }
See Section 210-10-45 for further guidance on the required presentation of current assets in the balance sheet.
Is the entity in compliance with the guidance in ASC 310-10-45:
Cash Flows?
03/09/2023 11:15 AM EST
Page 208 / 1816
FASB Codification:
>
Cash Flows
45-10
{Paragraph 230-10-45-16 states that cash receipts from returns on loans, other debt instruments of other entities, and equity
securities—interest and dividends shall be classified in the statement of cash flows as cash inflows from operating activities. [FAS 095,
paragraph 22] }
45-11
{Paragraph 230-10-45-11 states that cash flows from purchases, sales, and maturities of available-for-sale securities shall be
classified as cash flows from investing activities and reported gross in the statement of cash flows. [FAS 102, paragraph 8] }
{Paragraph 230-10-45-21 states that some loans are similar to securities in a trading account in that they are originated or purchased
specifically for resale and are held for short periods of time. [FAS 102, paragraph 9] }
Pending Content:
Transition Date: (P) December 16, 2017; (N) December 16, 2018 Transition Guidance 825-10-65-2
825-10-65-2{Paragraph 230-10-45-11 states that cash flows from purchases, sales, and maturities of available-for-sale debt securities
shall be classified as cash flows from investing activities and reported gross in the statement of cash flows. [FAS 102, paragraph 8] }
{Paragraph 230-10-45-21 states that some loans are similar to debt securities in a trading account in that they are originated or
purchased specifically for resale and are held for short periods of time. [FAS 102, paragraph 9] }
45-12
See Topic 230 for further guidance on the classification of cash flows from receivables in the cash flow statement.
Consideration Points:
Section 310-10-45 has been updated as the result of the issuance of ASU 2016-01. The pending content resulting from the
issuance of this ASU amended paragraph 310-10-45-11. For public business entities, the amendments in the ASU are
effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. For all
other entities including not-for-profit entities and employee benefit plans within the scope of ASC 960 through ASC 965 on
plan accounting, the amendments in the ASU are effective for fiscal years beginning after December 15, 2018, and interim
periods within fiscal years beginning after December 15, 2019. All entities that are not public business entities may adopt
the amendments in the ASU earlier as of the fiscal years beginning after December 15, 2017, including interim periods
within those fiscal years. Early application by public business entities to financial statements of fiscal years or interim
periods that have not yet been issued or, by all other entities, that have not yet been made available for issuance of the
following amendments in this Update are permitted as of the beginning of the fiscal year of adoption. Except for this, early
adoption of the amendments is not permitted.
Has the entity complied with the presentation requirements of ASC
310-10-45 regarding receivables from officers, employees, or
affiliates? [ASC 310-10-45-13]
FASB Codification:
>
Receivables from Officers, Employees, or Affiliates
45-13
{As indicated in paragraph 850-10-50-2, notes or accounts receivable due from officers, employees, or affiliated companies
shall be shown separately and not included under a general heading such as notes receivable or accounts receivable. [ARB 43,
paragraph Ch. 1A Par. 5] }
Consideration Points:
As indicated in paragraph 850-10-50-2, notes or accounts receivable due from officers, employees, or affiliated companies
shall be shown separately and not included under a general heading such as notes receivable or accounts receivable.
Has the entity complied with reporting requirements of ASC 50510-45 regarding notes received as equity contributions? [ASC 31010-45-14]
03/09/2023 11:15 AM EST
Page 209 / 1816
FASB Codification:
>
Note Received as an Equity Contribution
45-14
{For guidance on a note received as a contribution to an entity's equity, see paragraph 505-10-45-2. [EITF 85-01,
paragraph ISSUE] }
Consideration Points:
For guidance on a note received as a contribution to an entity's equity, see paragraph 505-10-45-2. Reporting the note as an
asset is generally not appropriate, except in very limited circumstances when there is substantial evidence of ability and
intent to pay within a reasonably short period of time.
Assets > 310 Receivables > 10 Overall > 45 Other Presentation > Acquisition, Development, and Construction
Arrangements
Is the entity in compliance with the guidance in ASC 310-10-45-15
regarding acquisition, development and construction arrangements?
[ASC 310-10-45-15]
FASB Codification:
45-15
{Acquisition, development, and construction arrangements accounted for as investments in real estate or joint ventures
shall be combined and reported in the balance sheet separately from those acquisition, development, and construction arrangements
accounted for as loans. [PB 01, paragraph 17] }
Consideration Points:
Acquisition, development, and construction arrangements accounted for as investments in real estate or joint ventures shall
be combined and reported in the balance sheet separately from those acquisition, development, and construction
arrangements accounted for as loans.
Assets > 310 Receivables > 10 Overall > 50 Disclosure > General
Is the entity in compliance with the guidance in ASC 310-10-50-1?
FASB Codification:
50-1
This Subsection provides the following disclosure guidance for receivables, off-balance-sheet credit exposures, and foreclosed
and repossessed assets:
a.
Accounting policies for loans and trade receivables
b.
Assets serving as collateral
c.
Nonaccrual and past due financing receivables
d.
Accounting policies for off-balance-sheet credit exposures
e.
Foreclosed and repossessed assets
f.
Allowance for credit losses
g.
Impaired loans
h.
Loss contingencies
03/09/2023 11:15 AM EST
i.
Risks and uncertainties
j.
Fair value disclosures
k.
{Credit quality information [ASU 2010-20, paragraph 6] }
l.
{Modifications. [ASU 2010-20, paragraph 6] }
Page 210 / 1816
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1This Subsection provides the following disclosure guidance for receivables, off-balance-sheet credit exposures, and
foreclosed and repossessed assets:
a.
Accounting policies for loans and trade receivables
b.
Assets serving as collateral
c.
[Subparagraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update] .
d.
[Subparagraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update] .
e.
Foreclosed and repossessed assets
f.
[Subparagraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update] .
g.
[Subparagraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update] .
h.
[Subparagraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update] .
i.
Risks and uncertainties
j.
Fair value disclosures
k.
[Subparagraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update] .
l.
{Modifications. [ASU 2010-20, paragraph 6] }
Consideration Points:
Section 310-10-50 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU amended paragraph 310-10-50-1. For public business entities that are U.S. Securities and Exchange
Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after December 15, 2019,
including interim periods within those fiscal years. For all other public business entities, the amendments in the ASU are
effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. For all
other entities, including not-for-profit entities and employee benefit plans within the scope of ASC 960 through ASC 965 on
plan accounting, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, and interim
periods within fiscal years beginning after December 15, 2021. All entities may adopt the amendments in this Update
earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.
Has the entity disclosed a summary of its significant accounting
policies for loans and trade receivables as described in ASC 310-1050? [ASC 310-10-50-1A through 50-4A]
03/09/2023 11:15 AM EST
Page 211 / 1816
FASB Codification:
>
Accounting Policies for Loans and Trade Receivables
50-1A
{The guidance in paragraphs 310-10-50-2 through 50-4A applies only to the following financing receivables: [ASU 2010-
20, paragraph 7] }
a.
{Loans [ASU 2010-20, paragraph 7] }
b.
{Trade receivables. [ASU 2010-20, paragraph 7] }
50-2
{The summary of significant accounting policies shall include the following: [SOP 01-6, paragraph 13] }
a.
{The basis for accounting for loans and trade receivables [SOP 01-6, paragraph 13] }
b.
{The method used in determining the lower of cost or fair value of nonmortgage loans held for sale (that is, aggregate or
individual asset basis) [SOP 01-6, paragraph 13] }
c.
{The classification and method of accounting for interest-only strips, loans, other receivables, or retained interests in
securitizations that can be contractually prepaid or otherwise settled in a way that the holder would not recover substantially all
of its recorded investment [SOP 01-6, paragraph 13] }
d.
{The method for recognizing interest income on loan and trade receivables, including a statement about the entity’s policy for
treatment of related fees and costs, including the method of amortizing net deferred fees or costs. [SOP 01-6, paragraph 13] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{The summary of significant accounting policies shall include the following: [SOP 01-6, paragraph 13] }
a.
{The basis for accounting for loans and trade receivables [SOP 01-6, paragraph 13] }
b.
{The method used in determining the lower of amortized cost basis or fair value of nonmortgage loans held for sale (that is,
aggregate or individual asset basis) [SOP 01-6, paragraph 13] }
c.
{The classification and method of accounting for interest-only strips, loans, other receivables, or retained interests in
securitizations that can be contractually prepaid or otherwise settled in a way that the holder would not recover substantially all
of its recorded investment [SOP 01-6, paragraph 13] }
d.
{The method for recognizing interest income on loan and trade receivables, including a statement about the entity’s policy for
treatment of related fees and costs, including the method of amortizing net deferred fees or costs. [SOP 01-6, paragraph 13] }
50-3
{If major categories of loans or trade receivables are not presented separately in the balance sheet (see paragraph 310-10-45-
2), they shall be disclosed in the notes to the financial statements. [SOP 01-6, paragraph 13] }
50-4
{The allowance for credit losses (also referred to as the allowance for doubtful accounts) and, as applicable, any unearned
income, any unamortized premiums and discounts, and any net unamortized deferred fees and costs, shall be disclosed in the financial
statements. [SOP 01-6, paragraph 13] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{The allowance for credit losses and, as applicable, any unearned income, any unamortized premiums and discounts, and
any net unamortized deferred fees and costs, shall be disclosed in the financial statements. [SOP 01-6, paragraph 13] }
50-4A
{Except for credit card receivables, an entity shall disclose its policy for charging off uncollectible trade accounts receivable
that have both of the following characteristics: [ASU 2010-20, paragraph 9] }
a.
{They have a contractual maturity of one year or less [ASU 2010-20, paragraph 9] }
03/09/2023 11:15 AM EST
b.
Page 212 / 1816
{They arose from the sale of goods or services. [ASU 2010-20, paragraph 9] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
Has the carrying amount of loans, trade receivables, securities and
financial instruments that serve as collateral for borrowings been
disclosed pursuant to ASC 860-30-50? [ASC 310-10-50-5]
FASB Codification:
>
Assets Serving as Collateral
50-5
{For required disclosures of the carrying amount of loans, trade receivables, securities and financial instruments that serve as
collateral for borrowings, [SOP 01-6, paragraph 13] } see paragraph 860-30-50-1A.
Has the entity disclosed a summary of its significant accounting
policies for nonaccrual and past due loans and trade receivables as
described in ASC 310-10-50? [ASC 310-10-50-5A through 50-8]
FASB Codification:
>
Nonaccrual and Past Due Financing Receivables
50-5A
{The guidance in paragraphs 310-10-50-6 through 50-8 does not apply to loans acquired with deteriorated credit quality
(accounted for under Subtopic 310-30). [ASU 2010-20, paragraph 10] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-50-5A will be superseded upon transition, together with its heading.
> Nonaccrual and Past Due Financing Receivables
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
50-5B
{The guidance in paragraphs 310-10-50-6 through 50-7A shall be provided by class of financing receivable except for the
following financing receivables: [ASU 2010-20, paragraph 10] }
a.
{Receivables measured at fair value with changes in fair value reported in earnings [ASU 2010-20, paragraph 10] }
b.
{Receivables measured at lower of cost or fair value [ASU 2010-20, paragraph 10] }
c.
{Trade accounts receivable, except for credit card receivables, that have both of the following characteristics: [ASU 2010-20,
paragraph 10] }
d.
1.
{They have a contractual maturity of one year or less. [ASU 2010-20, paragraph 10] }
2.
{They arose from the sale of goods or services. [ASU 2010-20, paragraph 10] }
{Participant loans in defined contribution pension plans. [ASU 2010-25, paragraph 2] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
03/09/2023 11:15 AM EST
Page 213 / 1816
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
50-6
{An entity’s summary of significant accounting policies for financing receivables shall include all of the following: [SOP 01-6,
paragraph 13] }
a.
{The policy for placing financing receivables, if applicable, on nonaccrual status (or discontinuing accrual of interest) [SOP 01-6,
paragraph 13] }
b.
{The policy for recording payments received on nonaccrual financing receivables, if applicable [SOP 01-6, paragraph 13] }
c.
{The policy for resuming accrual of interest [SOP 01-6, paragraph 13] }
d.
[Subparagraph superseded by Accounting Standards Update No. 2010-20 superseded by Accounting Standards Update]
e.
{The policy for determining past due or delinquency status. [SOP 01-6, paragraph 13] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
50-7
An entity shall provide both of the following disclosures related to nonaccrual and past due financing receivables as of each
balance sheet date:
a.
{The recorded investment in financing receivables on nonaccrual status [SOP 01-6, paragraph 13] }
b.
{The recorded investment in financing receivables past due 90 days or more and still accruing. [SOP 01-6, paragraph 13] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
50-7A
{An entity shall provide an analysis of the age of the recorded investment in financing receivables at the end of the reporting
period that are past due, as determined by the entity’s policy. [ASU 2010-20, paragraph 12] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
50-7B
{The guidance in paragraph 310-10-50-7A does not apply to the following financing receivables: [ASU 2010-20,
paragraph 12] }
a.
{Receivables measured at fair value with changes in fair value reported in earnings [ASU 2010-20, paragraph 12] }
b.
{Receivables measured at lower of cost or fair value [ASU 2010-20, paragraph 12] }
c.
{Except for credit card receivables, trade accounts receivable that have both of the following characteristics: [ASU 2010-20,
paragraph 12] }
d.
1.
{They have a contractual maturity of one year or less. [ASU 2010-20, paragraph 12] }
2.
{They arose from the sale of goods or services. [ASU 2010-20, paragraph 12] }
{Participant loans in defined contribution pension plans. [ASU 2010-25, paragraph 2] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
03/09/2023 11:15 AM EST
50-8
Page 214 / 1816
{For trade receivables that do not accrue interest until a specified period has elapsed, nonaccrual status would be the point when
accrual is suspended after the receivable becomes past due. [SOP 01-6, paragraph 13] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
Consideration Points:
Section 310-10-50 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU superseded paragraphs 310-10-50-5A through 50-8. For public business entities that are U.S.
Securities and Exchange Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2019, including interim periods within those fiscal years. For all other public business entities, the
amendments in the ASU are effective for fiscal years beginning after December 15, 2020, including interim periods within
those fiscal years. For all other entities, including not-for-profit entities and employee benefit plans within the scope of ASC
960 through ASC 965 on plan accounting, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. All entities may adopt the
amendments in this Update earlier as of the fiscal years beginning after December 15, 2018, including interim periods
within those fiscal years.
Has the entity disclosed its accounting policies for credit losses and
doubtful accounts as described in ASC 310-10-50? [ASC 310-10-509 and 50-10]
FASB Codification:
>
Accounting Policies for Off-Balance-Sheet Credit Exposures
50-9
{In addition to disclosures required by Subtopic 450-20, an entity shall disclose a description of the accounting policies and
methodology the entity used to estimate its liability for off-balance-sheet credit exposures and related charges for those credit
exposures. Such a description shall identify the factors that influenced management's judgment (for example, historical losses and
existing economic conditions) and a discussion of risk elements relevant to particular categories of financial instruments. [SOP 01-6,
paragraph 13] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-50-9 will be superseded upon transition, together with its heading.
> Accounting Policies for Off-Balance-Sheet Credit Exposures
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
50-10
{Off-balance-sheet credit exposures refers to credit exposures on off-balance-sheet loan commitments, standby letters of
credit, financial guarantees, and other similar instruments, except for instruments within the scope of Topic 815. [SOP 01-6,
paragraph 13] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
Consideration Points:
Section 310-10-50 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU superseded paragraphs 310-10-50-9 through 50-10. For public business entities that are U.S.
Securities and Exchange Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2019, including interim periods within those fiscal years. For all other public business entities, the
amendments in the ASU are effective for fiscal years beginning after December 15, 2020, including interim periods within
those fiscal years. For all other entities, including not-for-profit entities and employee benefit plans within the scope of ASC
960 through ASC 965 on plan accounting, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. All entities may adopt the
amendments in this Update earlier as of the fiscal years beginning after December 15, 2018, including interim periods
within those fiscal years.
03/09/2023 11:15 AM EST
Page 215 / 1816
Has the entity separately disclosed the carrying amount of
foreclosed residential real estate properties held at the reporting
date as a result of obtaining physical possession in accordance with
paragraphs ASC 310-40-40-6 and 55-10A? Entities that adopted
ASU 2022-02: Has the entity separately disclosed the carrying
amount of foreclosed residential real estate properties held at the
reporting date as a result of obtaining physical possession in
accordance with paragraphs ASC 310-20-40-6 and 55-18F?
FASB Codification:
>
Foreclosed and Repossessed Assets
50-11
{Paragraph 310-10-45-3 states that foreclosed and repossessed assets included in other assets on the statement of financial
position shall have separate disclosures in the notes to financial statements. [SOP 01-6, paragraph 13] }{An entity shall also disclose
the carrying amount of foreclosed residential real estate properties held at the reporting date as a result of obtaining physical
possession in accordance with paragraphs 310-40-40-6 and 310-40-55-10A. [ASU 2014–04, paragraph 3] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{Paragraph 310-10-45-3 states that foreclosed and repossessed assets included in other assets on the statement of financial
position shall have separate disclosures in the notes to financial statements. [SOP 01-6, paragraph 13] }{An entity shall also disclose
the carrying amount of foreclosed residential real estate properties held at the reporting date as a result of obtaining physical
possession in accordance with paragraphs 310-20-40-6 and 310-20-55-18F. [ASU 2014–04, paragraph 3] }
Consideration Points:
ASC section 310-10-50 has been updated as the result of the issuance of ASU 2014-04. The pending content resulting from
the issuance of this ASU amended paragraph 310-10-50-11.The amendments in this ASU are effective for public business
entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. For
entities other than public business entities, the amendments in this ASU are effective for annual periods beginning after
December 15, 2014, and interim periods within annual periods beginning after December 15, 2015. Early adoption is
permitted. An entity can elect to adopt the amendments in this Update using either a modified retrospective transition
method or a prospective transition method. Under the modified retrospective transition method, an entity should apply the
amendments in this Update by means of cumulative-effect adjustment to residential consumer mortgage loans and
foreclosed residential real estate properties existing as of the beginning of the annual period for which the amendments are
effective. ASU 2022-02 The pending content resulting from the issuance of ASU 2022-02 amended paragraphs 310-10-05-1,
310-10-40-1A, and 310-10-50-11, superseded paragraphs 310-10-50-31 through 50-34 and 310-10-55-12 and the related
headings, and added paragraphs 310-10-50-36 through 50-48 and 310-10- 55-12A, 310-10-55-12B, 310-10-55-12F, and 31010-55-12I and their related headings, with a link to transition paragraph 326-10-65-5, and paragraphs 310-10-55-12C
through 55-12E, 310-10-55-12G, 310-10-55-12H, 310-10-55-12J, and 310-10-55-12K. ASU 2022-02 eliminated the
accounting guidance on troubled debt restructurings (TDRs) for creditors in ASC 310-40 and amended the guidance on
“vintage disclosures” to require disclosure of current-period gross write-offs by year of origination. The ASU also updated the
requirements related to accounting for credit losses under ASC 326 and added enhanced disclosures for creditors with
respect to loan refinancings and restructurings for borrowers experiencing financial difficulty. ASU 2022-02 superseded the
accounting guidance for TDRs for creditors in ASC 310-40 in its entirety and requires entities to evaluate all receivable
modifications under ASC 310-20-35-9 through 35-11 to determine whether a modification made to a borrower results in a
new loan or a continuation of the existing loan. ASU 2022-02’s amendments are effective as follows: • For entities that have
already adopted ASU 2016-13, the amendments in ASU 2022-02 are effective for fiscal years beginning after December 15,
2022, including interim periods within those fiscal years. • For entities that have not yet adopted ASU 2016-13, the
amendments in ASU 2022-02 are effective upon adoption of ASU 2016-13. Entities are permitted to early adopt these
amendments, including adoption in any interim period, provided that the amendments are adopted as of the beginning of the
annual reporting period that includes the interim period of adoption. In addition, entities are permitted to elect to early
adopt the amendments related to TDR accounting and related disclosure enhancements separately from the amendments
related to the vintage disclosures.
Is the entity in compliance with the classification and disclosure
requirements of ASC 310-10-50-12 thru 50-14 regarding allowance
for credit losses related to loans? [ASC 310-10-50-11A through 5014]
FASB Codification:
03/09/2023 11:15 AM EST
>
Page 216 / 1816
Allowance for Credit Losses Related to Financing Receivables
50-11A
{The guidance in paragraph 310-10-50-11B does not apply to the following financing receivables: [ASU 2010-20,
paragraph 14] }
a.
{Financing receivables listed in paragraph 310-10-50-7B [ASU 2010-20, paragraph 14] }
b.
{Lessor’s net investments in leveraged leases. [ASU 2010-20, paragraph 14] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-50-11A will be superseded upon transition, together with its heading.
> Allowance for Credit Losses Related to Financing Receivables
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
50-11B
a.
{An entity shall disclose all of the following by portfolio segment: [ASU 2010-20, paragraph 14] }
{A description of the entity’s accounting policies and methodology used to estimate the allowance for credit losses, including all
of the following: [ASU 2010-20, paragraph 14] }
1.
{A description of the factors that influenced management’s judgment, including both of the following: [ASU 2010-20,
paragraph 14] }
i.
{Historical losses [ASU 2010-20, paragraph 14] }
ii. {Existing economic conditions. [ASU 2010-20, paragraph 14] }
2.
{A discussion of risk characteristics relevant to each portfolio segment [ASU 2010-20, paragraph 14] }
3.
{Identification of any changes to the entity’s accounting policies or methodology from the prior period and the entity’s
rationale for the change. [ASU 2010-20, paragraph 14] }
b.
{A description of the policy for charging off uncollectible financing receivables [ASU 2010-20, paragraph 14] }
c.
{The activity in the allowance for credit losses for each period, including all of the following: [ASU 2010-20, paragraph 14] }
1.
{The balance in the allowance at the beginning and end of each period [ASU 2010-20, paragraph 14] }
2.
{Current period provision [ASU 2010-20, paragraph 14] }
3.
{Direct write-downs charged against the allowance [ASU 2010-20, paragraph 14] }
4.
{Recoveries of amounts previously charged off. [ASU 2010-20, paragraph 14] }
d.
{The quantitative effect of changes identified in item (a)(3) on item (c)(2) [ASU 2010-20, paragraph 14] }
e.
{The amount of any significant purchases of financing receivables during each reporting period [ASU 2010-20, paragraph 14] }
f.
{The amount of any significant sales of financing receivables or reclassifications of financing receivables to held for sale during
each reporting period [ASU 2010-20, paragraph 14] }
03/09/2023 11:15 AM EST
g.
Page 217 / 1816
{The balance in the allowance for credit losses at the end of each period disaggregated on the basis of the entity’s impairment
method [ASU 2010-20, paragraph 14] }
h.
{The recorded investment in financing receivables at the end of each period related to each balance in the allowance for credit
losses, disaggregated on the basis of the entity’s impairment methodology in the same manner as the disclosure in item (g).
[ASU 2010-20, paragraph 14] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
50-11C
{To disaggregate the information required by items (g) and (h) in the preceding paragraph on the basis of the impairment
methodology, an entity shall separately disclose the following amounts: [ASU 2010-20, paragraph 14] }
a.
{Amounts collectively evaluated for impairment (determined under Subtopic 450-20) [ASU 2010-20, paragraph 14] }
b.
{Amounts individually evaluated for impairment (determined under Section 310-10-35) [ASU 2010-20, paragraph 14] }
c.
{Amounts related to loans acquired with deteriorated credit quality (determined under Subtopic 310-30). [ASU 2010-20,
paragraph 14] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
50-12
[Paragraph superseded by Accounting Standards Update No. 2010-20 superseded by Accounting Standards Update]
50-13
[Paragraph superseded by Accounting Standards Update No. 2010-20 superseded by Accounting Standards Update]
50-14
{Asset valuation allowances required by paragraph 210-10-45-13 shall have an appropriate disclosure. [APB 12,
paragraph 3] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
Consideration Points:
Section 310-10-50 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU superseded paragraphs 310-10-50-11A through 50-14. For public business entities that are U.S.
Securities and Exchange Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2019, including interim periods within those fiscal years. For all other public business entities, the
amendments in the ASU are effective for fiscal years beginning after December 15, 2020, including interim periods within
those fiscal years. For all other entities, including not-for-profit entities and employee benefit plans within the scope of ASC
960 through ASC 965 on plan accounting, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. All entities may adopt the
amendments in this Update earlier as of the fiscal years beginning after December 15, 2018, including interim periods
within those fiscal years.
Is the entity in compliance with the classification and disclosure
requirements of ASC 310-10-50-15 thru 50-20 regarding impaired
loans? [ASC 310-10-50-14A through 50-20]
FASB Codification:
>
Impaired Loans
50-14A
{For each class of financing receivable, an entity shall disclose both of the following for loans that meet the definition of an
impaired loan in paragraphs 310-10-35-16 through 35-17 (individually evaluated for impairment): [ASU 2010-20, paragraph 16] }
a.
{The accounting for impaired loans [ASU 2010-20, paragraph 16] }
03/09/2023 11:15 AM EST
b.
Page 218 / 1816
{The amount of impaired loans. [ASU 2010-20, paragraph 16] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-50-14A will be superseded upon transition, together with its heading.
> Impaired Loans
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
50-15
{An entity shall disclose all of the following information about loans that meet the definition of an impaired loan in paragraphs
310-10-35-16 through 35-17 by class of financing receivable: [FAS 114, paragraph 20] }
a.
{As of the date of each statement of financial position presented: [FAS 114, paragraph 20] }
1.
[Subparagraph superseded by Accounting Standards Update No. 2010-20 superseded by Accounting Standards Update]
2.
[Subparagraph superseded by Accounting Standards Update No. 2010-20 superseded by Accounting Standards Update]
3.
{The recorded investment in the impaired loans and both of the following: [ASU 2010-20, paragraph 16] }
i.
{The amount of that recorded investment for which there is a related allowance for credit losses determined in
accordance with Section 310-10-35 and the amount of that allowance [FAS 114, paragraph 20] }
ii. {The amount of that recorded investment for which there is no related allowance for credit losses determined in
accordance with Section 310-10-35. [FAS 114, paragraph 20] }
4.
b.
{The total unpaid principal balance of the impaired loans. [ASU 2010-20, paragraph 16] }
{The entity's policy for recognizing interest income on impaired loans, including how cash receipts are recorded [FAS 114,
paragraph 20] }
c.
{For each period for which results of operations are presented: [FAS 114, paragraph 20] }
1.
{The average recorded investment in the impaired loans [FAS 114, paragraph 20] }
2.
{The related amount of interest income recognized during the time within that period that the loans were impaired [FAS
114, paragraph 20] }
3.
{The amount of interest income recognized using a cash-basis method of accounting during the time within that period that
the loans were impaired, if practicable. [FAS 114, paragraph 20] }
d.
{The entity’s policy for determining which loans the entity assesses for impairment under Section 310-10-35 [ASU 2010-20,
paragraph 16] }
e.
{The factors considered in determining that the loan is impaired. [ASU 2010-20, paragraph 16] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
50-16
{Those disclosures shall be provided for impaired loans that have been charged off partially. Those disclosures cannot be
03/09/2023 11:15 AM EST
Page 219 / 1816
provided for loans that have been charged off fully because both the recorded investment and the allowance for credit losses will equal
zero. [FAS 118, paragraph 19] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
50-17
{This guidance does not specify how a creditor shall calculate the average recorded investment in the impaired loans during
the reporting period. A creditor shall develop an appropriate method for that calculation. Averages based on month-end balances may
be considered an appropriate method. [FAS 118, paragraph 17] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
50-18
{Information about loans meeting the scope of Subtopic 310-30 shall be included in the disclosures required by paragraph
310-10-50-15(a) through (b) if the condition in paragraphs 320-10-35-18 through 35-34 or 450-20-25-2(a), as discussed in
paragraphs 310-30-35-8(a) and 310-30-35-10(a), is met. [SOP 03-3, paragraph 15] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
50-19
{Paragraphs 310-10-45-5 through 45-6 explains that a creditor that measures impairment based on the present value of
expected future cash flows is permitted to report the entire change in present value as bad-debt expense but may also report the change
in present value attributable to the passage of time as interest income. [FAS 114, paragraph 59] }{Creditors that choose the latter
alternative shall disclose the amount of interest income that represents the change in present value attributable to the passage of time.
[FAS 114, paragraph 59] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
50-20
{The following table summarizes the scope of the disclosure requirements in paragraph 310-10-50-15. [FAS 118,
paragraph 24] }
[FAS 118, paragraph 24]
Pending Content:
03/09/2023 11:15 AM EST
Page 220 / 1816
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
Consideration Points:
Section 310-10-50 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU superseded paragraphs 310-10-50-14A through 50-20. For public business entities that are U.S.
Securities and Exchange Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2019, including interim periods within those fiscal years. For all other public business entities, the
amendments in the ASU are effective for fiscal years beginning after December 15, 2020, including interim periods within
those fiscal years. For all other entities, including not-for-profit entities and employee benefit plans within the scope of ASC
960 through ASC 965 on plan accounting, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. All entities may adopt the
amendments in this Update earlier as of the fiscal years beginning after December 15, 2018, including interim periods
within those fiscal years.
Is the entity in compliance with the classification and disclosure
requirements of ASC 310-10-50-21 thru 50-24 regarding loss
contingencies? [ASC 310-10-50-21 through 50-24]
FASB Codification:
>
Loss Contingencies
50-21
{Paragraph 450-20-50-3 provides disclosure guidance for circumstances in which no accrual is made for a loss contingency
because one or both of the conditions in paragraph 450-20-25-2 (probable and reasonably estimated) are not met, [FAS 005,
paragraph 10] }{or if an exposure to loss exists in excess of the amount accrued pursuant to the provisions of paragraph 450-20-25-2.
[FAS 005, paragraph 10] }{The disclosures required by paragraphs 450-20-50-3 through 50-6 do not apply to loss contingencies
arising from an entity’s estimation of its allowance for credit losses. [ASU 2010-20, paragraph 18] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-50-21 will be superseded upon transition, together with its heading.
> Loss Contingencies
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
50-22
[Paragraph superseded by Accounting Standards Update No. 2010-20 superseded by Accounting Standards Update]
50-23
[Paragraph superseded by Accounting Standards Update No. 2010-20 superseded by Accounting Standards Update]
50-24
See Section 450-20-50 for further guidance on required disclosures for loss contingencies.
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
Consideration Points:
Section 310-10-50 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU superseded paragraphs 310-10-50-21 through 50-24. For public business entities that are U.S.
Securities and Exchange Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2019, including interim periods within those fiscal years. For all other public business entities, the
amendments in the ASU are effective for fiscal years beginning after December 15, 2020, including interim periods within
those fiscal years. For all other entities, including not-for-profit entities and employee benefit plans within the scope of ASC
960 through ASC 965 on plan accounting, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. All entities may adopt the
amendments in this Update earlier as of the fiscal years beginning after December 15, 2018, including interim periods
within those fiscal years.
Has the entity complied with the disclosure guidance of ASC 27510-50 regarding risks and uncertainties? [ASC 310-10-50-25]
03/09/2023 11:15 AM EST
Page 221 / 1816
FASB Codification:
>
Risks and Uncertainties
50-25
{Certain loan products have contractual terms that expose [FSP SOP94-6-1, paragraph 11] }{ entities to risks and
uncertainties that fall into one or more categories, as discussed in paragraph 275-10-50-1. [FSP SOP94-6-1, paragraph 11] }See
Section 275-10-50 for disclosure guidance related to those loan products.
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{Certain loans and trade receivables have contractual terms that expose [FSP SOP94-6-1, paragraph 11] }{ entities to risks
and uncertainties that fall into one or more categories, as discussed in paragraph 275-10-50-1. [FSP SOP94-6-1, paragraph 11] }See
Section 275-10-50 for disclosure guidance related to those products.
Consideration Points:
Section 310-10-50 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU amended paragraph 310-10-50-25. For public business entities that are U.S. Securities and Exchange
Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after December 15, 2019,
including interim periods within those fiscal years. For all other public business entities, the amendments in the ASU are
effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. For all
other entities, including not-for-profit entities and employee benefit plans within the scope of ASC 960 through ASC 965 on
plan accounting, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, and interim
periods within fiscal years beginning after December 15, 2021. All entities may adopt the amendments in this Update
earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.
Has the entity complied with the disclosure guidance of ASC 82510-50 regarding fair values of certain assets and liabilities? [ASC
310-10-50-26]
FASB Codification:
>
Fair Value Disclosures
50-26
Section 825-10-50 provides guidance on the required disclosure of fair values of certain assets and liabilities.{ Paragraph
825-10-50-8 explains that, for trade receivables and payables, no disclosure is required under that Subtopic if the trade receivable or
payable is due in one year or less. [FAS 107, paragraph 13] }
Consideration Points:
Section 310-10-50 has been updated as the result of the issuance of ASU 2016-01. The pending content resulting from the
issuance of this ASU amended paragraph 310-10-50-26. For public business entities, the amendments in the ASU are
effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. For all
other entities including not-for-profit entities and employee benefit plans within the scope of ASC 960 through ASC 965 on
plan accounting, the amendments in the ASU are effective for fiscal years beginning after December 15, 2018, and interim
periods within fiscal years beginning after December 15, 2019. All entities that are not public business entities may adopt
the amendments in the ASU earlier as of the fiscal years beginning after December 15, 2017, including interim periods
within those fiscal years. Early application by public business entities to financial statements of fiscal years or interim
periods that have not yet been issued or, by all other entities, that have not yet been made available for issuance of the
following amendments in this Update are permitted as of the beginning of the fiscal year of adoption. Except for this, early
adoption of the amendments is not permitted.
Is the entity in compliance with the guidance in ASC 310-10-5027?
03/09/2023 11:15 AM EST
Page 222 / 1816
FASB Codification:
50-27
{The guidance in paragraphs 310-10-50-28 through 50-30 does not apply to the financing receivables listed in paragraph
310-10-50-7B. [ASU 2010-20, paragraph 21] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-10-50-27 will be superseded upon transition, together with its heading.
> Credit Quality Information
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
Consideration Points:
Section 310-10-50 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU superseded paragraphs 310-10-50-27 through 50-30. For public business entities that are U.S.
Securities and Exchange Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2019, including interim periods within those fiscal years. For all other public business entities, the
amendments in the ASU are effective for fiscal years beginning after December 15, 2020, including interim periods within
those fiscal years. For all other entities, including not-for-profit entities and employee benefit plans within the scope of ASC
960 through ASC 965 on plan accounting, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. All entities may adopt the
amendments in this Update earlier as of the fiscal years beginning after December 15, 2018, including interim periods
within those fiscal years.
Has the entity provided information that enables financial
statement users to: (1) understand how and to what extent
management monitors the credit quality of its financing receivables
in an ongoing manner; (2) assess the quantitative and qualitative
risks arising from the credit quality of its financing receivables?
[ASC 310-10-50-28]
FASB Codification:
50-28
{An entity shall provide information that enables financial statement users to do both of the following: [ASU 2010-20,
paragraph 21] }
a.
{Understand how and to what extent management monitors the credit quality of its financing receivables in an ongoing manner
[ASU 2010-20, paragraph 21] }
b.
{Assess the quantitative and qualitative risks arising from the credit quality of its financing receivables. [ASU 2010-20,
paragraph 21] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
Consideration Points:
Section 310-10-50 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU superseded paragraphs 310-10-50-27 through 50-30. For public business entities that are U.S.
Securities and Exchange Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2019, including interim periods within those fiscal years. For all other public business entities, the
amendments in the ASU are effective for fiscal years beginning after December 15, 2020, including interim periods within
those fiscal years. For all other entities, including not-for-profit entities and employee benefit plans within the scope of ASC
960 through ASC 965 on plan accounting, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. All entities may adopt the
amendments in this Update earlier as of the fiscal years beginning after December 15, 2018, including interim periods
within those fiscal years.
03/09/2023 11:15 AM EST
Page 223 / 1816
Is quantitative and qualitative information by class about the credit
quality of financing receivables provided, including: (1) a description
of the credit quality indicator; (2) the recorded investment in
financing receivables by credit quality indicator; and (3) for each
credit quality indicator, the date or range of dates in which the
information was updated for that credit quality indicator? [ASC 31010-50-29]
FASB Codification:
50-29
{To meet the objective in the preceding paragraph, an entity shall provide quantitative and qualitative information by class
about the credit quality of financing receivables, including all of the following: [ASU 2010-20, paragraph 21] }
a.
{A description of the credit quality indicator [ASU 2010-20, paragraph 21] }
b.
{The recorded investment in financing receivables by credit quality indicator [ASU 2010-20, paragraph 21] }
c.
{For each credit quality indicator, the date or range of dates in which the information was updated for that credit quality
indicator. [ASU 2010-20, paragraph 21] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
Consideration Points:
Section 310-10-50 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU superseded paragraphs 310-10-50-27 through 50-30. For public business entities that are U.S.
Securities and Exchange Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2019, including interim periods within those fiscal years. For all other public business entities, the
amendments in the ASU are effective for fiscal years beginning after December 15, 2020, including interim periods within
those fiscal years. For all other entities, including not-for-profit entities and employee benefit plans within the scope of ASC
960 through ASC 965 on plan accounting, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. All entities may adopt the
amendments in this Update earlier as of the fiscal years beginning after December 15, 2018, including interim periods
within those fiscal years.
If the entity discloses internal risk ratings, has it provided
qualitative information on how those internal risk ratings relate to
the likelihood of loss? [ASC 310-10-50-30]
FASB Codification:
50-30
{If an entity discloses internal risk ratings, then the entity shall provide qualitative information on how those internal risk
ratings relate to the likelihood of loss. [ASU 2010-20, paragraph 21] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
03/09/2023 11:15 AM EST
Page 224 / 1816
Consideration Points:
Section 310-10-50 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU superseded paragraphs 310-10-50-27 through 50-30. For public business entities that are U.S.
Securities and Exchange Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2019, including interim periods within those fiscal years. For all other public business entities, the
amendments in the ASU are effective for fiscal years beginning after December 15, 2020, including interim periods within
those fiscal years. For all other entities, including not-for-profit entities and employee benefit plans within the scope of ASC
960 through ASC 965 on plan accounting, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. All entities may adopt the
amendments in this Update earlier as of the fiscal years beginning after December 15, 2018, including interim periods
within those fiscal years.
Is the entity in compliance with the guidance in ASC 310-10-5032?
FASB Codification:
50-32
{This guidance does not apply to troubled debt restructurings of either of the following: [ASU 2010-20, paragraph 21] }
a.
{Financing receivables listed in paragraph 310-10-50-7B [ASU 2010-20, paragraph 21] }
b.
{Loans acquired with deteriorated credit quality (determined under Subtopic 310-30) that are accounted for within a pool. [ASU
2010-20, paragraph 21] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{This guidance does not apply to troubled debt restructurings of either of the following: [ASU 2010-20, paragraph 21] }
a.
{Financing receivables listed below: [ASU 2010-20, paragraph 21] }
1.
{Receivables measured at fair value with changes in fair value reported in earnings [ASU 2010-20, paragraph 12] }
2.
{Receivables measured at lower of amortized cost basis or fair value [ASU 2010-20, paragraph 12] }
3.
{Except for credit card receivables, trade accounts receivable that have both of the following characteristics: [ASU 201020, paragraph 12] }
i.
{They have a contractual maturity of one year or less. [ASU 2010-20, paragraph 12] }
ii. {They arose from the sale of goods or services. [ASU 2010-20, paragraph 12] }
4.
b.
{Participant loans in defined contribution pension plans. [ASU 2010-25, paragraph 2] }
[Subparagraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update] .
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5 [Paragraph superseded by Accounting Standards Update No. 2022-02 superseded by Accounting Standards Update]
03/09/2023 11:15 AM EST
Page 225 / 1816
Consideration Points:
Section 310-10-50 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU amended paragraph 310-10-50-32. For public business entities that are U.S. Securities and Exchange
Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after December 15, 2019,
including interim periods within those fiscal years. For all other public business entities, the amendments in the ASU are
effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. For all
other entities, including not-for-profit entities and employee benefit plans within the scope of ASC 960 through ASC 965 on
plan accounting, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, and interim
periods within fiscal years beginning after December 15, 2021. All entities may adopt the amendments in this Update
earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.
Has the entity disclosed the following about troubled debt
restructurings of financing receivables that occurred during the
period for each period for which a statement of income is presented:
(1) by class of financing receivable, qualitative and quantitative
information, how the financing receivables were modified and the
financial effects of the modifications; and (2) by portfolio segment,
qualitative information about how such modifications are factored
into the determination of the allowance for credit losses? [ASC 31010-50-33]
FASB Codification:
50-33
{For each period for which a statement of income is presented, an entity shall disclose the following about troubled debt
restructurings of financing receivables that occurred during the period: [ASU 2010-20, paragraph 21] }
a.
{By class of financing receivable, qualitative and quantitative information, including both of the following: [ASU 2010-20,
paragraph 21] }
b.
1.
{How the financing receivables were modified [ASU 2010-20, paragraph 21] }
2.
{The financial effects of the modifications. [ASU 2010-20, paragraph 21] }
{By portfolio segment, qualitative information about how such modifications are factored into the determination of the allowance
for credit losses. [ASU 2010-20, paragraph 21] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{For each period for which a statement of income is presented, an entity shall disclose the following about troubled debt
restructurings of financing receivables that occurred during the period: [ASU 2010-20, paragraph 21] }
a.
{By class of financing receivable, qualitative and quantitative information, including both of the following: [ASU 2010-20,
paragraph 21] }
b.
1.
{How the financing receivables were modified [ASU 2010-20, paragraph 21] }
2.
{The financial effects of the modifications. [ASU 2010-20, paragraph 21] }
{By portfolio segment, qualitative information about how such modifications are factored into the determination of the
allowance for credit losses. [ASU 2010-20, paragraph 21] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5 [Paragraph superseded by Accounting Standards Update No. 2022-02 superseded by Accounting Standards Update]
03/09/2023 11:15 AM EST
Page 226 / 1816
Consideration Points:
Section 310-10-50 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU amended paragraph 310-10-50-33. For public business entities that are U.S. Securities and Exchange
Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after December 15, 2019,
including interim periods within those fiscal years. For all other public business entities, the amendments in the ASU are
effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. For all
other entities, including not-for-profit entities and employee benefit plans within the scope of ASC 960 through ASC 965 on
plan accounting, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, and interim
periods within fiscal years beginning after December 15, 2021. All entities may adopt the amendments in this Update
earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.
Has the entity disclosed the following about financing receivables
modified as troubled debt restructurings within the previous 12
months and for which there was a payment default during the
period: (1) by class of financing receivable, qualitative and
quantitative information about those defaulted financing
receivables, the types and amounts of financing receivables that
defaulted; and (2) by portfolio segment, qualitative information
about how such defaults are factored into the determination of the
allowance for credit losses? [ASC 310-10-50-34]
03/09/2023 11:15 AM EST
Page 227 / 1816
FASB Codification:
50-34
{For each period for which a statement of income is presented, an entity shall disclose the following for financing receivables
modified as troubled debt restructurings within the previous 12 months and for which there was a payment default during the period:
[ASU 2010-20, paragraph 21] }
a.
{By class of financing receivable, qualitative and quantitative information about those defaulted financing receivables, including
both of the following: [ASU 2010-20, paragraph 21] }
b.
1.
{The types of financing receivables that defaulted [ASU 2010-20, paragraph 21] }
2.
{The amount of financing receivables that defaulted. [ASU 2010-20, paragraph 21] }
{By portfolio segment, qualitative information about how such defaults are factored into the determination of the allowance for
credit losses. [ASU 2010-20, paragraph 21] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{For each period for which a statement of income is presented, an entity shall disclose the following for financing
receivables modified as troubled debt restructurings within the previous 12 months and for which there was a payment default (after the
restructuring) during the period: [ASU 2010-20, paragraph 21] }
a.
{By class of financing receivable, qualitative and quantitative information about those defaulted financing receivables, including
both of the following: [ASU 2010-20, paragraph 21] }
b.
1.
{The types of financing receivables that defaulted [ASU 2010-20, paragraph 21] }
2.
{The amount of financing receivables that defaulted. [ASU 2010-20, paragraph 21] }
{By portfolio segment, qualitative information about how such defaults are factored into the determination of the allowance for
credit losses. [ASU 2010-20, paragraph 21] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5 [Paragraph superseded by Accounting Standards Update No. 2022-02 superseded by Accounting Standards Update]
Consideration Points:
Section 310-10-50 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU amended paragraph 310-10-50-34. For public business entities that are U.S. Securities and Exchange
Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after December 15, 2019,
including interim periods within those fiscal years. For all other public business entities, the amendments in the ASU are
effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. For all
other entities, including not-for-profit entities and employee benefit plans within the scope of ASC 960 through ASC 965 on
plan accounting, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, and interim
periods within fiscal years beginning after December 15, 2021. All entities may adopt the amendments in this Update
earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.
Is the entity in compliance with the guidance in ASC 310-10-50:
Loans in Process of Foreclosure?
03/09/2023 11:15 AM EST
Page 228 / 1816
FASB Codification:
>
Loans in Process of Foreclosure
50-35
{An entity shall disclose the recorded investment of consumer mortgage loans secured by residential real estate properties for
which formal foreclosure proceedings are in process according to local requirements of the applicable jurisdiction. [ASU 2014–04,
paragraph 3] }
Consideration Points:
ASC section 310-10-50 has been updated as the result of the issuance of ASU 2014-04. The pending content resulting from
the issuance of this ASU added paragraph 310-10-50-35.The amendments in this ASU are effective for public business
entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. For
entities other than public business entities, the amendments in this ASC are effective for annual periods beginning after
December 15, 2014, and interim periods within annual periods beginning after December 15, 2015. Early adoption is
permitted. An entity can elect to adopt the amendments in this Update using either a modified retrospective transition
method or a prospective transition method. Under the modified retrospective transition method, an entity should apply the
amendments in this Update by means of cumulative-effect adjustment to residential consumer mortgage loans and
foreclosed residential real estate properties existing as of the beginning of the annual period for which the amendments are
effective.
Is the entity in compliance with the guidance in ASC 310-10-50:
Modifications?
FASB Codification:
>
Modifications
50-36
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{As of the date of each balance sheet presented, a creditor shall disclose, either in the body of the financial statements or in
the accompanying notes, the [FAS 015, paragraph 40] }{ amount of commitments, if any, to lend additional funds to debtors [FAS 015,
paragraph 40] }{experiencing financial difficulty for which the creditor has modified the terms of the receivables in the form of
principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, or a term extension in the current reporting
period. For purposes of this disclosure, covenant waivers and modifications of contingent acceleration clauses would not be considered
term extensions. [ASU 2022-02, paragraph 5] }
> >
50-37
Loans Restructured into Two (or More) Loan Agreements
{When a loan is restructured in a troubled debt restructuring into two (or more) loan agreements, the restructured loans shall
be considered separately when assessing the applicability of the disclosures in paragraph 310-10-50-15 in years after the restructuring
because they are legally distinct from the original loan. The creditor would continue to base its measure of loan impairment on the
contractual terms specified by the original loan agreement in accordance with paragraphs 310-10-35-20 through 35-26 and 310-1035-37. [EITF 96-22, paragraph DISCUSSION] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{When a loan is restructured in a troubled debt restructuring into two (or more) loan agreements, the restructured loans
shall be considered separately when assessing the applicability of the disclosures in Section 326-20-50 in years after the restructuring
because they are legally distinct from the original loan. The creditor would continue to base its measure of credit losses in accordance
with Topic 326 on the contractual terms specified by the original loan agreement. [EITF 96-22, paragraph DISCUSSION] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{When a loan is restructured into two (or more) loan agreements, the restructured loans shall be considered separately
when assessing the applicability of the disclosures in Section 326-20-50 in years after the restructuring because they are legally
distinct from the original loan. [EITF 96-22, paragraph DISCUSSION] }
> >
Modifications to Debtors Experiencing Financial Difficulty
03/09/2023 11:15 AM EST
Page 229 / 1816
50-38
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{The objective of the disclosures in paragraphs 310-10-50-42 through 50-44 is to provide financial statement users with
information about the type and magnitude of certain modifications of receivables made to debtors experiencing financial difficulty, the
financial effect of those modifications, and the degree of success of the modifications in mitigating potential credit losses. In addition to
the disclosures in paragraphs 310-10-50-42 through 50-44, an entity shall consider providing information that helps financial
statement users understand significant changes in the type or magnitude of modifications, including those modifications that, for
example, were caused by a major credit event, even if the modifications otherwise would not require the disclosures in paragraphs
310-10-50-42 through 50-44. [ASU 2022-02, paragraph 5] }
50-39
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{The disclosures in paragraphs 310-10-50-42 through 50-44 shall be provided for modifications of receivables to
borrowers experiencing financial difficulty in the form of principal forgiveness, an interest rate reduction, an other-than-insignificant
payment delay, or a term extension made within the scope of this Topic. For purposes of those disclosures, covenant waivers and
modifications of contingent acceleration clauses would not be considered term extensions. [ASU 2022-02, paragraph 5] }
50-40
{This guidance does not apply to troubled debt restructurings of either of the following: [ASU 2010-20, paragraph 21] }
a.
{Financing receivables listed in paragraph 310-10-50-7B [ASU 2010-20, paragraph 21] }
b.
{Loans acquired with deteriorated credit quality (determined under Subtopic 310-30) that are accounted for within a pool. [ASU
2010-20, paragraph 21] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{This guidance does not apply to troubled debt restructurings of either of the following: [ASU 2010-20, paragraph 21] }
a.
{Financing receivables listed below: [ASU 2010-20, paragraph 21] }
1.
{Receivables measured at fair value with changes in fair value reported in earnings [ASU 2010-20, paragraph 12] }
2.
{Receivables measured at lower of amortized cost basis or fair value [ASU 2010-20, paragraph 12] }
3.
{Except for credit card receivables, trade accounts receivable that have both of the following characteristics: [ASU 201020, paragraph 12] }
i.
{They have a contractual maturity of one year or less. [ASU 2010-20, paragraph 12] }
ii. {They arose from the sale of goods or services. [ASU 2010-20, paragraph 12] }
4.
b.
{Participant loans in defined contribution pension plans. [ASU 2010-25, paragraph 2] }
[Subparagraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update] .
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{The guidance in paragraphs 310-10-50-42 through 50-44 does not apply to the following [ASU 2010-20, paragraph 21]
}{financing receivables: [ASU 2022-02, paragraph 5] }
a.
{Receivables measured at fair value with changes in fair value reported in earnings [ASU 2010-20, paragraph 12] }
03/09/2023 11:15 AM EST
Page 230 / 1816
b.
{Receivables measured at lower of amortized cost basis or fair value [ASU 2010-20, paragraph 12] }
c.
{Except for credit card receivables, trade accounts receivable that have both of the following characteristics: [ASU 2010-20,
paragraph 12] }
d.
1.
{They have a contractual maturity of one year or less. [ASU 2010-20, paragraph 12] }
2.
{They arose from the sale of goods or services. [ASU 2010-20, paragraph 12] }
{Participant loans in defined contribution pension plans. [ASU 2010-25, paragraph 2] }
50-41
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{The disclosures required in paragraphs 310-10-50-42 through 50-44 are applicable regardless of whether a modification
of a receivable to a debtor experiencing financial difficulty results in a new loan in accordance with paragraphs 310-20-35-9 through
35-11. As a practical expedient, an entity may exclude the accrued interest receivable balance that is included in the amortized cost
basis of financing receivables for the purposes of the disclosure requirements in Subtopic 326-20. If an entity has applied that practical
expedient, an entity may do the same for the disclosures in paragraphs 310-10-50-42 through 50-44 and shall disclose the total
amount of accrued interest excluded from the disclosed amortized cost basis. [ASU 2022-02, paragraph 5] }
50-42
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{For each period for which a statement of income is presented, an entity shall disclose the following information related to
modifications of receivables that are in the form of principal forgiveness, an interest rate reduction, an other-than-insignificant payment
delay, or a term extension (or a combination thereof) made to debtors experiencing financial difficulty during the reporting period:
[ASU 2022-02, paragraph 5] }
a.
{By class of financing receivable, qualitative and quantitative information about: [ASU 2022-02, paragraph 5] }
1.
{The types of modifications utilized by an entity, including the total period-end amortized cost basis of the modified
receivables and the percentage of modifications of receivables made to debtors experiencing financial difficulty relative to
the total period-end amortized cost basis of receivables in the class of financing receivable. [ASU 2022-02, paragraph 5] }
2.
{The financial effect of the modification by type of modification, which shall provide information about the changes to the
contractual terms as a result of the modification and shall include the incremental effect of principal forgiveness on the
amortized cost basis of the modified receivables, as applicable, or the reduction in weighted-average interest rates (versus
a range) for interest rate reductions. [ASU 2022-02, paragraph 5] }
3.
{Receivable performance in the 12 months after a modification of a receivable made to a debtor experiencing financial
difficulty. [ASU 2022-02, paragraph 5] }
b.
{By portfolio segment, qualitative information about how those modifications and the debtors’ subsequent performance are
factored into determining the allowance for credit losses. [ASU 2022-02, paragraph 5] }
50-43
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{Receivables may be modified in more than one manner. An entity that modifies the same receivable in more than one
manner shall provide disclosures sufficient for users to understand the different types of combinations of modifications provided to
03/09/2023 11:15 AM EST
Page 231 / 1816
borrowers. For example, a receivable may be modified to provide both principal forgiveness and an interest rate reduction. In that
case, an entity shall disclose the period-end amortized cost basis of that receivable in a separate category that reflects that a
combination of modification types has been granted. If another receivable was modified to provide both an interest rate reduction and a
term extension, the period-end amortized cost basis of that receivable shall be presented in a different category. Multiple separate
combination categories may be necessary if significant. The same receivable’s period-end amortized cost basis shall not be presented in
multiple categories. [ASU 2022-02, paragraph 5] }
50-44
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{For each period for which a statement of income is presented, an entity shall disclose the following information about
financing receivables that had a payment default during the period and had been modified in the form of principal forgiveness, an
interest rate reduction, an other-than-insignificant payment delay, or a term extension (or a combination thereof) within the previous 12
months preceding the payment default when the debtor was experiencing financial difficulty at the time of the modification: [ASU 202202, paragraph 5] }
a.
{By class of financing receivable, qualitative and quantitative information about those defaulted financing receivables, including
the following: [ASU 2022-02, paragraph 5] }
1.
{The type of contractual change that the modification provided [ASU 2022-02, paragraph 5] }
2.
{The amount of financing receivables that defaulted, including the period-end amortized cost basis for financing receivables
that defaulted. [ASU 2022-02, paragraph 5] }
b.
{By portfolio segment, qualitative information about how those defaults are factored into determining the allowance for credit
losses. [ASU 2022-02, paragraph 5] }
> >
Determining Whether a Debtor Is Experiencing Financial Difficulties
50-45
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{In evaluating whether the debtor is experiencing financial difficulties [ASU 2011-02, paragraph 2] }{for the purpose of the
disclosure requirements in paragraphs 310-10-50-42 through 50-44 [ASU 2022-02, paragraph 5] }{, a creditor shall consider the
following indicators: [ASU 2011-02, paragraph 2] }
a.
{The debtor is currently in payment default on any of its debt. In addition, a creditor shall evaluate whether it is probable that
the debtor would be in payment default on any of its debt in the foreseeable future without the modification. That is, a creditor
may conclude that a debtor is experiencing financial difficulties, even though the debtor is not currently in payment default. [ASU
2011-02, paragraph 2] }
b.
{The debtor has declared or is in the process of declaring bankruptcy. [ASU 2011-02, paragraph 2] }
c.
{There is substantial doubt as to whether the debtor will continue to be a going concern. [ASU 2011-02, paragraph 2] }
d.
{The debtor has securities that have been delisted, are in the process of being delisted, or are under threat of being delisted from
an exchange. [ASU 2011-02, paragraph 2] }
e.
{On the basis of estimates and projections that only encompass the debtor’s current capabilities, the creditor forecasts that the
debtor’s entity-specific cash flows will be insufficient to service any of its debt (both interest and principal) in accordance with the
contractual terms of the existing agreement for the foreseeable future. [ASU 2011-02, paragraph 2] }
03/09/2023 11:15 AM EST
f.
Page 232 / 1816
{Without the current modification, the debtor cannot obtain funds from sources other than the existing creditors at an effective
interest rate equal to the current market interest rate for similar debt for a nontroubled debtor. [ASU 2011-02, paragraph 2] }
{The above list of indicators is not intended to include all indicators of a debtor’s financial difficulties. [ASU 2011-02, paragraph 2] }
> >
Evaluating Whether a Restructuring Results in a Delay in Payment That Is Insignificant
50-46
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{In the case of a [ASU 2022-02, paragraph 5] }{restructuring that results in only a delay in payment that is insignificant
[ASU 2011-02, paragraph 2] }{, an entity [ASU 2022-02, paragraph 5] }{is not [ASU 2011-02, paragraph 2] }{required to include
the modification made to receivables for debtors experiencing financial difficulty in the disclosure requirements in paragraphs 310-1050-36 and 310-10-50-42 through 50-44. [ASU 2022-02, paragraph 5] }{The following factors, when considered together, may
indicate that a restructuring results in a delay in payment that is insignificant: [ASU 2011-02, paragraph 2] }
a.
{The amount of the restructured payments subject to the delay is insignificant relative to the unpaid principal or collateral value
of the debt and will result in an insignificant shortfall in the contractual amount due. [ASU 2011-02, paragraph 2] }
b.
{The delay in timing of the restructured payment period is insignificant relative to any one of the following: [ASU 2011-02,
paragraph 2] }
1.
{The frequency of payments due under the debt [ASU 2011-02, paragraph 2] }
2.
{The debt’s original contractual maturity [ASU 2011-02, paragraph 2] }
3.
{The debt’s original expected duration. [ASU 2011-02, paragraph 2] }
50-47
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{If the debt has been previously restructured, an entity shall consider the cumulative effect of past restructurings [ASU
2011-02, paragraph 2] }{made within the 12-month period before the current restructuring [ASU 2022-02, paragraph 5] }{when
determining whether a delay in payment resulting from the [ASU 2011-02, paragraph 2] }{current [ASU 2022-02, paragraph 5] }
{restructuring is insignificant. [ASU 2011-02, paragraph 2] }
50-48
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{Examples 4, 5, and 6 in paragraphs 310-10-55-12B through 55-12K illustrate a creditor’s evaluation about whether a
delay in payment resulting from a restructuring is insignificant. [ASU 2011-02, paragraph 2] }
03/09/2023 11:15 AM EST
Page 233 / 1816
Consideration Points:
ASU 2022-02 The pending content resulting from the issuance of ASU 2022-02 amended paragraphs 310-10-05-1, 310-1040-1A, and 310-10-50-11, superseded paragraphs 310-10-50-31 through 50-34 and 310-10-55-12 and the related headings,
and added paragraphs 310-10-50-36 through 50-48 and 310-10- 55-12A, 310-10-55-12B, 310-10-55-12F, and 310-10-55-12I
and their related headings, with a link to transition paragraph 326-10-65-5, and paragraphs 310-10-55-12C through 5512E, 310-10-55-12G, 310-10-55-12H, 310-10-55-12J, and 310-10-55-12K. ASU 2022-02 eliminated the accounting
guidance on troubled debt restructurings (TDRs) for creditors in ASC 310-40 and amended the guidance on “vintage
disclosures” to require disclosure of current-period gross write-offs by year of origination. The ASU also updated the
requirements related to accounting for credit losses under ASC 326 and added enhanced disclosures for creditors with
respect to loan refinancings and restructurings for borrowers experiencing financial difficulty. ASU 2022-02 superseded the
accounting guidance for TDRs for creditors in ASC 310-40 in its entirety and requires entities to evaluate all receivable
modifications under ASC 310-20-35-9 through 35-11 to determine whether a modification made to a borrower results in a
new loan or a continuation of the existing loan. ASU 2022-02’s amendments are effective as follows: • For entities that have
already adopted ASU 2016-13, the amendments in ASU 2022-02 are effective for fiscal years beginning after December 15,
2022, including interim periods within those fiscal years. • For entities that have not yet adopted ASU 2016-13, the
amendments in ASU 2022-02 are effective upon adoption of ASU 2016-13. Entities are permitted to early adopt these
amendments, including adoption in any interim period, provided that the amendments are adopted as of the beginning of the
annual reporting period that includes the interim period of adoption. In addition, entities are permitted to elect to early
adopt the amendments related to TDR accounting and related disclosure enhancements separately from the amendments
related to the vintage disclosures.
Is the entity in compliance with the guidance in ASC 310-10-50:
Loans Restructured into Two (or More) Loan Agreements?
FASB Codification:
>
Loans Restructured into Two (or More) Loan Agreements
50-37
{When a loan is restructured in a troubled debt restructuring into two (or more) loan agreements, the restructured loans shall
be considered separately when assessing the applicability of the disclosures in paragraph 310-10-50-15 in years after the restructuring
because they are legally distinct from the original loan. The creditor would continue to base its measure of loan impairment on the
contractual terms specified by the original loan agreement in accordance with paragraphs 310-10-35-20 through 35-26 and 310-1035-37. [EITF 96-22, paragraph DISCUSSION] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{When a loan is restructured in a troubled debt restructuring into two (or more) loan agreements, the restructured loans
shall be considered separately when assessing the applicability of the disclosures in Section 326-20-50 in years after the restructuring
because they are legally distinct from the original loan. The creditor would continue to base its measure of credit losses in accordance
with Topic 326 on the contractual terms specified by the original loan agreement. [EITF 96-22, paragraph DISCUSSION] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{When a loan is restructured into two (or more) loan agreements, the restructured loans shall be considered separately
when assessing the applicability of the disclosures in Section 326-20-50 in years after the restructuring because they are legally
distinct from the original loan. [EITF 96-22, paragraph DISCUSSION] }
03/09/2023 11:15 AM EST
Page 234 / 1816
Consideration Points:
ASU 2022-02 The pending content resulting from the issuance of ASU 2022-02 amended paragraphs 310-10-05-1, 310-1040-1A, and 310-10-50-11, superseded paragraphs 310-10-50-31 through 50-34 and 310-10-55-12 and the related headings,
and added paragraphs 310-10-50-36 through 50-48 and 310-10- 55-12A, 310-10-55-12B, 310-10-55-12F, and 310-10-55-12I
and their related headings, with a link to transition paragraph 326-10-65-5, and paragraphs 310-10-55-12C through 5512E, 310-10-55-12G, 310-10-55-12H, 310-10-55-12J, and 310-10-55-12K. ASU 2022-02 eliminated the accounting
guidance on troubled debt restructurings (TDRs) for creditors in ASC 310-40 and amended the guidance on “vintage
disclosures” to require disclosure of current-period gross write-offs by year of origination. The ASU also updated the
requirements related to accounting for credit losses under ASC 326 and added enhanced disclosures for creditors with
respect to loan refinancings and restructurings for borrowers experiencing financial difficulty. ASU 2022-02 superseded the
accounting guidance for TDRs for creditors in ASC 310-40 in its entirety and requires entities to evaluate all receivable
modifications under ASC 310-20-35-9 through 35-11 to determine whether a modification made to a borrower results in a
new loan or a continuation of the existing loan. ASU 2022-02’s amendments are effective as follows: • For entities that have
already adopted ASU 2016-13, the amendments in ASU 2022-02 are effective for fiscal years beginning after December 15,
2022, including interim periods within those fiscal years. • For entities that have not yet adopted ASU 2016-13, the
amendments in ASU 2022-02 are effective upon adoption of ASU 2016-13. Entities are permitted to early adopt these
amendments, including adoption in any interim period, provided that the amendments are adopted as of the beginning of the
annual reporting period that includes the interim period of adoption. In addition, entities are permitted to elect to early
adopt the amendments related to TDR accounting and related disclosure enhancements separately from the amendments
related to the vintage disclosures.
Is the entity in compliance with the guidance in ASC 310-10-50:
Modifications to Debtors Experiencing Financial Difficulty?
FASB Codification:
>
Modifications to Debtors Experiencing Financial Difficulty
50-38
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{The objective of the disclosures in paragraphs 310-10-50-42 through 50-44 is to provide financial statement users with
information about the type and magnitude of certain modifications of receivables made to debtors experiencing financial difficulty, the
financial effect of those modifications, and the degree of success of the modifications in mitigating potential credit losses. In addition to
the disclosures in paragraphs 310-10-50-42 through 50-44, an entity shall consider providing information that helps financial
statement users understand significant changes in the type or magnitude of modifications, including those modifications that, for
example, were caused by a major credit event, even if the modifications otherwise would not require the disclosures in paragraphs
310-10-50-42 through 50-44. [ASU 2022-02, paragraph 5] }
50-39
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{The disclosures in paragraphs 310-10-50-42 through 50-44 shall be provided for modifications of receivables to
borrowers experiencing financial difficulty in the form of principal forgiveness, an interest rate reduction, an other-than-insignificant
payment delay, or a term extension made within the scope of this Topic. For purposes of those disclosures, covenant waivers and
modifications of contingent acceleration clauses would not be considered term extensions. [ASU 2022-02, paragraph 5] }
50-40
{This guidance does not apply to troubled debt restructurings of either of the following: [ASU 2010-20, paragraph 21] }
a.
{Financing receivables listed in paragraph 310-10-50-7B [ASU 2010-20, paragraph 21] }
b.
{Loans acquired with deteriorated credit quality (determined under Subtopic 310-30) that are accounted for within a pool. [ASU
2010-20, paragraph 21] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{This guidance does not apply to troubled debt restructurings of either of the following: [ASU 2010-20, paragraph 21] }
a.
{Financing receivables listed below: [ASU 2010-20, paragraph 21] }
1.
{Receivables measured at fair value with changes in fair value reported in earnings [ASU 2010-20, paragraph 12] }
03/09/2023 11:15 AM EST
Page 235 / 1816
2.
{Receivables measured at lower of amortized cost basis or fair value [ASU 2010-20, paragraph 12] }
3.
{Except for credit card receivables, trade accounts receivable that have both of the following characteristics: [ASU 201020, paragraph 12] }
i.
{They have a contractual maturity of one year or less. [ASU 2010-20, paragraph 12] }
ii. {They arose from the sale of goods or services. [ASU 2010-20, paragraph 12] }
4.
b.
{Participant loans in defined contribution pension plans. [ASU 2010-25, paragraph 2] }
[Subparagraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update] .
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{The guidance in paragraphs 310-10-50-42 through 50-44 does not apply to the following [ASU 2010-20, paragraph 21]
}{financing receivables: [ASU 2022-02, paragraph 5] }
a.
{Receivables measured at fair value with changes in fair value reported in earnings [ASU 2010-20, paragraph 12] }
b.
{Receivables measured at lower of amortized cost basis or fair value [ASU 2010-20, paragraph 12] }
c.
{Except for credit card receivables, trade accounts receivable that have both of the following characteristics: [ASU 2010-20,
paragraph 12] }
d.
1.
{They have a contractual maturity of one year or less. [ASU 2010-20, paragraph 12] }
2.
{They arose from the sale of goods or services. [ASU 2010-20, paragraph 12] }
{Participant loans in defined contribution pension plans. [ASU 2010-25, paragraph 2] }
50-41
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{The disclosures required in paragraphs 310-10-50-42 through 50-44 are applicable regardless of whether a modification
of a receivable to a debtor experiencing financial difficulty results in a new loan in accordance with paragraphs 310-20-35-9 through
35-11. As a practical expedient, an entity may exclude the accrued interest receivable balance that is included in the amortized cost
basis of financing receivables for the purposes of the disclosure requirements in Subtopic 326-20. If an entity has applied that practical
expedient, an entity may do the same for the disclosures in paragraphs 310-10-50-42 through 50-44 and shall disclose the total
amount of accrued interest excluded from the disclosed amortized cost basis. [ASU 2022-02, paragraph 5] }
50-42
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{For each period for which a statement of income is presented, an entity shall disclose the following information related to
modifications of receivables that are in the form of principal forgiveness, an interest rate reduction, an other-than-insignificant payment
delay, or a term extension (or a combination thereof) made to debtors experiencing financial difficulty during the reporting period:
[ASU 2022-02, paragraph 5] }
a.
{By class of financing receivable, qualitative and quantitative information about: [ASU 2022-02, paragraph 5] }
1.
{The types of modifications utilized by an entity, including the total period-end amortized cost basis of the modified
03/09/2023 11:15 AM EST
Page 236 / 1816
receivables and the percentage of modifications of receivables made to debtors experiencing financial difficulty relative to
the total period-end amortized cost basis of receivables in the class of financing receivable. [ASU 2022-02, paragraph 5] }
2.
{The financial effect of the modification by type of modification, which shall provide information about the changes to the
contractual terms as a result of the modification and shall include the incremental effect of principal forgiveness on the
amortized cost basis of the modified receivables, as applicable, or the reduction in weighted-average interest rates (versus
a range) for interest rate reductions. [ASU 2022-02, paragraph 5] }
3.
{Receivable performance in the 12 months after a modification of a receivable made to a debtor experiencing financial
difficulty. [ASU 2022-02, paragraph 5] }
b.
{By portfolio segment, qualitative information about how those modifications and the debtors’ subsequent performance are
factored into determining the allowance for credit losses. [ASU 2022-02, paragraph 5] }
50-43
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{Receivables may be modified in more than one manner. An entity that modifies the same receivable in more than one
manner shall provide disclosures sufficient for users to understand the different types of combinations of modifications provided to
borrowers. For example, a receivable may be modified to provide both principal forgiveness and an interest rate reduction. In that
case, an entity shall disclose the period-end amortized cost basis of that receivable in a separate category that reflects that a
combination of modification types has been granted. If another receivable was modified to provide both an interest rate reduction and a
term extension, the period-end amortized cost basis of that receivable shall be presented in a different category. Multiple separate
combination categories may be necessary if significant. The same receivable’s period-end amortized cost basis shall not be presented in
multiple categories. [ASU 2022-02, paragraph 5] }
50-44
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{For each period for which a statement of income is presented, an entity shall disclose the following information about
financing receivables that had a payment default during the period and had been modified in the form of principal forgiveness, an
interest rate reduction, an other-than-insignificant payment delay, or a term extension (or a combination thereof) within the previous 12
months preceding the payment default when the debtor was experiencing financial difficulty at the time of the modification: [ASU 202202, paragraph 5] }
a.
{By class of financing receivable, qualitative and quantitative information about those defaulted financing receivables, including
the following: [ASU 2022-02, paragraph 5] }
1.
{The type of contractual change that the modification provided [ASU 2022-02, paragraph 5] }
2.
{The amount of financing receivables that defaulted, including the period-end amortized cost basis for financing receivables
that defaulted. [ASU 2022-02, paragraph 5] }
b.
{By portfolio segment, qualitative information about how those defaults are factored into determining the allowance for credit
losses. [ASU 2022-02, paragraph 5] }
03/09/2023 11:15 AM EST
Page 237 / 1816
Consideration Points:
ASU 2022-02 The pending content resulting from the issuance of ASU 2022-02 amended paragraphs 310-10-05-1, 310-1040-1A, and 310-10-50-11, superseded paragraphs 310-10-50-31 through 50-34 and 310-10-55-12 and the related headings,
and added paragraphs 310-10-50-36 through 50-48 and 310-10- 55-12A, 310-10-55-12B, 310-10-55-12F, and 310-10-55-12I
and their related headings, with a link to transition paragraph 326-10-65-5, and paragraphs 310-10-55-12C through 5512E, 310-10-55-12G, 310-10-55-12H, 310-10-55-12J, and 310-10-55-12K. ASU 2022-02 eliminated the accounting
guidance on troubled debt restructurings (TDRs) for creditors in ASC 310-40 and amended the guidance on “vintage
disclosures” to require disclosure of current-period gross write-offs by year of origination. The ASU also updated the
requirements related to accounting for credit losses under ASC 326 and added enhanced disclosures for creditors with
respect to loan refinancings and restructurings for borrowers experiencing financial difficulty. ASU 2022-02 superseded the
accounting guidance for TDRs for creditors in ASC 310-40 in its entirety and requires entities to evaluate all receivable
modifications under ASC 310-20-35-9 through 35-11 to determine whether a modification made to a borrower results in a
new loan or a continuation of the existing loan. ASU 2022-02’s amendments are effective as follows: • For entities that have
already adopted ASU 2016-13, the amendments in ASU 2022-02 are effective for fiscal years beginning after December 15,
2022, including interim periods within those fiscal years. • For entities that have not yet adopted ASU 2016-13, the
amendments in ASU 2022-02 are effective upon adoption of ASU 2016-13. Entities are permitted to early adopt these
amendments, including adoption in any interim period, provided that the amendments are adopted as of the beginning of the
annual reporting period that includes the interim period of adoption. In addition, entities are permitted to elect to early
adopt the amendments related to TDR accounting and related disclosure enhancements separately from the amendments
related to the vintage disclosures.
Is the entity in compliance with the guidance in ASC 310-10-50:
Determining Whether a Debtor Is Experiencing Financial
Difficulties?
FASB Codification:
>
Determining Whether a Debtor Is Experiencing Financial Difficulties
50-45
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{In evaluating whether the debtor is experiencing financial difficulties [ASU 2011-02, paragraph 2] }{for the purpose of the
disclosure requirements in paragraphs 310-10-50-42 through 50-44 [ASU 2022-02, paragraph 5] }{, a creditor shall consider the
following indicators: [ASU 2011-02, paragraph 2] }
a.
{The debtor is currently in payment default on any of its debt. In addition, a creditor shall evaluate whether it is probable that
the debtor would be in payment default on any of its debt in the foreseeable future without the modification. That is, a creditor
may conclude that a debtor is experiencing financial difficulties, even though the debtor is not currently in payment default. [ASU
2011-02, paragraph 2] }
b.
{The debtor has declared or is in the process of declaring bankruptcy. [ASU 2011-02, paragraph 2] }
c.
{There is substantial doubt as to whether the debtor will continue to be a going concern. [ASU 2011-02, paragraph 2] }
d.
{The debtor has securities that have been delisted, are in the process of being delisted, or are under threat of being delisted from
an exchange. [ASU 2011-02, paragraph 2] }
e.
{On the basis of estimates and projections that only encompass the debtor’s current capabilities, the creditor forecasts that the
debtor’s entity-specific cash flows will be insufficient to service any of its debt (both interest and principal) in accordance with the
contractual terms of the existing agreement for the foreseeable future. [ASU 2011-02, paragraph 2] }
f.
{Without the current modification, the debtor cannot obtain funds from sources other than the existing creditors at an effective
interest rate equal to the current market interest rate for similar debt for a nontroubled debtor. [ASU 2011-02, paragraph 2] }
{The above list of indicators is not intended to include all indicators of a debtor’s financial difficulties. [ASU 2011-02, paragraph 2] }
03/09/2023 11:15 AM EST
Page 238 / 1816
Consideration Points:
ASU 2022-02 The pending content resulting from the issuance of ASU 2022-02 amended paragraphs 310-10-05-1, 310-1040-1A, and 310-10-50-11, superseded paragraphs 310-10-50-31 through 50-34 and 310-10-55-12 and the related headings,
and added paragraphs 310-10-50-36 through 50-48 and 310-10- 55-12A, 310-10-55-12B, 310-10-55-12F, and 310-10-55-12I
and their related headings, with a link to transition paragraph 326-10-65-5, and paragraphs 310-10-55-12C through 5512E, 310-10-55-12G, 310-10-55-12H, 310-10-55-12J, and 310-10-55-12K. ASU 2022-02 eliminated the accounting
guidance on troubled debt restructurings (TDRs) for creditors in ASC 310-40 and amended the guidance on “vintage
disclosures” to require disclosure of current-period gross write-offs by year of origination. The ASU also updated the
requirements related to accounting for credit losses under ASC 326 and added enhanced disclosures for creditors with
respect to loan refinancings and restructurings for borrowers experiencing financial difficulty. ASU 2022-02 superseded the
accounting guidance for TDRs for creditors in ASC 310-40 in its entirety and requires entities to evaluate all receivable
modifications under ASC 310-20-35-9 through 35-11 to determine whether a modification made to a borrower results in a
new loan or a continuation of the existing loan. ASU 2022-02’s amendments are effective as follows: • For entities that have
already adopted ASU 2016-13, the amendments in ASU 2022-02 are effective for fiscal years beginning after December 15,
2022, including interim periods within those fiscal years. • For entities that have not yet adopted ASU 2016-13, the
amendments in ASU 2022-02 are effective upon adoption of ASU 2016-13. Entities are permitted to early adopt these
amendments, including adoption in any interim period, provided that the amendments are adopted as of the beginning of the
annual reporting period that includes the interim period of adoption. In addition, entities are permitted to elect to early
adopt the amendments related to TDR accounting and related disclosure enhancements separately from the amendments
related to the vintage disclosures.
Is the entity in compliance with the guidance in ASC 310-10-50:
Evaluating Whether a Restructuring Results in a Delay in Payment
That Is Insignificant?
03/09/2023 11:15 AM EST
Page 239 / 1816
FASB Codification:
>
Evaluating Whether a Restructuring Results in a Delay in Payment That Is Insignificant
50-46
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{In the case of a [ASU 2022-02, paragraph 5] }{restructuring that results in only a delay in payment that is insignificant
[ASU 2011-02, paragraph 2] }{, an entity [ASU 2022-02, paragraph 5] }{is not [ASU 2011-02, paragraph 2] }{required to include
the modification made to receivables for debtors experiencing financial difficulty in the disclosure requirements in paragraphs 310-1050-36 and 310-10-50-42 through 50-44. [ASU 2022-02, paragraph 5] }{The following factors, when considered together, may
indicate that a restructuring results in a delay in payment that is insignificant: [ASU 2011-02, paragraph 2] }
a.
{The amount of the restructured payments subject to the delay is insignificant relative to the unpaid principal or collateral value
of the debt and will result in an insignificant shortfall in the contractual amount due. [ASU 2011-02, paragraph 2] }
b.
{The delay in timing of the restructured payment period is insignificant relative to any one of the following: [ASU 2011-02,
paragraph 2] }
1.
{The frequency of payments due under the debt [ASU 2011-02, paragraph 2] }
2.
{The debt’s original contractual maturity [ASU 2011-02, paragraph 2] }
3.
{The debt’s original expected duration. [ASU 2011-02, paragraph 2] }
50-47
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{If the debt has been previously restructured, an entity shall consider the cumulative effect of past restructurings [ASU
2011-02, paragraph 2] }{made within the 12-month period before the current restructuring [ASU 2022-02, paragraph 5] }{when
determining whether a delay in payment resulting from the [ASU 2011-02, paragraph 2] }{current [ASU 2022-02, paragraph 5] }
{restructuring is insignificant. [ASU 2011-02, paragraph 2] }
50-48
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{Examples 4, 5, and 6 in paragraphs 310-10-55-12B through 55-12K illustrate a creditor’s evaluation about whether a
delay in payment resulting from a restructuring is insignificant. [ASU 2011-02, paragraph 2] }
03/09/2023 11:15 AM EST
Page 240 / 1816
Consideration Points:
ASU 2022-02 The pending content resulting from the issuance of ASU 2022-02 amended paragraphs 310-10-05-1, 310-1040-1A, and 310-10-50-11, superseded paragraphs 310-10-50-31 through 50-34 and 310-10-55-12 and the related headings,
and added paragraphs 310-10-50-36 through 50-48 and 310-10- 55-12A, 310-10-55-12B, 310-10-55-12F, and 310-10-55-12I
and their related headings, with a link to transition paragraph 326-10-65-5, and paragraphs 310-10-55-12C through 5512E, 310-10-55-12G, 310-10-55-12H, 310-10-55-12J, and 310-10-55-12K. ASU 2022-02 eliminated the accounting
guidance on troubled debt restructurings (TDRs) for creditors in ASC 310-40 and amended the guidance on “vintage
disclosures” to require disclosure of current-period gross write-offs by year of origination. The ASU also updated the
requirements related to accounting for credit losses under ASC 326 and added enhanced disclosures for creditors with
respect to loan refinancings and restructurings for borrowers experiencing financial difficulty. ASU 2022-02 superseded the
accounting guidance for TDRs for creditors in ASC 310-40 in its entirety and requires entities to evaluate all receivable
modifications under ASC 310-20-35-9 through 35-11 to determine whether a modification made to a borrower results in a
new loan or a continuation of the existing loan. ASU 2022-02’s amendments are effective as follows: • For entities that have
already adopted ASU 2016-13, the amendments in ASU 2022-02 are effective for fiscal years beginning after December 15,
2022, including interim periods within those fiscal years. • For entities that have not yet adopted ASU 2016-13, the
amendments in ASU 2022-02 are effective upon adoption of ASU 2016-13. Entities are permitted to early adopt these
amendments, including adoption in any interim period, provided that the amendments are adopted as of the beginning of the
annual reporting period that includes the interim period of adoption. In addition, entities are permitted to elect to early
adopt the amendments related to TDR accounting and related disclosure enhancements separately from the amendments
related to the vintage disclosures.
Assets > 310 Receivables > 20 Nonrefundable Fees and Other Costs > 25 Recognition > General
Is the entity in compliance with the guidance in ASC 310-20-25-1?
FASB Codification:
25-1
This Section addresses the recognition of certain lending fees and costs, specifically:
a.
Loan origination fees and direct loan origination costs
b.
Other lending-related costs
c.
Cost determination
d.
Commitment fees
e.
Credit card fees and costs
f.
Loan syndication fees
g.
Purchase of a loan or group of loans
h.
Independent third parties.
Is the entity in compliance with the guidance in ASC 310-20-25:
Loan Origination Fees and Direct Loan Origination Costs?
FASB Codification:
>
Loan Origination Fees and Direct Loan Origination Costs
25-2
{Loan origination fees shall be deferred. [FAS 091, paragraph 5] }{Likewise, direct loan origination costs shall be deferred.
[FAS 091, paragraph 5] }
03/09/2023 11:15 AM EST
Page 241 / 1816
Is the entity in compliance with the guidance in ASC 310-20-25:
Other Lending-Related Costs?
FASB Codification:
>
Other Lending-Related Costs
25-3
{All other lending-related costs, including costs related to activities performed by the lender for advertising, soliciting potential
borrowers, servicing existing loans, and other ancillary activities related to establishing and monitoring credit policies, supervision,
and administration, shall be charged to expense as incurred. Employees' compensation and fringe benefits related to those activities,
unsuccessful loan origination efforts, and idle time shall be charged to expense as incurred. Administrative costs, rent, depreciation,
and all other occupancy and equipment costs are considered indirect costs and shall be charged to expense as incurred. [FAS 091,
paragraph 7] }
25-4
{Costs for software dedicated to loan processing and origination are not eligible for deferral as direct loan origination costs
under the definition of that term. [QA 091, paragraph 15] }{Such costs are not other costs related to those activities that would not
have been incurred but for that loan as contemplated in the definition of the term. [QA 091, paragraph 15] }
25-5
{Fees paid to a service bureau for loan processing are not eligible for deferral as direct loan origination costs under the
definition of that term [QA 091, paragraph 17] }{because the services were performed after the loan has already been made; the costs
are not origination costs. [QA 091, paragraph 17] }
25-6
{Bonuses based on successful production of loans that are paid to employees involved in loan origination activities are partially
deferrable as direct loan origination costs under the definition of that term. [QA 091, paragraph 18] }{Bonuses are part of an
employee's total compensation. The portion of the employee's total compensation that may be deferred as direct loan origination costs
is the portion that is directly related to time spent on the activities contemplated in the definition of that term and results in the
origination of a loan. [QA 091, paragraph 18] }
25-7
{If compensation for an employee traditionally paid by salary or hourly wage is switched wholly or partially to commissions on
successful loan production, such costs would be partially deferrable as direct loan origination costs under the definition of that term.
[QA 091, paragraph 19] }{As specified in the preceding paragraph, only the portion of the employee's total compensation directly
related to time spent on activities contemplated in the definition of that term for completed loans would be deferred. Commission-based
compensation arrangements between a lender and its employees may be similar to arrangements a lender may have with independent
third parties such as loan brokers. However, when origination activities are performed by the lender's employees, the lender must
allocate compensation costs applicable to the activities contemplated in the definition of direct loan acquisition costs based on the
portion of time spent by employees. An allocation of the employees' total compensation between origination and other activities is
made so that only those costs associated with those lending activities contemplated in the definition of that term are deferred for
completed loans, even if commissions are 100 percent of such compensation and are based solely on completed loan transactions. [QA
091, paragraph 19] }
Is the entity in compliance with the guidance in ASC 310-20-25:
Cost Determination?
03/09/2023 11:15 AM EST
Page 242 / 1816
FASB Codification:
>
Cost Determination
25-8
{This Subtopic does not specify how costs are to be determined but rather what costs must be deferred. In many instances,
standard costing may be used to estimate the costs to be deferred in accordance with the provisions of this Subtopic. For certain loans,
the cost of origination may be similar and standard costing may be appropriate for those loans, while other loans may be of such a
nature that costs must be identified separately. Lenders may use any one or a combination of methods that will provide adequate
information to report financial results in accordance with this Subtopic. Development of a standard costing system will require periodic
analysis of variances and, if necessary, adjustment of standard costing estimates. Possible standard cost methods that may be used to
measure costs applicable to transactions that have occurred include standard costs, actual costs, job process (for example, homogeneous
loans), or job order (for example, specific loans). [QA 091, paragraph 21] }
25-9
{The successful-efforts accounting notion utilized at an entity-wide level may result in a standard cost system that does not
accurately reflect the amount of costs that may be deferred and amortized under the provisions of this Subtopic. Successful loan efforts
can be determined as a percentage of each function (for example, application, verification, underwriting, appraisal, closing) and may be
based on the percentage, adjusted for idle time and time spent on activities for which the related costs cannot be deferred, of successful
and unsuccessful efforts determined for each function. [QA 091, paragraph 22] }
25-10
{In accounting for costs associated with loan originations on loans that have not yet been closed [QA 091, paragraph 30] }{,
judgment is required to estimate the number of loans in process that will result in a successful loan origination. Origination costs on a
loan in process may be deferred until the loan is either closed or considered an unsuccessful effort. If a loan in process is determined to
be unsuccessful after the balance sheet date but before the financial statements are issued or are available to be issued (as discussed in
Section 855-10-25), costs that have been deferred through the balance sheet date shall be charged to expense in the period ending with
the balance sheet date. [QA 091, paragraph 30] }
Is the entity in compliance with the guidance in ASC 310-20-25:
Commitment Fees?
FASB Codification:
>
Commitment Fees
25-11
{Except as set forth in paragraph 310-20-35-3, fees received for a commitment to originate or purchase a loan or group of
loans shall be deferred. [FAS 091, paragraph 8] }
25-12
{Direct loan origination costs incurred to make a commitment to originate a loan shall be offset against any related
commitment fee and the net amount recognized as set forth in paragraph 310-20-35-3. [FAS 091, paragraph 9] }
25-13
{If qualifying costs associated with commitments exceed commitment fees received (or if no fee is charged), whether or not the
resulting net cost may be deferred [QA 091, paragraph 26] }{depends on the likelihood of the commitment being exercised. This
Subtopic applies to both nonrefundable fees and costs, and paragraphs 310-20-35-3 and 310-20-25-1 may require that the net of such
items be deferred. However, if the likelihood that the commitment will be exercised is remote, any net costs shall be charged to
expense immediately rather than deferred and amortized on a straight-line basis over the commitment period. [QA 091, paragraph 26]
}
25-14
{Fees received for providing commercial letters of credit are covered by this Subtopic. [QA 091, paragraph 3] }{Such fees are
considered commitment fees, and the accounting is specified in paragraph 310-20-35-3. [QA 091, paragraph 3] }
Is the entity in compliance with the guidance in ASC 310-20-25:
Credit Card Fees and Costs?
03/09/2023 11:15 AM EST
Page 243 / 1816
FASB Codification:
>
Credit Card Fees and Costs
25-15
{Credit card fees generally cover many services to cardholders. [FAS 091, paragraph 10] }{Accordingly, fees that are
periodically charged to cardholders shall be deferred. This accounting shall also apply to other similar card arrangements that involve
an extension of credit by the card issuer. [FAS 091, paragraph 10] }
25-16
{Only the costs of origination that qualify as direct loan origination costs under the definition of that term are eligible for
deferral. All other costs shall be charged to expense as incurred. [QA 091, paragraph 31] }{Therefore, costs eligible for deferral
would likely exceed fees only when a credit card is first issued. [QA 091, paragraph 31] }
25-17
{Credit card origination costs shall be netted against the related credit card fee, if any. [QA 091, paragraph 31] }{In situations
where a significant fee is charged, the privilege period is the period that the fee entitles the cardholder to use the credit card. [QA
091, paragraph 31] }{If there is no significant fee, the privilege period shall be one year. [QA 091, paragraph 31] }{Significance for
this purpose shall be evaluated based on the amount of the fee relative to the related costs. [QA 091, paragraph 31] }
25-18
{Credit card accounts acquired individually shall be accounted for as originations under this Subtopic. [EITF 93-01,
paragraph DISCUSSION] }{Amounts paid to a third party to acquire individual credit card accounts shall be deferred and netted against
the related credit card fee, if any. [EITF 93-01, paragraph DISCUSSION] }
Is the entity in compliance with the guidance in ASC 310-20-25:
Loan Syndication Fees?
FASB Codification:
>
Loan Syndication Fees
25-19
{The entity managing a loan syndication (the syndicator) shall recognize loan syndication fees when the syndication is complete
unless a portion of the syndication loan is retained. [FAS 091, paragraph 11] }{If the yield on the portion of the loan retained by the
syndicator is less than the average yield to the other syndication participants after considering the fees passed through by the
syndicator, the syndicator shall defer a portion of the syndication fee to produce a yield on the portion of the loan retained that is not
less than the average yield on the loans held by the other syndication participants. [FAS 091, paragraph 11] }
25-20
{All transactions that are structured legally as loan syndications shall be accounted for as loan syndications in accordance with
the provisions of this Subtopic. [EITF 97-03, paragraph DISCUSSION] }
25-21
[Paragraph Not Used not used]
Is the entity in compliance with the guidance in ASC 310-20-25:
Purchase of a Loan or Group of Loans?
FASB Codification:
>
Purchase of a Loan or Group of Loans
25-22
{Paragraph 310-20-30-5 explains that the initial investment in a purchased loan or group of loans shall include the amount
paid to the seller plus any fees paid or less any fees received. [FAS 091, paragraph 15] }{The initial investment frequently differs
from the related loan's principal amount at the date of purchase. [FAS 091, paragraph 15] }{All other costs incurred in connection with
acquiring purchased loans or committing to purchase loans shall be charged to expense as incurred. [FAS 091, paragraph 15] }
25-23
{Designation of a fee or cost as an origination fee or cost for a loan that is purchased is inappropriate because a purchased loan
has already been originated by another party. [FAS 091, paragraph 36] }{Costs incurred in connection with acquiring loans or
committing to purchase loans, including a participation, shall be charged to expense in accordance with paragraph 310-20-35-15. [QA
091, paragraph 35] }
25-24
{For the originating lender, net fees and costs associated with a loan participation [QA 091, paragraph 35] }{would become
a component of the net loan investment balance to be used in calculating the gain or loss on a subsequent sale as described in
paragraph 310-20-35-16. [QA 091, paragraph 35] }
03/09/2023 11:15 AM EST
Page 244 / 1816
Is the entity in compliance with the guidance in ASC 310-20-25:
Independent Third Parties?
FASB Codification:
>
Independent Third Parties
25-25
{If an entity utilizes a third party for loan originations and the third party is not considered an independent third party for
several reasons but also is not an employee of the entity, the entity shall defer those costs [QA 091, paragraph 11] }{ directly related
to specified activities that can be determined to meet the criteria for direct loan origination costs under the definition of that term as
long as those costs would not have been incurred but for that loan. [QA 091, paragraph 11] }
25-26
{Fees paid to independent third parties for advisory services regarding loan origination activities, even if those same activities
are performed internally, [QA 091, paragraph 13] }{ are not considered to be incurred for the specified activities set forth in the
definition of the direct loan acquisition costs term and shall be charged to expense as incurred whether paid to independent third parties
or performed internally. [QA 091, paragraph 13] }
25-27
{Fees paid to an independent third party, or incurred internally, for portfolio management or investment consultation [QA
091, paragraph 39] }{ are considered other costs incurred in connection with acquiring purchased loans or committing to purchase
loans because they constitute investment advisory costs, not loan origination costs. Therefore, such costs shall be charged to expense in
accordance with paragraph 310-20-35-15 whether the costs are paid to independent third parties or incurred internally. [QA 091,
paragraph 39] }{In some circumstances judgment may be necessary to determine if a third party is independent. [QA 091,
paragraph 9] }
Assets > 310 Receivables > 20 Nonrefundable Fees and Other Costs > 30 Initial Measurement > General
Is the entity in compliance with the guidance in ASC 310-20-30-1?
FASB Codification:
30-1
This Section addresses the measurement of certain types of lending fees and costs, specifically:
a.
Loan origination fees and costs
b.
Syndication fees
c.
Purchase of a loan or group of loans.
Is the entity in compliance with the guidance in ASC 310-20-30:
Loan Origination Fees and Costs?
FASB Codification:
>
Loan Origination Fees and Costs
30-2
{Loan origination fees and related direct loan origination costs for a given loan shall be offset and only the net amount shall
be deferred. [FAS 091, paragraph 5] }
30-3
{For increasing interest rate loans, the recorded net investment in a loan may exceed the amount by which the borrower could
settle the obligation [QA 091, paragraph 41] }{but only if the excess results from a purchase premium (loans purchased) or loan costs
that qualify for deferral in excess of loan fees (loans originated). [QA 091, paragraph 41] }
Is the entity in compliance with the guidance in ASC 310-20-30:
Syndication Fees?
03/09/2023 11:15 AM EST
Page 245 / 1816
FASB Codification:
>
Syndication Fees
30-4
{Paragraph 310-20-25-19 explains that, if the yield on the portion of the loan retained by the syndicator is less than the
average yield to the other syndication participants after considering the fees passed through by the syndicator, the syndicator shall defer
a portion of the syndication fee to produce a yield on the portion of the loan retained that is not less than the average yield on the loans
held by the other syndication participants. [FAS 091, paragraph 11] }
Is the entity in compliance with the guidance in ASC 310-20-30:
Purchase of a Loan or Group of Loans?
FASB Codification:
>
Purchase of a Loan or Group of Loans
30-5
{The initial investment in a purchased loan or group of loans shall include the amount paid to the seller plus any fees paid or
less any fees received. [FAS 091, paragraph 15] }{In applying the provisions of this Subtopic to loans purchased as a group, the
purchaser may allocate the initial investment to the individual loans or may account for the initial investment in the aggregate. [FAS
091, paragraph 16] }
Assets > 310 Receivables > 20 Nonrefundable Fees and Other Costs > 35 Subsequent Measurement > General
Is the entity in compliance with the guidance in ASC 310-20-35-1?
FASB Codification:
35-1
This Section addresses measurement issues for certain fees and costs related to various forms of lending, specifically:
a.
Loan origination fees and costs
b.
Commitment fees and costs
c.
Credit card fees and costs
d.
Loan refinancing or restructuring
e.
Purchase of a loan or group of loans
f.
Interest method and other amortization matters
g.
Estimating principal prepayments
h.
Lending transactions unrelated to the origination of loans
i.
Blended-rate loans.
Is the entity in compliance with the guidance in ASC 310-20-35:
Loan Origination Fees and Costs?
03/09/2023 11:15 AM EST
Page 246 / 1816
FASB Codification:
>
Loan Origination Fees and Costs
35-2
{Loan origination fees deferred in accordance with paragraph 310-20-25-2 shall be recognized over the life of the loan as an
adjustment of yield (interest income). [FAS 091, paragraph 5] }{Likewise, direct loan origination costs deferred in accordance with
that paragraph shall be recognized as a reduction in the yield of the loan except as set forth in paragraph 310-20-35-12 (for a troubled
debt restructuring). [FAS 091, paragraph 5] }{Paragraph 310-20-30-2 explains that loan origination fees and related direct loan
origination costs for a given loan shall be offset and only the net amount shall be amortized. [FAS 091, paragraph 5] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{Loan origination fees deferred in accordance with paragraph 310-20-25-2 shall be recognized over the life of the loan as
an adjustment of yield (interest income). [FAS 091, paragraph 5] }{Likewise, direct loan origination costs deferred in accordance
with that paragraph shall be recognized as a reduction in the yield of the loan. [FAS 091, paragraph 5] }{Paragraph 310-20-30-2
explains that loan origination fees and related direct loan origination costs for a given loan shall be offset and only the net amount shall
be amortized. [FAS 091, paragraph 5] }{For loans that are refinanced or restructured, see paragraphs 310-20-35-9 through 35-10.
[ASU 2022-02, paragraph 6] }
Consideration Points:
ASU 2022-02 The pending content resulting from the issuance of ASU 2022-02 amended paragraphs 310-20-35-2 and 31020-35-9 through 35-10, superseded paragraph 310-20-35-12, and added paragraphs 310-20-35-12A through 35-12C and
their related headings, 310-20-40-3, 310-20-40-5 through 40-7, and 310-20-40-9 and their related headings, 310-20-55-18A
and its related heading, and 310-20-55-51, 310-20-55-52, and 310-20-55-54 through 55-56 and their related headings, with
a link to transition paragraph 326-10-65-5, and paragraph 310-20-35-12D and its related heading, paragraphs 310-20-40-2,
310-20-40-4, 310-20-40-8, 310-20-40-10 through 40-12 and their related headings, and paragraphs 310-20-55-18B through
18F and 310-20-55-53 and their related headings. ASU 2022-02 eliminated the accounting guidance on troubled debt
restructurings (TDRs) for creditors in ASC 310-40 and amended the guidance on “vintage disclosures” to require disclosure
of current-period gross write-offs by year of origination. The ASU also updated the requirements related to accounting for
credit losses under ASC 326 and added enhanced disclosures for creditors with respect to loan refinancings and
restructurings for borrowers experiencing financial difficulty. ASU 2022-02 superseded the accounting guidance for TDRs for
creditors in ASC 310-40 in its entirety and requires entities to evaluate all receivable modifications under ASC 310-20-35-9
through 35-11 to determine whether a modification made to a borrower results in a new loan or a continuation of the
existing loan. ASU 2022-02’s amendments are effective as follows: • For entities that have already adopted ASU 2016-13,
the amendments in ASU 2022-02 are effective for fiscal years beginning after December 15, 2022, including interim periods
within those fiscal years. • For entities that have not yet adopted ASU 2016-13, the amendments in ASU 2022-02 are
effective upon adoption of ASU 2016-13. Entities are permitted to early adopt these amendments, including adoption in any
interim period, provided that the amendments are adopted as of the beginning of the annual reporting period that includes
the interim period of adoption. In addition, entities are permitted to elect to early adopt the amendments related to TDR
accounting and related disclosure enhancements separately from the amendments related to the vintage disclosures.
Is the entity in compliance with the guidance in ASC 310-20-35:
Commitment Fees and Costs?
03/09/2023 11:15 AM EST
Page 247 / 1816
FASB Codification:
>
Commitment Fees and Costs
35-3
{Except as set forth in this paragraph, fees received for a commitment to originate or purchase a loan or group of loans shall be,
if the commitment is exercised, recognized over the life of the loan as an adjustment of yield or, if the commitment expires
unexercised, recognized in income upon expiration of the commitment: [FAS 091, paragraph 8] }
a.
{If the entity's experience with similar arrangements indicates that the likelihood that the commitment will be exercised is
remote, the commitment fee shall be recognized over the commitment period on a straight-line basis as service fee income. If the
commitment is subsequently exercised during the commitment period, the remaining unamortized commitment fee at the time of
exercise shall be recognized over the life of the loan as an adjustment of yield. [FAS 091, paragraph 8] }{The term remote is
used here, consistent with its use in Topic 450, to mean that the likelihood is slight that a loan commitment will be exercised
before its expiration. [FAS 091, paragraph 8] }
b.
{If the amount of the commitment fee is determined retrospectively as a percentage of the line of credit available but unused in a
previous period, if that percentage is nominal in relation to the stated interest rate on any related borrowing, and if that
borrowing will bear a market interest rate at the date the loan is made, the commitment fee shall be recognized as service fee
income as of the determination date. [FAS 091, paragraph 8] }
Is the entity in compliance with the guidance in ASC 310-20-35:
Credit Card Fees and Costs?
FASB Codification:
>
Credit Card Fees and Costs
35-4
{The following guidance addresses the amortization of deferred origination costs of credit cards with fees, without fees, or when
the fees have been waived for a limited period of time. [EITF 92-05, paragraph ISSUE] }
35-5
{Fees deferred in accordance with paragraph 310-20-25-15 shall be recognized on a straight-line basis over the period the fee
entitles the cardholder to use the card. This accounting shall also apply to other similar card arrangements that involve an extension of
credit by the card issuer. [FAS 091, paragraph 10] }
35-6
{In connection with the issuance of a credit card that is not a private label credit card, an issuer may incur certain credit card
origination costs that qualify as direct loan origination costs pursuant to this Topic. [EITF 92-05, paragraph ISSUE] }{Paragraph 31020-25-16 explains that only the costs of origination that qualify as direct loan origination costs under the definition of that term are
eligible for deferral. That definition explains that all other costs shall be charged to expense as incurred. [QA 091, paragraph 31] }
{That definition explains that, therefore, costs eligible for deferral would likely exceed fees only when a credit card is first issued. [QA
091, paragraph 31] }
35-7
{The net amount of credit card origination costs netted against the related credit card fee, if any, and recognized in accordance
with paragraph 310-20-25-17 shall be amortized on a straight-line basis over the privilege period. That paragraph states that
significance for this purpose shall be evaluated based on the amount of the fee relative to the related costs and provides related
guidance. [QA 091, paragraph 31] }
35-8
{Any net amount deferred in accordance with paragraph 310-20-25-18 shall be amortized on a straight-line basis over the
privilege period. [EITF 93-01, paragraph DISCUSSION] }
Is the entity in compliance with the guidance in ASC 310-20-35-9?
03/09/2023 11:15 AM EST
Page 248 / 1816
FASB Codification:
35-9
{If the terms of the new loan resulting from a loan refinancing or restructuring other than a troubled debt restructuring are at
least as favorable to the lender as the terms for comparable loans to other customers with similar collection risks who are not
refinancing or restructuring a loan with the lender, the refinanced loan shall be accounted for as a new loan. This condition would be
met if the new loan's effective yield is at least equal to the effective yield for such loans [FAS 091, paragraph 12] }{and modifications
of the original debt instrument are more than minor. [EITF 01-07, paragraph 3] }{Any unamortized net fees or costs and any
prepayment penalties from the original loan shall be recognized in interest income when the new loan is granted. [FAS 091,
paragraph 12] }{The effective yield comparison considers the level of nominal interest rate, commitment and origination fees, and
direct loan origination costs and would also consider comparison of other factors where appropriate, such as compensating balance
arrangements. [FAS 091, paragraph 12] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{If the terms of the new loan resulting from a loan refinancing or restructuring, in which the refinancing or restructuring is
not itself a troubled debt restructuring, are at least as favorable to the lender as the terms for comparable loans to other customers
with similar collection risks who are not refinancing or restructuring a loan with the lender, the refinanced loan shall be accounted for
as a new loan. This condition would be met if the new loan's effective yield is at least equal to the effective yield for such loans [FAS
091, paragraph 12] }{and modifications of the original debt instrument are more than minor. [EITF 01-07, paragraph 3] }{Any
unamortized net fees or costs and any prepayment penalties from the original loan shall be recognized in interest income when the new
loan is granted. [FAS 091, paragraph 12] }{The effective yield comparison considers the level of nominal interest rate, commitment
and origination fees, and direct loan origination costs and would also consider comparison of other factors where appropriate, such as
compensating balance arrangements. [FAS 091, paragraph 12] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{If the terms of the new loan resulting from a loan refinancing or restructuring are at least as favorable to the lender as the
terms for comparable loans to other customers with similar collection risks who are not refinancing or restructuring a loan with the
lender, the refinanced loan shall be accounted for as a new loan. This condition would be met if the new loan's effective yield is at least
equal to the effective yield for such loans [FAS 091, paragraph 12] }{and modifications of the original debt instrument are more than
minor. [EITF 01-07, paragraph 3] }{Any unamortized net fees or costs and any prepayment penalties from the original loan shall be
recognized in interest income when the new loan is granted. [FAS 091, paragraph 12] }{The effective yield comparison considers the
level of nominal interest rate, commitment and origination fees, and direct loan origination costs and would also consider comparison
of other factors where appropriate, such as compensating balance arrangements. [FAS 091, paragraph 12] }
03/09/2023 11:15 AM EST
Page 249 / 1816
Consideration Points:
Section 310-20-35 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU amended paragraph 310-20-35-9. For public business entities that are U.S. Securities and Exchange
Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after December 15, 2019,
including interim periods within those fiscal years. For all other public business entities, the amendments in the ASU are
effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. For all
other entities, including not-for-profit entities and employee benefit plans within the scope of ASC 960 through ASC 965 on
plan accounting, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, and interim
periods within fiscal years beginning after December 15, 2021. All entities may adopt the amendments in this Update
earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. ASU
2022-02 The pending content resulting from the issuance of ASU 2022-02 amended paragraphs 310-20-35-2 and 310-2035-9 through 35-10, superseded paragraph 310-20-35-12, and added paragraphs 310-20-35-12A through 35-12C and their
related headings, 310-20-40-3, 310-20-40-5 through 40-7, and 310-20-40-9 and their related headings, 310-20-55-18A and
its related heading, and 310-20-55-51, 310-20-55-52, and 310-20-55-54 through 55-56 and their related headings, with a
link to transition paragraph 326-10-65-5, and paragraph 310-20-35-12D and its related heading, paragraphs 310-20-40-2,
310-20-40-4, 310-20-40-8, 310-20-40-10 through 40-12 and their related headings, and paragraphs 310-20-55-18B through
18F and 310-20-55-53 and their related headings. ASU 2022-02 eliminated the accounting guidance on troubled debt
restructurings (TDRs) for creditors in ASC 310-40 and amended the guidance on “vintage disclosures” to require disclosure
of current-period gross write-offs by year of origination. The ASU also updated the requirements related to accounting for
credit losses under ASC 326 and added enhanced disclosures for creditors with respect to loan refinancings and
restructurings for borrowers experiencing financial difficulty. ASU 2022-02 superseded the accounting guidance for TDRs for
creditors in ASC 310-40 in its entirety and requires entities to evaluate all receivable modifications under ASC 310-20-35-9
through 35-11 to determine whether a modification made to a borrower results in a new loan or a continuation of the
existing loan. ASU 2022-02’s amendments are effective as follows: • For entities that have already adopted ASU 2016-13,
the amendments in ASU 2022-02 are effective for fiscal years beginning after December 15, 2022, including interim periods
within those fiscal years. • For entities that have not yet adopted ASU 2016-13, the amendments in ASU 2022-02 are
effective upon adoption of ASU 2016-13. Entities are permitted to early adopt these amendments, including adoption in any
interim period, provided that the amendments are adopted as of the beginning of the annual reporting period that includes
the interim period of adoption. In addition, entities are permitted to elect to early adopt the amendments related to TDR
accounting and related disclosure enhancements separately from the amendments related to the vintage disclosures.
Is the entity in compliance with the guidance in ASC 310-20-3510?
FASB Codification:
35-10
{If the refinancing or restructuring does not meet the condition set forth in the preceding paragraph or if only minor
modifications are made to the original loan contract, the unamortized net fees or costs from the original loan and any prepayment
penalties shall be carried forward as a part of the net investment in the new loan. In this case, the investment in the new loan shall
consist of the remaining net investment in the original loan, any additional amounts loaned, any fees received, and direct loan
origination costs associated with the refinancing or restructuring. [FAS 091, paragraph 13] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{If the refinancing or restructuring does not meet the condition set forth in paragraph 310-20-35-9 or if only minor
modifications are made to the original loan contract, the unamortized net fees or costs from the original loan and any prepayment
penalties shall be carried forward as a part of the net investment in the new loan. In this case, the investment in the new loan shall
consist of the remaining net investment in the original loan, any additional [FAS 091, paragraph 13] }{funds advanced to the
borrower, [ASU 2022-02, paragraph 6] }{any fees received, and direct loan origination costs associated with the refinancing or
restructuring. [FAS 091, paragraph 13] }
03/09/2023 11:15 AM EST
Page 250 / 1816
Consideration Points:
ASU 2022-02 The pending content resulting from the issuance of ASU 2022-02 amended paragraphs 310-20-35-2 and 31020-35-9 through 35-10, superseded paragraph 310-20-35-12, and added paragraphs 310-20-35-12A through 35-12C and
their related headings, 310-20-40-3, 310-20-40-5 through 40-7, and 310-20-40-9 and their related headings, 310-20-55-18A
and its related heading, and 310-20-55-51, 310-20-55-52, and 310-20-55-54 through 55-56 and their related headings, with
a link to transition paragraph 326-10-65-5, and paragraph 310-20-35-12D and its related heading, paragraphs 310-20-40-2,
310-20-40-4, 310-20-40-8, 310-20-40-10 through 40-12 and their related headings, and paragraphs 310-20-55-18B through
18F and 310-20-55-53 and their related headings. ASU 2022-02 eliminated the accounting guidance on troubled debt
restructurings (TDRs) for creditors in ASC 310-40 and amended the guidance on “vintage disclosures” to require disclosure
of current-period gross write-offs by year of origination. The ASU also updated the requirements related to accounting for
credit losses under ASC 326 and added enhanced disclosures for creditors with respect to loan refinancings and
restructurings for borrowers experiencing financial difficulty. ASU 2022-02 superseded the accounting guidance for TDRs for
creditors in ASC 310-40 in its entirety and requires entities to evaluate all receivable modifications under ASC 310-20-35-9
through 35-11 to determine whether a modification made to a borrower results in a new loan or a continuation of the
existing loan. ASU 2022-02’s amendments are effective as follows: • For entities that have already adopted ASU 2016-13,
the amendments in ASU 2022-02 are effective for fiscal years beginning after December 15, 2022, including interim periods
within those fiscal years. • For entities that have not yet adopted ASU 2016-13, the amendments in ASU 2022-02 are
effective upon adoption of ASU 2016-13. Entities are permitted to early adopt these amendments, including adoption in any
interim period, provided that the amendments are adopted as of the beginning of the annual reporting period that includes
the interim period of adoption. In addition, entities are permitted to elect to early adopt the amendments related to TDR
accounting and related disclosure enhancements separately from the amendments related to the vintage disclosures.
Is the entity in compliance with the guidance in ASC 310-20-3511?
FASB Codification:
35-11
{A modification of a debt instrument shall be considered more than minor under paragraph 310-20-35-10 if the present value
of the cash flows under the terms of the new debt instrument is at least 10 percent different from the present value of the remaining
cash flows under the terms of the original instrument. If the difference between the present value of the cash flows under the terms of
the new debt instrument and the present value of the remaining cash flows under the terms of the original debt instrument is less than
10 percent, a creditor shall evaluate whether the modification is more than minor based on the specific facts and circumstances (and
other relevant considerations) surrounding the modification. [EITF 01-07, paragraph DISCUSSION] }{The guidance in Topic 470 shall
be used to calculate the present value of the cash flows for purposes of applying the 10 percent test. [EITF 01-07,
paragraph DISCUSSION] }
Consideration Points:
ASU 2022-02 The pending content resulting from the issuance of ASU 2022-02 amended paragraphs 310-20-35-2 and 31020-35-9 through 35-10, superseded paragraph 310-20-35-12, and added paragraphs 310-20-35-12A through 35-12C and
their related headings, 310-20-40-3, 310-20-40-5 through 40-7, and 310-20-40-9 and their related headings, 310-20-55-18A
and its related heading, and 310-20-55-51, 310-20-55-52, and 310-20-55-54 through 55-56 and their related headings, with
a link to transition paragraph 326-10-65-5, and paragraph 310-20-35-12D and its related heading, paragraphs 310-20-40-2,
310-20-40-4, 310-20-40-8, 310-20-40-10 through 40-12 and their related headings, and paragraphs 310-20-55-18B through
18F and 310-20-55-53 and their related headings. ASU 2022-02 eliminated the accounting guidance on troubled debt
restructurings (TDRs) for creditors in ASC 310-40 and amended the guidance on “vintage disclosures” to require disclosure
of current-period gross write-offs by year of origination. The ASU also updated the requirements related to accounting for
credit losses under ASC 326 and added enhanced disclosures for creditors with respect to loan refinancings and
restructurings for borrowers experiencing financial difficulty. ASU 2022-02 superseded the accounting guidance for TDRs for
creditors in ASC 310-40 in its entirety and requires entities to evaluate all receivable modifications under ASC 310-20-35-9
through 35-11 to determine whether a modification made to a borrower results in a new loan or a continuation of the
existing loan. ASU 2022-02’s amendments are effective as follows: • For entities that have already adopted ASU 2016-13,
the amendments in ASU 2022-02 are effective for fiscal years beginning after December 15, 2022, including interim periods
within those fiscal years. • For entities that have not yet adopted ASU 2016-13, the amendments in ASU 2022-02 are
effective upon adoption of ASU 2016-13. Entities are permitted to early adopt these amendments, including adoption in any
interim period, provided that the amendments are adopted as of the beginning of the annual reporting period that includes
the interim period of adoption. In addition, entities are permitted to elect to early adopt the amendments related to TDR
accounting and related disclosure enhancements separately from the amendments related to the vintage disclosures.
Is the entity in compliance with the guidance in ASC 310-20-35:
Substitution or Addition of Debtors?
03/09/2023 11:15 AM EST
Page 251 / 1816
FASB Codification:
>
Substitution or Addition of Debtors
35-12A
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{A loan refinancing or [ASU 2022-02, paragraph 6] }{restructuring may involve substituting debt of another business
entity, individual, or government entity for that of the debtor or adding another debtor (for example, as a joint debtor). [FAS 015,
paragraph 42] }{Government entities include, but are not limited to, states, counties, townships, municipalities, school districts,
authorities, and commissions. [FAS 015, paragraph 42] }{That kind of restructuring should be accounted for according to its substance.
[FAS 015, paragraph 42] }{ For example, a restructuring in which, after the restructuring, the substitute or additional debtor controls,
is controlled by (as defined in paragraphs 810-10-15-8 through 15-8A), or is under common control with the original debtor is an
example of one that shall be accounted for by the creditor as [FAS 015, paragraph 42] }{a loan refinancing or restructuring as
prescribed in paragraphs 310-20-35-9 through 35-11. Similarly, [ASU 2022-02, paragraph 6] }{a restructuring in which the
substitute or additional debtor and original debtor are related after the restructuring by an agency, trust, or other relationship that in
substance earmarks certain of the original debtor's funds or funds flows for the creditor although payments to the creditor may be made
by the substitute or additional debtor [FAS 015, paragraph 42] }{should be accounted for by the creditor as a loan refinancing or
restructuring as prescribed in paragraphs 310-20-35-9 through 35-11. [ASU 2022-02, paragraph 6] }{In contrast, a restructuring in
which the substitute or additional debtor and the original debtor do not have any of the relationships described above after the
restructuring shall be accounted for by the creditor according to the provisions of paragraphs 310-20-40-2 through 40-5. [FAS 015,
paragraph 42] }
Consideration Points:
ASU 2022-02 The pending content resulting from the issuance of ASU 2022-02 amended paragraphs 310-20-35-2 and 31020-35-9 through 35-10, superseded paragraph 310-20-35-12, and added paragraphs 310-20-35-12A through 35-12C and
their related headings, 310-20-40-3, 310-20-40-5 through 40-7, and 310-20-40-9 and their related headings, 310-20-55-18A
and its related heading, and 310-20-55-51, 310-20-55-52, and 310-20-55-54 through 55-56 and their related headings, with
a link to transition paragraph 326-10-65-5, and paragraph 310-20-35-12D and its related heading, paragraphs 310-20-40-2,
310-20-40-4, 310-20-40-8, 310-20-40-10 through 40-12 and their related headings, and paragraphs 310-20-55-18B through
18F and 310-20-55-53 and their related headings. ASU 2022-02 eliminated the accounting guidance on troubled debt
restructurings (TDRs) for creditors in ASC 310-40 and amended the guidance on “vintage disclosures” to require disclosure
of current-period gross write-offs by year of origination. The ASU also updated the requirements related to accounting for
credit losses under ASC 326 and added enhanced disclosures for creditors with respect to loan refinancings and
restructurings for borrowers experiencing financial difficulty. ASU 2022-02 superseded the accounting guidance for TDRs for
creditors in ASC 310-40 in its entirety and requires entities to evaluate all receivable modifications under ASC 310-20-35-9
through 35-11 to determine whether a modification made to a borrower results in a new loan or a continuation of the
existing loan. ASU 2022-02’s amendments are effective as follows: • For entities that have already adopted ASU 2016-13,
the amendments in ASU 2022-02 are effective for fiscal years beginning after December 15, 2022, including interim periods
within those fiscal years. • For entities that have not yet adopted ASU 2016-13, the amendments in ASU 2022-02 are
effective upon adoption of ASU 2016-13. Entities are permitted to early adopt these amendments, including adoption in any
interim period, provided that the amendments are adopted as of the beginning of the annual reporting period that includes
the interim period of adoption. In addition, entities are permitted to elect to early adopt the amendments related to TDR
accounting and related disclosure enhancements separately from the amendments related to the vintage disclosures.
Is the entity in compliance with the guidance in ASC 310-20-35:
Partial Satisfaction of a Receivable?
03/09/2023 11:15 AM EST
Page 252 / 1816
FASB Codification:
>
Partial Satisfaction of a Receivable
35-12B
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{In a partial satisfaction of a receivable (see paragraph 310-20-35-12C), the fair value of the assets received shall be used
in all cases to avoid the need to allocate the fair value of the receivable between the part satisfied and the part still outstanding. [FAS
015, paragraph 28] }
35-12C
{A troubled debt restructuring may involve receipt of assets (including an equity interest in the debtor) in partial satisfaction
of a receivable and a modification of terms of the remaining receivable. [FAS 015, paragraph 33] }{Even if the stated terms of the
remaining receivable, for example, the stated interest rate and the maturity date or dates, are not changed in connection with the
receipt of assets (including an equity interest in the debtor), the restructuring shall be accounted for as prescribed by this paragraph.
[FAS 015, paragraph 33] }{A creditor shall account for a troubled debt restructuring involving a partial satisfaction and modification of
terms as prescribed in this Topic except that, first, the assets received shall be accounted for as prescribed in paragraphs 310-40-40-2
through 40-4 and the recorded investment in the receivable shall be reduced by the fair value less cost to sell of the assets
received. [FAS 015, paragraph 33] }{If cash is received in a partial satisfaction of a receivable, the recorded investment in the
receivable shall be reduced by the amount of cash received. [FAS 015, paragraph 33] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{A troubled debt restructuring may involve receipt of assets (including an equity interest in the debtor) in partial satisfaction
of a receivable and a modification of terms of the remaining receivable. [FAS 015, paragraph 33] }{Even if the stated terms of the
remaining receivable, for example, the stated interest rate and the maturity date or dates, are not changed in connection with the
receipt of assets (including an equity interest in the debtor), the restructuring shall be accounted for as prescribed by this paragraph.
[FAS 015, paragraph 33] }{A creditor shall account for a troubled debt restructuring involving a partial satisfaction and modification of
terms as prescribed in this Topic except that, first, the assets received shall be accounted for as prescribed in paragraphs 310-40-40-2
through 40-4 and the amortized cost basis shall be reduced by the fair value less cost to sell of the assets received. [FAS 015,
paragraph 33] }{If cash is received in a partial satisfaction of a receivable, the amortized cost basis shall be reduced by the amount of
cash received. [FAS 015, paragraph 33] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{A loan refinancing or [ASU 2022-02, paragraph 6] }{restructuring may involve receipt of assets (including an equity
interest in the debtor) in partial satisfaction of a receivable and a modification of terms of the remaining receivable. [FAS 015,
paragraph 33] }{Even if the stated terms of the remaining receivable, for example, the stated interest rate and the maturity date or
dates, are not changed in connection with the receipt of assets (including an equity interest in the debtor), the restructuring shall be
accounted for as prescribed by this paragraph. [FAS 015, paragraph 33] }{A creditor shall account for a [FAS 015, paragraph 33] }
{loan refinancing or [ASU 2022-02, paragraph 6] }{restructuring involving a partial satisfaction and modification of terms as
prescribed in paragraphs 310-20-35-9 through 35-11 except that, first, the assets received shall be accounted for as prescribed in
paragraphs 310-20-40-2 through 40-4 and the amortized cost basis shall be reduced by the fair value less cost to sell of the assets
received. [FAS 015, paragraph 33] }{If cash is received in a partial satisfaction of a receivable, the amortized cost basis shall be
reduced by the amount of cash received. [FAS 015, paragraph 33] }
03/09/2023 11:15 AM EST
Page 253 / 1816
Consideration Points:
ASU 2022-02 The pending content resulting from the issuance of ASU 2022-02 amended paragraphs 310-20-35-2 and 31020-35-9 through 35-10, superseded paragraph 310-20-35-12, and added paragraphs 310-20-35-12A through 35-12C and
their related headings, 310-20-40-3, 310-20-40-5 through 40-7, and 310-20-40-9 and their related headings, 310-20-55-18A
and its related heading, and 310-20-55-51, 310-20-55-52, and 310-20-55-54 through 55-56 and their related headings, with
a link to transition paragraph 326-10-65-5, and paragraph 310-20-35-12D and its related heading, paragraphs 310-20-40-2,
310-20-40-4, 310-20-40-8, 310-20-40-10 through 40-12 and their related headings, and paragraphs 310-20-55-18B through
18F and 310-20-55-53 and their related headings. ASU 2022-02 eliminated the accounting guidance on troubled debt
restructurings (TDRs) for creditors in ASC 310-40 and amended the guidance on “vintage disclosures” to require disclosure
of current-period gross write-offs by year of origination. The ASU also updated the requirements related to accounting for
credit losses under ASC 326 and added enhanced disclosures for creditors with respect to loan refinancings and
restructurings for borrowers experiencing financial difficulty. ASU 2022-02 superseded the accounting guidance for TDRs for
creditors in ASC 310-40 in its entirety and requires entities to evaluate all receivable modifications under ASC 310-20-35-9
through 35-11 to determine whether a modification made to a borrower results in a new loan or a continuation of the
existing loan. ASU 2022-02’s amendments are effective as follows: • For entities that have already adopted ASU 2016-13,
the amendments in ASU 2022-02 are effective for fiscal years beginning after December 15, 2022, including interim periods
within those fiscal years. • For entities that have not yet adopted ASU 2016-13, the amendments in ASU 2022-02 are
effective upon adoption of ASU 2016-13. Entities are permitted to early adopt these amendments, including adoption in any
interim period, provided that the amendments are adopted as of the beginning of the annual reporting period that includes
the interim period of adoption. In addition, entities are permitted to elect to early adopt the amendments related to TDR
accounting and related disclosure enhancements separately from the amendments related to the vintage disclosures.
Is the entity in compliance with the guidance in ASC 310-20-35:
Impairment?
FASB Codification:
>
Impairment
35-12D
{The Impairment or Disposal of Long-Lived Assets Subsections of Subtopic 360-10 do not allow the lender to look-back to
lending impairments measured and recognized under this Topic or Topic 450 for purposes of measuring the cumulative loss previously
recognized in determining the gain to be recognized on the increase in fair value less cost to sell of a foreclosed property under
paragraph 360-10-35-40. [FSP FAS144-1, paragraph 3] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{The Impairment or Disposal of Long-Lived Assets Subsections of Subtopic 360-10 do not allow the lender to look-back to
credit losses measured and recorded under Topic 326 for purposes of measuring the cumulative loss previously recognized in
determining the gain to be recognized on the increase in fair value less cost to sell of a foreclosed property under paragraph 360-1035-40. [FSP FAS144-1, paragraph 3] }
Consideration Points:
ASU 2022-02 The pending content resulting from the issuance of ASU 2022-02 amended paragraphs 310-20-35-2 and 31020-35-9 through 35-10, superseded paragraph 310-20-35-12, and added paragraphs 310-20-35-12A through 35-12C and
their related headings, 310-20-40-3, 310-20-40-5 through 40-7, and 310-20-40-9 and their related headings, 310-20-55-18A
and its related heading, and 310-20-55-51, 310-20-55-52, and 310-20-55-54 through 55-56 and their related headings, with
a link to transition paragraph 326-10-65-5, and paragraph 310-20-35-12D and its related heading, paragraphs 310-20-40-2,
310-20-40-4, 310-20-40-8, 310-20-40-10 through 40-12 and their related headings, and paragraphs 310-20-55-18B through
18F and 310-20-55-53 and their related headings. ASU 2022-02 eliminated the accounting guidance on troubled debt
restructurings (TDRs) for creditors in ASC 310-40 and amended the guidance on “vintage disclosures” to require disclosure
of current-period gross write-offs by year of origination. The ASU also updated the requirements related to accounting for
credit losses under ASC 326 and added enhanced disclosures for creditors with respect to loan refinancings and
restructurings for borrowers experiencing financial difficulty. ASU 2022-02 superseded the accounting guidance for TDRs for
creditors in ASC 310-40 in its entirety and requires entities to evaluate all receivable modifications under ASC 310-20-35-9
through 35-11 to determine whether a modification made to a borrower results in a new loan or a continuation of the
existing loan. ASU 2022-02’s amendments are effective as follows: • For entities that have already adopted ASU 2016-13,
the amendments in ASU 2022-02 are effective for fiscal years beginning after December 15, 2022, including interim periods
within those fiscal years. • For entities that have not yet adopted ASU 2016-13, the amendments in ASU 2022-02 are
effective upon adoption of ASU 2016-13. Entities are permitted to early adopt these amendments, including adoption in any
interim period, provided that the amendments are adopted as of the beginning of the annual reporting period that includes
the interim period of adoption. In addition, entities are permitted to elect to early adopt the amendments related to TDR
accounting and related disclosure enhancements separately from the amendments related to the vintage disclosures.
03/09/2023 11:15 AM EST
Page 254 / 1816
Is the entity in compliance with the guidance in ASC 310-20-35:
Purchase of a Loan or Group of Loans?
FASB Codification:
>
Purchase of a Loan or Group of Loans
35-15
{Paragraph 310-20-30-5 explains that the initial investment in a purchased loan or group of loans shall include the amount
paid to the seller plus any fees paid or less any fees received. [FAS 091, paragraph 15] }{Paragraph 310-20-25-22 explains that the
initial investment frequently differs from the related loan's principal amount at the date of purchase. [FAS 091, paragraph 15] }{This
difference shall be recognized as an adjustment of yield over the life of the loan. [FAS 091, paragraph 15] }
35-16
{Paragraph 310-20-30-5 explains that, in applying the provisions of this Subtopic to loans purchased as a group, the purchaser
may allocate the initial investment to the individual loans or may account for the initial investment in the aggregate. [FAS 091,
paragraph 16] }{The cash flows provided by the underlying loan contracts shall be used to apply the interest method, except as set forth
in paragraph 310-20-35-26. If prepayments are not anticipated pursuant to that paragraph and prepayments occur or a portion of the
purchased loans is sold, a proportionate amount of the related deferred fees and purchase premium or discount shall be recognized in
income so that the effective interest rate on the remaining portion of loans continues unchanged. [FAS 091, paragraph 16] }
Is the entity in compliance with the guidance in ASC 310-20-35:
Interest Method and Other Amortization Matters?
FASB Codification:
>
Interest Method and Other Amortization Matters
35-17
{Deferred net fees or costs shall not be amortized during periods in which interest income on a loan is not being recognized
because of concerns about the realization of loan principal or interest. [FAS 091, paragraph 17] }
35-18
{Net fees or costs that are required to be recognized as yield adjustments over the life of the related loan(s) shall be
recognized by the interest method except as set forth in paragraphs 310-20-35-21 through 35-24. [FAS 091, paragraph 18] }{ The
objective of the interest method is to arrive at periodic interest income (including recognition of fees and costs) at a constant effective
yield on the net investment in the receivable (that is, the principal amount of the receivable adjusted by unamortized fees or costs and
purchase premium or discount). [FAS 091, paragraph 18] }{ The difference between the periodic interest income so determined and
the stated interest on the outstanding principal amount of the receivable is the amount of periodic amortization. [FAS 091,
paragraph 18] }{See paragraphs 835-30-35-2 through 35-5 for guidance concerning the interest method. [FAS 091, paragraph 18] }
{ Under the provisions of this Subtopic, the interest method shall be applied as follows when the stated interest rate is not constant
throughout the term of the loan: [FAS 091, paragraph 18] }
a.
{If the loan's stated interest rate increases during the term of the loan (so that interest accrued under the interest method in early
periods would exceed interest at the stated rate), interest income shall not be recognized to the extent that the net investment in
the loan would increase to an amount greater than the amount at which the borrower could settle the obligation. Prepayment
penalties shall be considered in determining the amount at which the borrower could settle the obligation only to the extent that
such penalties are imposed throughout the loan term. (See Section 310-20-55.) [FAS 091, paragraph 18] }{Accordingly, a limit
is imposed on the amount of periodic amortization that can be recognized. However, that limitation does not apply to the
capitalization of costs incurred (such as direct loan origination costs and purchase premiums) that cause the investment in the loan
to be in excess of the amount at which the borrower could settle the obligation. The capitalization of costs incurred is different
from increasing the net investment in a loan through accrual of interest income that is only contingently receivable. [FAS 091,
paragraph 54] }
b.
{If the loan's stated interest rate decreases during the term of the loan, the stated periodic interest received early in the term of
the loan would exceed the periodic interest income that is calculated under the interest method. In that circumstance, the excess
shall be deferred and recognized in those future periods when the constant effective yield under the interest method exceeds the
stated interest rate. (See Section 310-20-55.) [FAS 091, paragraph 18] }
03/09/2023 11:15 AM EST
c.
Page 255 / 1816
{If the loan's stated interest rate varies based on future changes in an independent factor, such as an index or rate (for example,
the prime rate, the London Interbank Offered Rate [LIBOR], or the U.S. Treasury bill weekly average rate), the calculation of the
constant effective yield necessary to recognize fees and costs shall be based either on the factor (the index or rate) that is in effect
at the inception of the loan or on the factor as it changes over the life of the loan. (See Section 310-20-55.) [FAS 091,
paragraph 18] }{A variable rate loan whose initial rate differs from the rate its base factor would produce is also subject to the
provisions of (a) and (b). [FAS 091, paragraph 18] }
35-19
{The preceding paragraph provides that when a loan's stated interest rate varies based on future changes in an independent
factor, the lender shall calculate a constant effective yield by using the independent factor in effect at the inception of the loan or the
factor as it changes over the life of the loan. In applying the guidance in (c) in the preceding paragraph, the lender may not change from
one alternative to the other during the life of the loan. [QA 091, paragraph 45] }{The lender must select one of the two alternatives
and apply the method consistently throughout the life of the loan. [QA 091, paragraph 45] }
35-20
{In a period in which the independent factor on a variable rate loan changes, the constant effective yield is recalculated not
from the inception of the loan but [QA 091, paragraph 47] }{ from the time of the change. See Example 9 (paragraph 310-20-55-43)
for an illustration. [QA 091, paragraph 47] }
35-21
{Certain loan agreements provide no scheduled payment terms (demand loans); others provide the borrower with the option to
make multiple borrowings up to a specified maximum amount, to repay portions of previous borrowings, and then reborrow under the
same contract (revolving lines of credit). [FAS 091, paragraph 20] }
35-22
{For a loan that is payable at the lender's demand, any net fees or costs may be recognized as an adjustment of yield on a
straight-line basis over a period that is consistent with any of the following: [FAS 091, paragraph 20] }
a.
{The understanding between the borrower and lender [FAS 091, paragraph 20] }
b.
{If no understanding exists, the lender's estimate of the period of time over which the loan will remain outstanding; [FAS 091,
paragraph 20] }{any unamortized amount shall be recognized when the loan is paid in full. [FAS 091, paragraph 20] }
{Such estimates should be monitored regularly and revised as appropriate. If, contrary to expectation, a loan remains outstanding
beyond the anticipated payment date, no adjustment is required. [QA 091, paragraph 55] }
35-23
{For revolving lines of credit (or similar loan arrangements), the net fees or costs shall be recognized in income on a straight-
line basis over the period the revolving line of credit is active, assuming that borrowings are outstanding for the maximum term
provided in the loan contract. If the borrower pays all borrowings and cannot reborrow under the contract, any unamortized net fees or
costs shall be recognized in income upon payment. The interest method shall be applied to recognize net unamortized fees or costs when
the loan agreement provides a schedule for payment and no additional borrowings are provided for under the agreement. [FAS 091,
paragraph 20] }
35-24
{For example, if the loan agreement provides the borrower with the option to convert a one-year revolving line of credit to a
five-year term loan, during the term of the revolving line of credit the lender would recognize the net fees or costs as income on a
straight-line basis using the combined life of the revolving line of credit and term loan. If the borrower elects to convert the line of
credit to a term loan, the lender would recognize the unamortized net fees or costs as an adjustment of yield using the interest method.
If the revolving line of credit expires and borrowings are extinguished, the unamortized net fees or costs would be recognized in income
upon payment. [FAS 091, paragraph 20] }
35-25
{If the borrower continues to have a contractual right to borrow under the revolving line of credit, net fees and costs associated
with revolving lines of credit shall be amortized over the term of the revolver even if the revolver is unused for a period of time. [QA
091, paragraph 56] }
Is the entity in compliance with the guidance in ASC 310-20-35:
Estimating Principal Prepayments?
FASB Codification:
>
Estimating Principal Prepayments
35-26
{Except as stated in the following sentence, the calculation of the constant effective yield necessary to apply the interest
03/09/2023 11:15 AM EST
Page 256 / 1816
method shall use the payment terms required by the loan contract, and prepayments of principal shall not be anticipated to shorten the
loan term. If the entity holds a large number of similar loans for which prepayments are probable and the timing and amount of
prepayments can be reasonably estimated, the entity may consider estimates of future principal prepayments in the calculation of the
constant effective yield necessary to apply the interest method. If the entity anticipates prepayments in applying the interest method
and a difference arises between the prepayments anticipated and actual prepayments received, the entity shall recalculate the effective
yield to reflect actual payments to date and anticipated future payments. The net investment in the loans shall be adjusted to the amount
that would have existed had the new effective yield been applied since the acquisition of the loans. The investment in the loans shall be
adjusted to the new balance with a corresponding charge or credit to interest income. [FAS 091, paragraph 19] }
35-27
{Loans grouped together shall have sufficiently similar characteristics that prepayment experience of the loans can be expected
to be similar in a variety of interest rate environments. Loans that are grouped together for purposes of applying the preceding
paragraph shall have sufficiently similar levels of net fees or costs so that, in the event that an individual loan is sold, recalculation of
that loan's carrying amount will be practicable. [FAS 091, paragraph 58] }
35-28
{For loans that do qualify under paragraph 310-20-35-26, a lender may use either method for different loans and select the
most appropriate method for a group of loans based on the characteristics of those loans. (For example, homogeneous mortgage loans
might be aggregated while construction loans are accounted for separately.) However, once a lender has selected the appropriate
method of accounting for a loan or a group of loans, a lender must continue to use the method throughout the life of the loan or group of
loans. [QA 091, paragraph 8] }
35-29
{If loan-by-loan accounting is used, net fees and costs shall be amortized over the contract life and adjusted based on actual
prepayments. [QA 091, paragraph 48] }
35-30
{There are a number of characteristics to be considered in determining whether the lender holds a large number of similar
loans for purposes of estimating prepayments in accordance with paragraph 310-20-35-26. [QA 091, paragraph 51] }{The objective is
to evaluate all characteristics that would affect the ability of the lender to estimate the behavior of a group of loans. The following are
examples of some characteristics that shall be considered when aggregating loans: [QA 091, paragraph 51] }
a.
{Loan type [QA 091, paragraph 51] }
b.
{Loan size [QA 091, paragraph 51] }
c.
{Nature and location of collateral [QA 091, paragraph 51] }
d.
{Coupon interest rate [QA 091, paragraph 51] }
e.
{Maturity [QA 091, paragraph 51] }
f.
{Period of origination [QA 091, paragraph 51] }
g.
{Prepayment history of the loans (if seasoned) [QA 091, paragraph 51] }
h.
{Level of net fees or costs [QA 091, paragraph 51] }
i.
{Prepayment penalties [QA 091, paragraph 51] }
j.
{Interest rate type (fixed or variable) [QA 091, paragraph 51] }
k.
{Expected prepayment performance in varying interest rate scenarios. [QA 091, paragraph 51] }
35-31
{If a lender meets the requirements of paragraph 310-20-35-26 for considering principal prepayments in calculating constant
effective yield, several factors shall be considered in estimating those principal prepayments. [QA 091, paragraph 52] }{The lender
shall consider historical prepayment data in making its estimate of future prepayments. Also, the lender shall consider external
information, including existing and forecasted interest rates and economic conditions and published mortality and prepayment tables for
03/09/2023 11:15 AM EST
Page 257 / 1816
similar loans. If periodic changes in estimates occur or actual prepayments are different from estimated prepayments, an adjustment
will be necessary. [QA 091, paragraph 52] }
35-32
{If a lender aggregates loans for purposes of estimating prepayments and subsequently sells some of the loans, [QA 091,
paragraph 49] }{generally, the loans that are aggregated have lost their individual distinction. A pro rata calculation of net fees and
costs based on the ratio of the outstanding principal balances of the loans sold would be appropriate in the gain or loss calculation. If
the lender has sufficiently detailed accounting records for the aggregated loans, specific identification may be used in the gain or loss
calculation. [QA 091, paragraph 49] }
35-33
{To the extent that the amortized cost basis of an individual callable debt security exceeds the amount repayable by the issuer
at the earliest call date, the excess (that is, the premium) shall be amortized to the earliest call date, unless the guidance in paragraph
310-20-35-26 is applied to consider estimated prepayments. After the earliest call date, if the call option is not exercised, the entity
shall reset the effective yield using the payment terms of the debt security. Securities within the scope of this paragraph are those that
have explicit, noncontingent call features that are callable at fixed prices and on preset dates. [ASU 2017–08, paragraph 2] }
Pending Content:
Transition Date: (P) December 16, 2020; (N) December 16, 2021 Transition Guidance 310-20-65-2
310-20-65-2{For each reporting period, to [ASU 2020-08, paragraph 4] }{the extent that the amortized cost basis of an individual
callable debt security exceeds the amount repayable by the issuer at the next call date, the excess (that is, the premium) shall be
amortized to the next call date, unless the guidance in paragraph 310-20-35-26 is applied to consider estimated prepayments. [ASU
2017–08, paragraph 2] }{For purposes of this guidance, the next call date is the first date when a call option at a specified price
becomes exercisable. Once that date has passed, the next call date is when the next call option at a specified price becomes
exercisable, if applicable. If there is no remaining premium or if there are no further call dates, [ASU 2020-08, paragraph 4] }{the
entity shall reset the effective yield using the payment terms of the debt security. Securities within the scope of this paragraph are those
that have explicit, noncontingent call options that are callable at fixed prices and on preset dates [ASU 2017–08, paragraph 2] }{at
prices less than the amortized cost basis of the security. Whether a security is subject to this paragraph may change depending on the
amortized cost basis of the security and the terms of the next call option. [ASU 2020-08, paragraph 4] }
Consideration Points:
Section 310-20-35 has been updated as the result of the issuance of ASU 2017-08. The pending content resulting from the
issuance of this ASU amended paragraph 310-20-35-33. The amendments are effective for fiscal years, and interim periods
within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments are effective for fiscal
years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early
adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim
period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity
should apply the amendments in this Update on a modified retrospective basis through a cumulative-effect adjustment
directly related to retained earnings as of the beginning of the period of adoption. Additionally, in the period of adoption, an
entity should provide disclosures about a change in accounting principle. The pending content resulting from the issuance
of ASU 2020-08 amended paragraph 310-20-35-33. For public business entities, the amendments in ASU 2020-08 are
effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is
not permitted. For all other entities, the amendments in ASU 2020-08 are effective for fiscal years beginning after
December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. For all other entities, early
adoption is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. All
entities should apply the amendments in ASU 2020-08 on a prospective basis as of the beginning of the period of adoption
for existing or newly purchased callable debt securities.
Is the entity in compliance with the guidance in ASC 310-20-35:
Lending Transactions Unrelated to the Origination of Loans?
03/09/2023 11:15 AM EST
Page 258 / 1816
FASB Codification:
>
Lending Transactions Unrelated to the Origination of Loans
35-34
{A lender may receive fees for lending transactions unrelated to the origination of loans. [QA 091, paragraph 6] }{For
example, a borrower may pay a fee to the lender for extending the contractual maturity of an existing loan, for converting an
adjustable-rate mortgage to a fixed-rate loan, or for the assumption of an existing loan by a new borrower. [QA 091, paragraph 6] }
{The fees shall be recognized over the remaining life of the loan as an adjustment of yield. In each situation, the lender has made some
form of concession to the initial or underlying borrower by altering the original terms of the initial underwriting; thus, any fees
received shall be recognized as an adjustment of yield over the remaining life of the loan. [QA 091, paragraph 6] }
Is the entity in compliance with the guidance in ASC 310-20-35:
Blended-Rate Loans?
FASB Codification:
>
Blended-Rate Loans
35-35
{A blended-rate loan yields an interest rate between the existing loan rate and the market rate. The resulting loan is subject to
the same underwriting standards as all other new loans. This arrangement is considered a refinancing [QA 091, paragraph 38] }{but it
does not meet the yield criteria prescribed in paragraph 310-20-35-9. Thus, the unamortized net fees and costs on the existing loan as
well as the net fees and costs relating to the refinancing shall carry over to the new loan because the blended rate is below the market
rate of loans with similar collection risks made to the lender's other customers. [QA 091, paragraph 38] }
Assets > 310 Receivables > 20 Nonrefundable Fees and Other Costs > 40 Derecognition > General
Is the entity in compliance with the guidance in ASC 310-20-40:
Commitment Fees?
FASB Codification:
>
Commitment Fees
40-1
{Except as set forth in paragraph 310-20-35-3(a) through (b), fees received for a commitment to originate or purchase a loan
or group of loans shall be, if the commitment expires unexercised, recognized in income upon expiration of the commitment. [FAS
091, paragraph 8] }
Is the entity in compliance with the guidance in ASC 310-20-40:
Receipt of Assets in Full Satisfaction of a Receivable?
03/09/2023 11:15 AM EST
Page 259 / 1816
FASB Codification:
>
Receipt of Assets in Full Satisfaction of a Receivable
40-2
{A creditor that receives from a debtor in full satisfaction of a receivable either or both of the following shall account for those
assets (including an equity interest) at their fair value at the time of the restructuring: [FAS 015, paragraph 28] }
a.
{Receivables from third parties, real estate, or other assets [FAS 015, paragraph 28] }
b.
{Shares of stock or other evidence of an equity interest in the debtor. [FAS 015, paragraph 28] }
40-3
{A creditor that receives long-lived assets that will be sold from a debtor in full satisfaction of a receivable shall account for
those assets at their fair value less cost to sell, as that term is used in paragraph 360-10-35-43. [FAS 015, paragraph 28] }{The
excess of [FAS 015, paragraph 28] }{ the recorded investment in the receivable satisfied over [FAS 015, paragraph 28] }{the fair
value of assets received (less cost to sell, if required above) is a loss that shall be recognized. [FAS 015, paragraph 28] }{For purposes
of this paragraph, losses, to the extent they are not offset against allowances for uncollectible amounts or other valuation accounts,
shall be included in measuring net income for the period. [FAS 015, paragraph 28] }{Recorded investment in the receivable is used in
paragraphs 310-40-25-1 through 25-2; 310-40-35-7; 310-40-40-2 through 40-8; and 310-40-50-1 instead of carrying amount of
the receivable because the latter is net of an allowance for estimated uncollectible amounts or other valuation account, if any, while the
former is not. [FAS 015, paragraph 28] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{A creditor that receives long-lived assets that will be sold from a debtor in full satisfaction of a receivable shall account for
those assets at their fair value less cost to sell, as that term is used in paragraph 360-10-35-43. [FAS 015, paragraph 28] }{The
excess of [FAS 015, paragraph 28] }{ the amortized cost basis satisfied over [FAS 015, paragraph 28] }{the fair value of assets
received (less cost to sell, if required above) is a loss that shall be recognized. [FAS 015, paragraph 28] }{For purposes of this
paragraph, losses, to the extent they are not offset against allowances for uncollectible amounts or other valuation accounts, shall be
included in measuring net income for the period. [FAS 015, paragraph 28] }{The amortized cost basis is used in paragraphs 310-4025-1 through 25-2; 310-40-35-7; 310-40-40-2 through 40-8; and 310-40-50-1 instead of carrying amount of the receivable
because the latter is net of an allowance for estimated uncollectible amounts or other valuation account, if any, while the former is not.
[FAS 015, paragraph 28] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{A creditor that receives long-lived assets that will be sold from a debtor in full satisfaction of a receivable shall account for
those assets at their fair value less cost to sell, as that term is used in paragraph 360-10-35-43. [FAS 015, paragraph 28] }{The
excess of [FAS 015, paragraph 28] }{ the amortized cost basis satisfied over [FAS 015, paragraph 28] }{the fair value of assets
received (less cost to sell, if required above) is a loss that shall be recognized. [FAS 015, paragraph 28] }{For purposes of this
paragraph, losses, to the extent they are not offset against allowances for uncollectible amounts or other valuation accounts, shall be
included in measuring net income for the period. [FAS 015, paragraph 28] }{The amortized cost basis is used in paragraphs 310-2035-12A; 310-20-35-12C; 310-20-40-2 through 40-9; and 310-10-50-36 instead of carrying amount of the receivable because the
latter is net of an allowance for estimated uncollectible amounts or other valuation account, if any, while the former is not. [FAS 015,
paragraph 28] }
40-4
{That guidance is not intended to preclude using the fair value of the receivable satisfied if more clearly evident than the fair
value of the assets received in full satisfaction of a receivable. [FAS 015, paragraph 28] }
40-5
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{A creditor shall account for assets received in satisfaction of a receivable the same as if the assets had been acquired for
cash. [FAS 015, paragraph 29] }
03/09/2023 11:15 AM EST
Page 260 / 1816
Consideration Points:
ASU 2022-02 The pending content resulting from the issuance of ASU 2022-02 amended paragraphs 310-20-35-2 and 31020-35-9 through 35-10, superseded paragraph 310-20-35-12, and added paragraphs 310-20-35-12A through 35-12C and
their related headings, 310-20-40-3, 310-20-40-5 through 40-7, and 310-20-40-9 and their related headings, 310-20-55-18A
and its related heading, and 310-20-55-51, 310-20-55-52, and 310-20-55-54 through 55-56 and their related headings, with
a link to transition paragraph 326-10-65-5, and paragraph 310-20-35-12D and its related heading, paragraphs 310-20-40-2,
310-20-40-4, 310-20-40-8, 310-20-40-10 through 40-12 and their related headings, and paragraphs 310-20-55-18B through
18F and 310-20-55-53 and their related headings. ASU 2022-02 eliminated the accounting guidance on troubled debt
restructurings (TDRs) for creditors in ASC 310-40 and amended the guidance on “vintage disclosures” to require disclosure
of current-period gross write-offs by year of origination. The ASU also updated the requirements related to accounting for
credit losses under ASC 326 and added enhanced disclosures for creditors with respect to loan refinancings and
restructurings for borrowers experiencing financial difficulty. ASU 2022-02 superseded the accounting guidance for TDRs for
creditors in ASC 310-40 in its entirety and requires entities to evaluate all receivable modifications under ASC 310-20-35-9
through 35-11 to determine whether a modification made to a borrower results in a new loan or a continuation of the
existing loan. ASU 2022-02’s amendments are effective as follows: • For entities that have already adopted ASU 2016-13,
the amendments in ASU 2022-02 are effective for fiscal years beginning after December 15, 2022, including interim periods
within those fiscal years. • For entities that have not yet adopted ASU 2016-13, the amendments in ASU 2022-02 are
effective upon adoption of ASU 2016-13. Entities are permitted to early adopt these amendments, including adoption in any
interim period, provided that the amendments are adopted as of the beginning of the annual reporting period that includes
the interim period of adoption. In addition, entities are permitted to elect to early adopt the amendments related to TDR
accounting and related disclosure enhancements separately from the amendments related to the vintage disclosures.
Is the entity in compliance with the guidance in ASC 310-20-40:
Foreclosure?
03/09/2023 11:15 AM EST
Page 261 / 1816
FASB Codification:
>
Foreclosure
40-6
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{A restructuring that is in substance a repossession or foreclosure by the creditor, that is, the creditor receives physical
possession of the debtor's assets regardless of whether formal foreclosure proceedings take place, or in which the creditor otherwise
obtains one or more of the debtor's assets in place of all or part of the receivable, shall be accounted for according to the provisions of
paragraphs 310-20-35-12C, 310-20-40-2 through 40-4, and, if appropriate, 310-20-40-9. [FAS 015, paragraph 34] }{See
paragraphs 310-20-40-7 through 40-8 for the classification and measurement of certain government-guaranteed mortgage loans.
[ASU 2014-14, paragraph 3] }{For guidance on when a creditor shall be considered to have received physical possession (resulting
from an in substance repossession or foreclosure) of residential real estate property collateralizing a consumer mortgage loan, see
paragraph 310-20-55-18F. [ASU 2014-04, paragraph 4] }
> >
Classification and Measurement of Certain Government-Guaranteed Mortgage Loans upon Foreclosure
40-7
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{A guaranteed mortgage loan receivable shall be derecognized and a separate other receivable shall be recognized upon
foreclosure (that is, when a creditor receives physical possession of real estate property collateralizing a mortgage loan in accordance
with the guidance in paragraph 310-20-40-6) if the following conditions are met: [ASU 2014-14, paragraph 3] }
a.
{The loan has a government guarantee that is not separable from the loan before foreclosure. [ASU 2014-14, paragraph 3] }
b.
{At the time of foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a claim on
the guarantee, and the creditor has the ability to recover under that claim. A creditor would be considered to have the ability to
recover under the guarantee at the time of foreclosure if the creditor determines that it has maintained compliance with the
conditions and procedures required by the guarantee program. [ASU 2014-14, paragraph 3] }
c.
{At the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the real estate is fixed.
[ASU 2014-14, paragraph 3] }
40-8
{Upon foreclosure, the separate other receivable shall be measured based on the amount of the loan balance (principal and
interest) expected to be recovered from the guarantor. [ASU 2014-14, paragraph 3] }
03/09/2023 11:15 AM EST
Page 262 / 1816
Consideration Points:
ASU 2022-02 The pending content resulting from the issuance of ASU 2022-02 amended paragraphs 310-20-35-2 and 31020-35-9 through 35-10, superseded paragraph 310-20-35-12, and added paragraphs 310-20-35-12A through 35-12C and
their related headings, 310-20-40-3, 310-20-40-5 through 40-7, and 310-20-40-9 and their related headings, 310-20-55-18A
and its related heading, and 310-20-55-51, 310-20-55-52, and 310-20-55-54 through 55-56 and their related headings, with
a link to transition paragraph 326-10-65-5, and paragraph 310-20-35-12D and its related heading, paragraphs 310-20-40-2,
310-20-40-4, 310-20-40-8, 310-20-40-10 through 40-12 and their related headings, and paragraphs 310-20-55-18B through
18F and 310-20-55-53 and their related headings. ASU 2022-02 eliminated the accounting guidance on troubled debt
restructurings (TDRs) for creditors in ASC 310-40 and amended the guidance on “vintage disclosures” to require disclosure
of current-period gross write-offs by year of origination. The ASU also updated the requirements related to accounting for
credit losses under ASC 326 and added enhanced disclosures for creditors with respect to loan refinancings and
restructurings for borrowers experiencing financial difficulty. ASU 2022-02 superseded the accounting guidance for TDRs for
creditors in ASC 310-40 in its entirety and requires entities to evaluate all receivable modifications under ASC 310-20-35-9
through 35-11 to determine whether a modification made to a borrower results in a new loan or a continuation of the
existing loan. ASU 2022-02’s amendments are effective as follows: • For entities that have already adopted ASU 2016-13,
the amendments in ASU 2022-02 are effective for fiscal years beginning after December 15, 2022, including interim periods
within those fiscal years. • For entities that have not yet adopted ASU 2016-13, the amendments in ASU 2022-02 are
effective upon adoption of ASU 2016-13. Entities are permitted to early adopt these amendments, including adoption in any
interim period, provided that the amendments are adopted as of the beginning of the annual reporting period that includes
the interim period of adoption. In addition, entities are permitted to elect to early adopt the amendments related to TDR
accounting and related disclosure enhancements separately from the amendments related to the vintage disclosures.
Is the entity in compliance with the guidance in ASC 310-20-40:
Classification and Measurement of Certain Government-Guaranteed
Mortgage Loans upon Foreclosure?
FASB Codification:
>
Classification and Measurement of Certain Government-Guaranteed Mortgage Loans upon Foreclosure
40-7
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{A guaranteed mortgage loan receivable shall be derecognized and a separate other receivable shall be recognized upon
foreclosure (that is, when a creditor receives physical possession of real estate property collateralizing a mortgage loan in accordance
with the guidance in paragraph 310-20-40-6) if the following conditions are met: [ASU 2014-14, paragraph 3] }
a.
{The loan has a government guarantee that is not separable from the loan before foreclosure. [ASU 2014-14, paragraph 3] }
b.
{At the time of foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a claim on
the guarantee, and the creditor has the ability to recover under that claim. A creditor would be considered to have the ability to
recover under the guarantee at the time of foreclosure if the creditor determines that it has maintained compliance with the
conditions and procedures required by the guarantee program. [ASU 2014-14, paragraph 3] }
c.
{At the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the real estate is fixed.
[ASU 2014-14, paragraph 3] }
40-8
{Upon foreclosure, the separate other receivable shall be measured based on the amount of the loan balance (principal and
interest) expected to be recovered from the guarantor. [ASU 2014-14, paragraph 3] }
03/09/2023 11:15 AM EST
Page 263 / 1816
Consideration Points:
ASU 2022-02 The pending content resulting from the issuance of ASU 2022-02 amended paragraphs 310-20-35-2 and 31020-35-9 through 35-10, superseded paragraph 310-20-35-12, and added paragraphs 310-20-35-12A through 35-12C and
their related headings, 310-20-40-3, 310-20-40-5 through 40-7, and 310-20-40-9 and their related headings, 310-20-55-18A
and its related heading, and 310-20-55-51, 310-20-55-52, and 310-20-55-54 through 55-56 and their related headings, with
a link to transition paragraph 326-10-65-5, and paragraph 310-20-35-12D and its related heading, paragraphs 310-20-40-2,
310-20-40-4, 310-20-40-8, 310-20-40-10 through 40-12 and their related headings, and paragraphs 310-20-55-18B through
18F and 310-20-55-53 and their related headings. ASU 2022-02 eliminated the accounting guidance on troubled debt
restructurings (TDRs) for creditors in ASC 310-40 and amended the guidance on “vintage disclosures” to require disclosure
of current-period gross write-offs by year of origination. The ASU also updated the requirements related to accounting for
credit losses under ASC 326 and added enhanced disclosures for creditors with respect to loan refinancings and
restructurings for borrowers experiencing financial difficulty. ASU 2022-02 superseded the accounting guidance for TDRs for
creditors in ASC 310-40 in its entirety and requires entities to evaluate all receivable modifications under ASC 310-20-35-9
through 35-11 to determine whether a modification made to a borrower results in a new loan or a continuation of the
existing loan. ASU 2022-02’s amendments are effective as follows: • For entities that have already adopted ASU 2016-13,
the amendments in ASU 2022-02 are effective for fiscal years beginning after December 15, 2022, including interim periods
within those fiscal years. • For entities that have not yet adopted ASU 2016-13, the amendments in ASU 2022-02 are
effective upon adoption of ASU 2016-13. Entities are permitted to early adopt these amendments, including adoption in any
interim period, provided that the amendments are adopted as of the beginning of the annual reporting period that includes
the interim period of adoption. In addition, entities are permitted to elect to early adopt the amendments related to TDR
accounting and related disclosure enhancements separately from the amendments related to the vintage disclosures.
Is the entity in compliance with the guidance in ASC 310-20-40:
Sale of Assets from a Loan Refinancing or Restructuring?
FASB Codification:
>
Sale of Assets from a Loan Refinancing or Restructuring
40-9
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5{In the case of a loan refinancing or restructuring deemed to be a new loan in accordance with paragraphs 310-20-35-9
through 35-11, a [ASU 2022-02, paragraph 6] }{receivable from the sale of assets previously obtained in a [FAS 015, paragraph 39]
}{loan refinancing or [ASU 2022-02, paragraph 6] }{restructuring shall be accounted for according to Subtopic 835-30 regardless of
whether the assets were obtained in satisfaction (full or partial) of a receivable to which that Topic was not intended to apply. A
difference, if any, between the amount of the new receivable and the carrying amount of the assets sold is a gain or loss on sale of
assets. [FAS 015, paragraph 39] }
Consideration Points:
ASU 2022-02 The pending content resulting from the issuance of ASU 2022-02 amended paragraphs 310-20-35-2 and 31020-35-9 through 35-10, superseded paragraph 310-20-35-12, and added paragraphs 310-20-35-12A through 35-12C and
their related headings, 310-20-40-3, 310-20-40-5 through 40-7, and 310-20-40-9 and their related headings, 310-20-55-18A
and its related heading, and 310-20-55-51, 310-20-55-52, and 310-20-55-54 through 55-56 and their related headings, with
a link to transition paragraph 326-10-65-5, and paragraph 310-20-35-12D and its related heading, paragraphs 310-20-40-2,
310-20-40-4, 310-20-40-8, 310-20-40-10 through 40-12 and their related headings, and paragraphs 310-20-55-18B through
18F and 310-20-55-53 and their related headings. ASU 2022-02 eliminated the accounting guidance on troubled debt
restructurings (TDRs) for creditors in ASC 310-40 and amended the guidance on “vintage disclosures” to require disclosure
of current-period gross write-offs by year of origination. The ASU also updated the requirements related to accounting for
credit losses under ASC 326 and added enhanced disclosures for creditors with respect to loan refinancings and
restructurings for borrowers experiencing financial difficulty. ASU 2022-02 superseded the accounting guidance for TDRs for
creditors in ASC 310-40 in its entirety and requires entities to evaluate all receivable modifications under ASC 310-20-35-9
through 35-11 to determine whether a modification made to a borrower results in a new loan or a continuation of the
existing loan. ASU 2022-02’s amendments are effective as follows: • For entities that have already adopted ASU 2016-13,
the amendments in ASU 2022-02 are effective for fiscal years beginning after December 15, 2022, including interim periods
within those fiscal years. • For entities that have not yet adopted ASU 2016-13, the amendments in ASU 2022-02 are
effective upon adoption of ASU 2016-13. Entities are permitted to early adopt these amendments, including adoption in any
interim period, provided that the amendments are adopted as of the beginning of the annual reporting period that includes
the interim period of adoption. In addition, entities are permitted to elect to early adopt the amendments related to TDR
accounting and related disclosure enhancements separately from the amendments related to the vintage disclosures.
Is the entity in compliance with the guidance in ASC 310-20-40:
Cost Basis of Debt Security Received in a Restructuring?
03/09/2023 11:15 AM EST
Page 264 / 1816
FASB Codification:
>
Cost Basis of Debt Security Received in a Restructuring
40-10
{The initial cost basis of a debt security of the original debtor received as part of a debt restructuring shall be the security's
fair value at the date of the restructuring. Any excess of the fair value of the security received over the net carrying amount of the loan
shall be recorded as a recovery on the loan. Any excess of the net carrying amount of the loan over the fair value of the security
received shall be recorded as a charge-off to the allowance for credit losses. [EITF 94-08, paragraph DISCUSSION] }{Subsequent to
the restructuring, the security received shall be accounted for according to the provisions of Topic 320. [EITF 94-08,
paragraph DISCUSSION] }
40-11
{A security received in a restructuring in settlement of a claim for only the past-due interest on a loan shall be measured at the
security's fair value at the date of the restructuring and accounted for in a manner consistent with the entity's policy for recognizing cash
received for past-due interest. [EITF 94-08, paragraph DISCUSSION] }{Subsequent to the restructuring, the security received shall be
accounted for according to the provisions of Topic 320. [EITF 94-08, paragraph DISCUSSION] }
Consideration Points:
ASU 2022-02 The pending content resulting from the issuance of ASU 2022-02 amended paragraphs 310-20-35-2 and 31020-35-9 through 35-10, superseded paragraph 310-20-35-12, and added paragraphs 310-20-35-12A through 35-12C and
their related headings, 310-20-40-3, 310-20-40-5 through 40-7, and 310-20-40-9 and their related headings, 310-20-55-18A
and its related heading, and 310-20-55-51, 310-20-55-52, and 310-20-55-54 through 55-56 and their related headings, with
a link to transition paragraph 326-10-65-5, and paragraph 310-20-35-12D and its related heading, paragraphs 310-20-40-2,
310-20-40-4, 310-20-40-8, 310-20-40-10 through 40-12 and their related headings, and paragraphs 310-20-55-18B through
18F and 310-20-55-53 and their related headings. ASU 2022-02 eliminated the accounting guidance on troubled debt
restructurings (TDRs) for creditors in ASC 310-40 and amended the guidance on “vintage disclosures” to require disclosure
of current-period gross write-offs by year of origination. The ASU also updated the requirements related to accounting for
credit losses under ASC 326 and added enhanced disclosures for creditors with respect to loan refinancings and
restructurings for borrowers experiencing financial difficulty. ASU 2022-02 superseded the accounting guidance for TDRs for
creditors in ASC 310-40 in its entirety and requires entities to evaluate all receivable modifications under ASC 310-20-35-9
through 35-11 to determine whether a modification made to a borrower results in a new loan or a continuation of the
existing loan. ASU 2022-02’s amendments are effective as follows: • For entities that have already adopted ASU 2016-13,
the amendments in ASU 2022-02 are effective for fiscal years beginning after December 15, 2022, including interim periods
within those fiscal years. • For entities that have not yet adopted ASU 2016-13, the amendments in ASU 2022-02 are
effective upon adoption of ASU 2016-13. Entities are permitted to early adopt these amendments, including adoption in any
interim period, provided that the amendments are adopted as of the beginning of the annual reporting period that includes
the interim period of adoption. In addition, entities are permitted to elect to early adopt the amendments related to TDR
accounting and related disclosure enhancements separately from the amendments related to the vintage disclosures.
Is the entity in compliance with the guidance in ASC 310-20-40:
Cost Basis of a Long-Lived Asset Received in Full Satisfaction of a
Receivable?
FASB Codification:
>
Cost Basis of a Long-Lived Asset Received in Full Satisfaction of a Receivable
40-12
{A valuation allowance for a loan collateralized by a long-lived asset shall not be carried over as a separate element of the
cost basis for purposes of accounting for the long-lived asset under Topic 360 after foreclosure. [FSP FAS144-1, paragraph 2] }
03/09/2023 11:15 AM EST
Page 265 / 1816
Consideration Points:
ASU 2022-02 The pending content resulting from the issuance of ASU 2022-02 amended paragraphs 310-20-35-2 and 31020-35-9 through 35-10, superseded paragraph 310-20-35-12, and added paragraphs 310-20-35-12A through 35-12C and
their related headings, 310-20-40-3, 310-20-40-5 through 40-7, and 310-20-40-9 and their related headings, 310-20-55-18A
and its related heading, and 310-20-55-51, 310-20-55-52, and 310-20-55-54 through 55-56 and their related headings, with
a link to transition paragraph 326-10-65-5, and paragraph 310-20-35-12D and its related heading, paragraphs 310-20-40-2,
310-20-40-4, 310-20-40-8, 310-20-40-10 through 40-12 and their related headings, and paragraphs 310-20-55-18B through
18F and 310-20-55-53 and their related headings. ASU 2022-02 eliminated the accounting guidance on troubled debt
restructurings (TDRs) for creditors in ASC 310-40 and amended the guidance on “vintage disclosures” to require disclosure
of current-period gross write-offs by year of origination. The ASU also updated the requirements related to accounting for
credit losses under ASC 326 and added enhanced disclosures for creditors with respect to loan refinancings and
restructurings for borrowers experiencing financial difficulty. ASU 2022-02 superseded the accounting guidance for TDRs for
creditors in ASC 310-40 in its entirety and requires entities to evaluate all receivable modifications under ASC 310-20-35-9
through 35-11 to determine whether a modification made to a borrower results in a new loan or a continuation of the
existing loan. ASU 2022-02’s amendments are effective as follows: • For entities that have already adopted ASU 2016-13,
the amendments in ASU 2022-02 are effective for fiscal years beginning after December 15, 2022, including interim periods
within those fiscal years. • For entities that have not yet adopted ASU 2016-13, the amendments in ASU 2022-02 are
effective upon adoption of ASU 2016-13. Entities are permitted to early adopt these amendments, including adoption in any
interim period, provided that the amendments are adopted as of the beginning of the annual reporting period that includes
the interim period of adoption. In addition, entities are permitted to elect to early adopt the amendments related to TDR
accounting and related disclosure enhancements separately from the amendments related to the vintage disclosures.
Assets > 310 Receivables > 20 Nonrefundable Fees and Other Costs > 45 Other Presentation > General
Is the entity in compliance with ASC 310-20-45 regarding the
balance sheet classification of nonrefundable fees and other costs?
[ASC 310-20-45-1 and 45-2]
FASB Codification:
>
Balance Sheet Classification
45-1
{The unamortized balance of loan origination, commitment, and other fees and costs and purchase premiums and discounts that
is being recognized as an adjustment of yield pursuant to this Subtopic shall be reported on the entity's balance sheet as part of the loan
balance to which it relates. [FAS 091, paragraph 21] }
45-2
{Commitment fees that meet the criteria of paragraph 310-20-35-3 shall be classified as deferred income in the financial
statements. [QA 091, paragraph 59] }
Consideration Points:
The unamortized balance of loan origination, commitment, and other fees and costs and purchase premiums and discounts
that is being recognized as an adjustment of yield pursuant to this Subtopic shall be reported on the entity's balance sheet
as part of the loan balance to which it relates. Commitment fees that meet the criteria of paragraph 310-20-35-3 shall be
classified as deferred income in the financial statements.
Is the entity in compliance with ASC 310-20-45 regarding the
income statement classification of nonrefundable fees and other
costs? [ASC 310-20-45-3]
FASB Codification:
>
Income Statement Classification
45-3
{Amounts of loan origination, commitment, and other fees and costs recognized as an adjustment of yield shall be reported as
part of interest income. Amortization of other fees, such as commitment fees that are being amortized on a straight-line basis over the
commitment period or included in income when the commitment expires, shall be reported as service fee income. [FAS 091,
paragraph 22] }
03/09/2023 11:15 AM EST
Page 266 / 1816
Consideration Points:
Amounts of loan origination, commitment, and other fees and costs recognized as an adjustment of yield shall be reported as
part of interest income. Amortization of other fees, such as commitment fees that are being amortized on a straight-line
basis over the commitment period or included in income when the commitment expires, shall be reported as service fee
income.
Assets > 310 Receivables > 20 Nonrefundable Fees and Other Costs > 50 Disclosure > General
In its summary of significant accounting policies, has the entity
included its method for recognizing interest income on loan and
trade receivables, including a statement about the entity’s policy for
treatment of related fees and costs, including the method of
amortizing net deferred fees or costs? [ASC 310-20-50-1]
FASB Codification:
50-1
{This paragraph requires that the summary of significant accounting policies shall include the [SOP 01-6, paragraph 13] }
{method for recognizing interest income on loan and trade receivables, including a statement about the entity’s policy for treatment of
related fees and costs, including the method of amortizing net deferred fees or costs. [SOP 01-6, paragraph 13] }
If the entity anticipate prepayments in applying the interest
method, has it disclosed that policy and the significant assumptions
underlying the prepayment estimates? [ASC 310-20-50-2]
FASB Codification:
50-2
{Entities that anticipate prepayments in applying the interest method shall disclose that policy and the significant assumptions
underlying the prepayment estimates. [FAS 091, paragraph 19] }
Are unamortized net fees and costs shall be reported as a part of
each loan category and, if the lender believes that such information
is useful to the users of its financial statements, has it provided
additional disclosures in the footnotes to the financial
statements? [ASC 310-20-50-3]
FASB Codification:
50-3
{The unamortized net fees and costs shall be reported as a part of each loan category. [QA 091, paragraph 63] }{Additional
disclosures such as unamortized net fees and costs may be included in the notes to financial statements if the lender believes that such
information is useful to the users of financial statements. [QA 091, paragraph 59] }
Has the entity disclosed its accounting policy, the net amount
capitalized at the balance sheet date, and the amortization period(s)
for credit card fees and costs for both purchased and originated
credit cards? [ASC 310-20-50-4]
FASB Codification:
50-4
{With respect to credit card fees and costs for both purchased and originated credit cards that are not private label credit
cards, an entity shall disclose its accounting policy, the net amount capitalized at the balance sheet date, and the amortization period(s).
[EITF 92-05, paragraph DISCUSSION] }
03/09/2023 11:15 AM EST
Page 267 / 1816
Assets > 310 Receivables > 30 Loans and Debt Securities Acquired with Deteriorated Credit Quality > 25 Recognition
> General
Is the entity in compliance with the guidance in ASC 310-30-25:
Loans Acquired Primarily for the Rewards of Collateral Ownership?
FASB Codification:
>
Loans Acquired Primarily for the Rewards of Collateral Ownership
25-1
{Loans meeting the scope criteria of paragraph 310-30-15-2 shall be accounted for as loans until the creditor is in possession of
the collateral, with or without having to go through formal foreclosure procedures. However, as described in paragraph 310-30-35-3,
if the loan is acquired primarily for the rewards of ownership of the underlying collateral, accrual of income is inappropriate. Such
rewards of ownership would include use of the collateral in operations of the entity or significantly improving the collateral for resale.
[SOP 03-3, paragraph 21 B22] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-30-25-1 will be superseded upon transition, together with its heading.
> Loans Acquired Primarily for the Rewards of Collateral Ownership
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
25-2
[Paragraph Not Used not used]
Consideration Points:
Section 310-30-25 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU superseded paragraph 310-30-25-1. For public business entities that are U.S. Securities and Exchange
Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after December 15, 2019,
including interim periods within those fiscal years. For all other public business entities, the amendments in the ASU are
effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. For all
other entities, including not-for-profit entities and employee benefit plans within the scope of ASC 960 through ASC 965 on
plan accounting, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, and interim
periods within fiscal years beginning after December 15, 2021. All entities may adopt the amendments in this Update
earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.
Assets > 310 Receivables > 30 Loans and Debt Securities Acquired with Deteriorated Credit Quality > 30 Initial
Measurement > General
Is the entity in compliance with the guidance in ASC 310-30-30:
Loss Accruals or Valuation Allowances?
03/09/2023 11:15 AM EST
Page 268 / 1816
FASB Codification:
>
Loss Accruals or Valuation Allowances
30-1
{Valuation allowances shall reflect only those losses incurred by the investor after acquisition—that is, the present value of all
cash flows expected at acquisition that ultimately are not to be received. For loans that are acquired by completion of a transfer, it
is not appropriate, at acquisition, to establish a loss allowance. For loans acquired in a business combination, the initial recognition of
those loans shall be the present value of amounts to be received. [SOP 03-3, paragraph 4] }{The loss accrual or valuation allowance
recorded by the investor should reflect only losses incurred by the investor, rather than losses incurred by the transferor or the
investor's estimate at acquisition of credit losses over the life of the loan. [SOP 03-3, paragraph 21 B29] }{At the acquisition date, the
amount of cash flows expected to be collected shall be based on the index rate in effect at acquisition. [SOP 03-3, paragraph 11] }
Pending Content:
Transition Guidance
326-10-65-1
Editor's Note: Paragraph 310-30-30-1 will be superseded upon transition, together with its heading.
> Loss Accruals or Valuation Allowances
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
Consideration Points:
Section 310-30-30 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU superseded paragraph 310-30-30-1. For public business entities that are U.S. Securities and Exchange
Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after December 15, 2019,
including interim periods within those fiscal years. For all other public business entities, the amendments in the ASU are
effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. For all
other entities, including not-for-profit entities and employee benefit plans within the scope of ASC 960 through ASC 965 on
plan accounting, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, and interim
periods within fiscal years beginning after December 15, 2021. All entities may adopt the amendments in this Update
earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.
Is the entity in compliance with the guidance in ASC 310-30-30:
Acquisition of a Loan at a Discount Related to Credit Quality?
FASB Codification:
>
Acquisition of a Loan at a Discount Related to Credit Quality
30-2
{A loan may be acquired at a discount because of a change in credit quality or rate or both. [FAS 114, paragraph 14] }{When a
loan is acquired at a discount that relates, at least in part, to the loan's credit quality, the effective interest rate is the discount rate
that equates the present value of the investor's estimate of the loan's future cash flows with the purchase price of the loan. [FAS 114,
paragraph 14] }
Pending Content:
Transition Guidance
326-10-65-1
Editor's Note: Paragraph 310-30-30-2 will be superseded upon transition, together with its heading.
> Acquisition of a Loan at a Discount Related to Credit Quality
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
03/09/2023 11:15 AM EST
Page 269 / 1816
Consideration Points:
Section 310-30-30 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU superseded paragraph 310-30-30-2. For public business entities that are U.S. Securities and Exchange
Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after December 15, 2019,
including interim periods within those fiscal years. For all other public business entities, the amendments in the ASU are
effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. For all
other entities, including not-for-profit entities and employee benefit plans within the scope of ASC 960 through ASC 965 on
plan accounting, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, and interim
periods within fiscal years beginning after December 15, 2021. All entities may adopt the amendments in this Update
earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.
Assets > 310 Receivables > 30 Loans and Debt Securities Acquired with Deteriorated Credit Quality > 35 Subsequent
Measurement > General
Is the entity in compliance with the guidance in ASC 310-30-35-1?
FASB Codification:
35-1
This Section addresses the recognition and measurement of income on loans subsequent to acquisition under varying
circumstances, specifically:
a.
Interest income
b.
Income measurement
c.
Expected prepayments
d.
Restructured or refinanced loans
e.
Variable rate loans
f.
Pool of multiple loans.
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
Consideration Points:
Section 310-30-35 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU superseded paragraph 310-30-35-1. For public business entities that are U.S. Securities and Exchange
Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after December 15, 2019,
including interim periods within those fiscal years. For all other public business entities, the amendments in the ASU are
effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. For all
other entities, including not-for-profit entities and employee benefit plans within the scope of ASC 960 through ASC 965 on
plan accounting, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, and interim
periods within fiscal years beginning after December 15, 2021. All entities may adopt the amendments in this Update
earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.
Is the entity in compliance with the guidance in ASC 310-30-35:
Interest Income?
03/09/2023 11:15 AM EST
Page 270 / 1816
FASB Codification:
>
Interest Income
35-2
{Upon completion of a transfer of a loan, this Subtopic requires that the investor (transferee) shall recognize the excess of all
cash flows expected at acquisition over the investor's initial investment in the loan as interest income on a level-yield basis over
the life of the loan (accretable yield). [SOP 03-3, paragraph 5] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-30-35-2 will be superseded upon transition, together with its heading.
> Interest Income
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-3
{Recognition of income under this Subtopic is dependent on having a reasonable expectation about the timing and amount of cash
flows expected to be collected. Subsequent to acquisition, this Subtopic does not prohibit placing loans on nonaccrual status, including
use of the cost recovery method or cash basis method of income recognition, when appropriate. For example, if the timing of either a
sale of the loan into the secondary market or a sale of loan collateral in essentially the same condition as received upon foreclosure is
indeterminate, the investor likely does not have the information necessary to reasonably estimate cash flows expected to be collected to
compute its yield and shall cease recognizing income on the loan. However, the ability to place a loan on nonaccrual shall not be used
to circumvent the loss recognition guidance contained in paragraphs 310-30-35-8(a) and 310-30-35-10(a). Alternatively, if the timing
and amount of cash flows expected to be collected from those sales are reasonably estimable, the investor shall use those cash flows to
apply the interest method under this Subtopic. Consistent with paragraph 310-20-35-18, interest income shall not be recognized to the
extent that the net investment in the loan would increase to an amount greater than the payoff amount. If the loan is acquired primarily
for the rewards of ownership of the underlying collateral, accrual of income is inappropriate. Such rewards of ownership would include
use of the collateral in operations of the entity or improving the collateral for resale. [SOP 03-3, paragraph 6] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-4
35-5
[Paragraph Not Used not used]
{This Subtopic does not address when an investor should record a direct write-down of an impaired loan. [SOP 03-3,
paragraph 23 FN2] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
Consideration Points:
Section 310-30-35 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU superseded paragraphs 310-30-35-2 through 35-5. For public business entities that are U.S.
Securities and Exchange Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2019, including interim periods within those fiscal years. For all other public business entities, the
amendments in the ASU are effective for fiscal years beginning after December 15, 2020, including interim periods within
those fiscal years. For all other entities, including not-for-profit entities and employee benefit plans within the scope of ASC
960 through ASC 965 on plan accounting, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. All entities may adopt the
amendments in this Update earlier as of the fiscal years beginning after December 15, 2018, including interim periods
within those fiscal years.
Is the entity in compliance with the guidance in ASC 310-30-35:
Income Measurement?
FASB Codification:
>
Income Measurement
03/09/2023 11:15 AM EST
35-6
Page 271 / 1816
{An increase in accretable yield establishes a higher effective interest rate and a different threshold for any subsequent
impairment determination. [SOP 03-3, paragraph 21 B45] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-30-35-6 will be superseded upon transition, together with its heading.
> Income Measurement
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-7
There are two types of loans to consider for income measurement:
a.
Loan accounted for as a debt security
b.
Loan not accounted for as a debt security.
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
> >
Loan Accounted for as a Debt Security
35-8
{An investor shall continue to estimate cash flows expected to be collected over the life of the loan. If, upon subsequent
evaluation: [SOP 03-3, paragraph 7] }
a.
{The fair value of the debt security has declined below its amortized cost basis, an entity shall determine whether the decline is
other than temporary. An entity shall apply the impairment of securities guidance in Section 320-10-35. For example, if, based
on current information and events, there is a decrease in cash flows expected to be collected (that is, the investor is unable to
collect all cash flows expected at acquisition plus any additional cash flows expected to be collected arising from changes in
estimate after acquisition (in accordance with (b)), an other-than-temporary impairment shall be considered to have occurred. The
investor shall consider both the timing and amount of cash flows expected to be collected in making a determination about
whether there has been a decrease in cash flows expected to be collected. [SOP 03-3, paragraph 7] }
b.
{Based on current information and events, there is a significant increase in cash flows previously expected to be collected or if
actual cash flows are significantly greater than cash flows previously expected, the investor shall recalculate the amount of
accretable yield for the loan as the excess of the revised cash flows expected to be collected over the sum of [SOP 03-3,
paragraph 7] }{the initial investment less [SOP 03-3, paragraph 7] }{cash collected less [SOP 03-3, paragraph 7] }{other-thantemporary impairments plus [SOP 03-3, paragraph 7] }{amount of yield accreted to date. [SOP 03-3, paragraph 7] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-30-35-8 will be superseded upon transition, together with its heading.
> > Loan Accounted for as a Debt Security
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-9
{The investor shall adjust the amount of accretable yield by reclassification from nonaccretable difference. [SOP 03-3,
paragraph 7] }{The adjustment shall be accounted for as a change in estimate in conformity with Topic 250, with the amount of periodic
accretion adjusted over the remaining life of the loan. [SOP 03-3, paragraph 7] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
> >
Loan Not Accounted for as a Debt Security
03/09/2023 11:15 AM EST
35-10
{
Page 272 / 1816
An investor shall continue to estimate cash flows expected to be collected over the life of the loan. If, upon subsequent
evaluation that is based on current information and events, it is probable that: [SOP 03-3, paragraph 8] }
a.
{The investor is unable to collect all cash flows expected at acquisition plus additional cash flows expected to be collected arising
from changes in estimate after acquisition (in accordance with (b)(2)), then the loan shall be considered impaired for purposes of
applying Topic 450 or, if applicable, this Topic. [SOP 03-3, paragraph 8] }{For purposes of applying paragraphs 310-10-35-10
through 35-11 to a loan within the scope of this Subtopic, the phrase all amounts due according to the contractual terms shall be
read all cash flows originally expected to be collected by the investor plus any additional cash flows expected to be collected
arising from changes in estimate after acquisition. [SOP 03-3, paragraph 08 FN13] }
b.
{There is a significant increase in cash flows previously expected to be collected or if actual cash flows are significantly greater
than cash flows previously expected, the investor shall: [SOP 03-3, paragraph 8] }
1.
{Reduce any remaining valuation allowance (or allowance for loan losses) for the loan established after its acquisition for
the increase in the present value of cash flows expected to be collected [SOP 03-3, paragraph 8] }
2.
{Recalculate the amount of accretable yield for the loan as the excess of the revised cash flows expected to be collected
over the sum of [SOP 03-3, paragraph 8] }{the initial investment less [SOP 03-3, paragraph 8] }{cash collected less [SOP
03-3, paragraph 8] }{write-downs plus [SOP 03-3, paragraph 8] }{amount of yield accreted to date. [SOP 03-3,
paragraph 8] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-30-35-10 will be superseded upon transition, together with its heading.
> > Loan Not Accounted for as a Debt Security
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-11
{The investor shall adjust the amount of accretable yield by reclassification from nonaccretable difference. [SOP 03-3,
paragraph 8] }{The adjustment shall be accounted for as a change in estimate in conformity with Topic 250 with the amount of periodic
accretion adjusted over the remaining life of the loan. [SOP 03-3, paragraph 8] }{The resulting yield shall be used as the effective
interest rate in any subsequent application of (a) in the preceding paragraph. [SOP 03-3, paragraph 8] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
Consideration Points:
Section 310-30-35 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU superseded paragraphs 310-30-35-6 through 35-11. For public business entities that are U.S.
Securities and Exchange Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2019, including interim periods within those fiscal years. For all other public business entities, the
amendments in the ASU are effective for fiscal years beginning after December 15, 2020, including interim periods within
those fiscal years. For all other entities, including not-for-profit entities and employee benefit plans within the scope of ASC
960 through ASC 965 on plan accounting, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. All entities may adopt the
amendments in this Update earlier as of the fiscal years beginning after December 15, 2018, including interim periods
within those fiscal years.
Is the entity in compliance with the guidance in ASC 310-30-35:
Expected Prepayments?
03/09/2023 11:15 AM EST
Page 273 / 1816
FASB Codification:
>
Expected Prepayments
35-12
{Expected prepayments shall be treated consistently for cash flows expected to be collected and projections of contractual cash
flows such that the nonaccretable difference is not affected. Similarly, the difference between actual prepayments and expected
prepayments shall not affect the nonaccretable difference. [SOP 03-3, paragraph 9] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-30-35-12 will be superseded upon transition, together with its heading.
> Expected Prepayments
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
Consideration Points:
Section 310-30-35 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU superseded paragraph 310-30-35-12. For public business entities that are U.S. Securities and
Exchange Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after December 15,
2019, including interim periods within those fiscal years. For all other public business entities, the amendments in the
ASU are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.
For all other entities, including not-for-profit entities and employee benefit plans within the scope of ASC 960 through ASC
965 on plan accounting, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, and
interim periods within fiscal years beginning after December 15, 2021. All entities may adopt the amendments in this
Update earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.
Is the entity in compliance with the guidance in ASC 310-30-35:
Restructured or Refinanced Loans?
FASB Codification:
>
Restructured or Refinanced Loans
35-13
{The guidance in this paragraph applies only to loans accounted for as individual loans. See paragraphs 310-30-40-1 through
40-2 for guidance on derecognition of pooled loans. [ASU 2010-18, paragraph 3] }{If an investor subsequently refinances or
restructures the loan, other than through a troubled debt restructuring, the refinanced or restructured loan shall not be accounted for as
a new loan, and this Subtopic, including paragraphs 310-30-35-8 through 35-11, continues to apply. [SOP 03-3, paragraph 10] }{See
Subtopic 310-40 for guidance on troubled debt restructurings. [ASU 2010-18, paragraph 3] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-30-35-13 will be superseded upon transition, together with its heading.
> Restructured or Refinanced Loans
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
03/09/2023 11:15 AM EST
Page 274 / 1816
Consideration Points:
Section 310-30-35 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU superseded paragraph 310-30-35-13. For public business entities that are U.S. Securities and
Exchange Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after December 15,
2019, including interim periods within those fiscal years. For all other public business entities, the amendments in the
ASU are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.
For all other entities, including not-for-profit entities and employee benefit plans within the scope of ASC 960 through ASC
965 on plan accounting, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, and
interim periods within fiscal years beginning after December 15, 2021. All entities may adopt the amendments in this
Update earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.
Is the entity in compliance with the guidance in ASC 310-30-35:
Variable Rate Loans?
FASB Codification:
>
Variable Rate Loans
35-14
{If a loan's contractual interest rate varies based on subsequent changes in an independent factor, such as an index or rate, for
example, the prime rate, the London Interbank Offered Rate (LIBOR), or the U.S. Treasury bill weekly average, that loan's
contractually required payments receivable shall be calculated based on the factor as it changes over the life of the loan. [SOP 033, paragraph 11] }{ Projections of future changes in the factor shall not be made for purposes of determining the effective interest rate
or estimating cash flows expected to be collected. [SOP 03-3, paragraph 11] }{Increases in cash flows expected to be collected shall be
accounted for according to paragraph 310-30-35-8(b) or 310-30-35-10(b). Decreases in cash flows expected to be collected resulting
directly from a change in the contractual interest rate shall be recognized prospectively as a change in estimate in conformity with Topic
250 by reducing, for purposes of applying paragraphs 310-30-35-8(a) and 310-30-35-10(a), all cash flows expected to be collected
at acquisition and the accretable yield. The investor shall decrease the amount of accretable yield and the cash flows expected to be
collected. Thus, for decreases in cash flows expected to be collected resulting directly from a change in the contractual interest rate, the
effect will be to reduce prospectively the yield recognized rather than recognize a loss. [SOP 03-3, paragraph 11] }{The guidance in
paragraphs 310-30-35-8 through 35-11 for increases and decreases shall be followed without having to meet the significance
threshold contained in those paragraphs. [SOP 03-3, paragraph 21 B49] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-30-35-14 will be superseded upon transition, together with its heading.
> Variable Rate Loans
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
Is the entity in compliance with the guidance in ASC 310-30-35:
Pool of Multiple Loans?
03/09/2023 11:15 AM EST
Page 275 / 1816
FASB Codification:
>
Pool of Multiple Loans
35-15
{If a loan is removed from a pool of loans, the difference between the loan's carrying amount and the fair value of the
collateral or other assets received shall not affect the percentage yield calculation used to recognize accretable yield on the pool of
loans. [SOP 03-3, paragraph 13] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-30-35-15 will be superseded upon transition, together with its heading.
> Pool of Multiple Loans
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
Assets > 310 Receivables > 30 Loans and Debt Securities Acquired with Deteriorated Credit Quality > 40
Derecognition > General
Is the entity in compliance with the guidance in ASC 310-30-40:
Pool of Multiple Loans?
FASB Codification:
>
Pool of Multiple Loans
40-1
{Once a pool of loans is assembled, the integrity of the pool shall be maintained. A loan shall be removed from a pool of loans
only if either of the following conditions is met: [SOP 03-3, paragraph 13] }
a.
{The investor sells, forecloses, or otherwise receives assets in satisfaction of the loan. [SOP 03-3, paragraph 13] }
b.
{The loan is written off. [SOP 03-3, paragraph 13] }
{A refinancing or restructuring of a loan shall not result in the removal of a loan from a pool. [ASU 2010-18, paragraph 4] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-30-40-1 will be superseded upon transition, together with its heading.
> Pool of Multiple Loans
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
40-2
{A loan removed from a pool in accordance with the preceding paragraph shall be removed at its carrying amount. See
paragraph 310-30-35-15 for further guidance on removing a loan from a pool. [ASU 2010-18, paragraph 5] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
03/09/2023 11:15 AM EST
Page 276 / 1816
Consideration Points:
Section 310-30-40 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU superseded paragraphs 310-30-40-1 through 40-2. For public business entities that are U.S.
Securities and Exchange Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2019, including interim periods within those fiscal years. For all other public business entities, the
amendments in the ASU are effective for fiscal years beginning after December 15, 2020, including interim periods within
those fiscal years. For all other entities, including not-for-profit entities and employee benefit plans within the scope of ASC
960 through ASC 965 on plan accounting, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. All entities may adopt the
amendments in this Update earlier as of the fiscal years beginning after December 15, 2018, including interim periods
within those fiscal years.
Assets > 310 Receivables > 30 Loans and Debt Securities Acquired with Deteriorated Credit Quality > 45 Other
Presentation > General
Is the entity in compliance with ASC 310-30-45 regarding the
presentation of accretable yield? [ASC 310-30-45-1]
FASB Codification:
>
Accretable Yield
45-1
{The amount of accretable yield shall not be displayed in the balance sheet. The loan's contractually required payments
receivable in excess of the amount of its cash flows expected at acquisition (nonaccretable difference) shall not be displayed in the
balance sheet or recognized as an adjustment of yield, a loss accrual, or a valuation allowance for credit risk. [SOP 03-3, paragraph 5]
}
Pending Content:
Transition Guidance
326-10-65-1
Editor's Note: Paragraph 310-30-45-1 will be superseded upon transition, together with its heading.
> Accretable Yield
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
Consideration Points:
The amount of accretable yield shall not be displayed in the balance sheet. The loan's contractually required payments
receivable in excess of the amount of its cash flows expected at acquisition (nonaccretable difference) shall not be displayed
in the balance sheet or recognized as an adjustment of yield, a loss accrual, or a valuation allowance for credit risk. Section
310-30-45 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the issuance
of this ASU superseded paragraph 310-30-45-1. For public business entities that are U.S. Securities and Exchange
Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after December 15, 2019,
including interim periods within those fiscal years. For all other public business entities, the amendments in the ASU are
effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. For all
other entities, including not-for-profit entities and employee benefit plans within the scope of ASC 960 through ASC 965 on
plan accounting, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, and interim
periods within fiscal years beginning after December 15, 2021. All entities may adopt the amendments in this Update
earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.
Assets > 310 Receivables > 30 Loans and Debt Securities Acquired with Deteriorated Credit Quality > 50 Disclosure >
General
Has the entity provided the appropriate footnote disclosures for
loans and debt securities in accordance with ASC 310-30-50? [ASC
310-30-50-1 and 50-2]
FASB Codification:
>
Footnote Disclosures for Loans
03/09/2023 11:15 AM EST
50-1
Page 277 / 1816
{The notes to financial statements shall describe how prepayments are considered in the determination of contractual cash flows
and cash flows expected to be collected. [SOP 03-3, paragraph 14] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-30-50-1 will be superseded upon transition, together with its heading.
> Footnote Disclosure for Loans
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
50-2
{In addition to disclosures required by other generally accepted accounting principles (GAAP), for each balance sheet presented,
an investor shall disclose the following information about loans within the scope of this Subtopic: [SOP 03-3, paragraph 16] }
a.
{Separately for both those loans that are accounted for as debt securities and those loans that are not accounted for as debt
securities, all of the following: [SOP 03-3, paragraph 16] }
1.
{The outstanding balance (see paragraph 310-30-50-3) and related carrying amount at the beginning and end of the period
[SOP 03-3, paragraph 16] }
2.
{The amount of accretable yield at the beginning and end of the period, reconciled for additions, accretion, disposals of
loans, and reclassifications to or from nonaccretable difference during the period [SOP 03-3, paragraph 16] }
3.
{For loans acquired during the period, the contractually required payments receivable, cash flows expected to be
collected, and fair value at the acquisition date [SOP 03-3, paragraph 16] }
4.
{For those loans within the scope of this Subtopic for which the income recognition model in this Subtopic is not applied in
accordance with paragraph 310-30-35-3, the carrying amount at the acquisition date for loans acquired during the period
and the carrying amount of all loans at the end of the period. [SOP 03-3, paragraph 16] }
b.
{Further, for those loans that are not accounted for as debt securities, both of the following: [SOP 03-3, paragraph 16] }
1.
{The amount of both of the following: [SOP 03-3, paragraph 16] }
i.
{Any expense recognized pursuant to paragraph 310-30-35-10(a) [SOP 03-3, paragraph 16] }
ii. {Any reductions of the allowance recognized pursuant to paragraph 310-30-35-10(b)(1) for each period for which an
income statement is presented. [SOP 03-3, paragraph 16] }
2.
{The amount of the allowance for uncollectible accounts at the beginning and end of the period. [SOP 03-3, paragraph 16] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
> >
Outstanding Balance
50-3
{For loans that have a net carrying amount, the outstanding balance is the undiscounted sum of all amounts, including amounts
deemed principal, interest, fees, penalties, and other under the loan, owed to the investor at the reporting date, whether or not
currently due and whether or not any such amounts have been written or charged off by the investor. [SOP 03-3, paragraph 23] }
{Amounts forgiven in a debt restructuring but contingently payable to the investor shall be included in the forgiven contract balance, but
amounts irrevocably forgiven in a debt restructuring shall not be included. Amounts payable to the investor in cash, in kind, and by any
other means shall be included. Amounts legally discharged shall not be included. The outstanding balance does not include amounts that
03/09/2023 11:15 AM EST
Page 278 / 1816
would be accrued under the contract as interest, fees, penalties, and other after the reporting date. [SOP 03-3, paragraph 23] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1
Editor's Note: Paragraph 310-30-50-3 will be superseded upon transition, together with its heading.
> > Outstanding Balance
[Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
Consideration Points:
Section 310-30-50 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU superseded paragraphs 310-30-50-1 through 50-3. For public business entities that are U.S.
Securities and Exchange Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2019, including interim periods within those fiscal years. For all other public business entities, the
amendments in the ASU are effective for fiscal years beginning after December 15, 2020, including interim periods within
those fiscal years. For all other entities, including not-for-profit entities and employee benefit plans within the scope of ASC
960 through ASC 965 on plan accounting, the amendments in the ASU are effective for fiscal years beginning after
December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. All entities may adopt the
amendments in this Update earlier as of the fiscal years beginning after December 15, 2018, including interim periods
within those fiscal years.
Assets > 310 Receivables > 40 Troubled Debt Restructurings by Creditors > 25 Recognition > General
Is the entity in compliance with the guidance in ASC 310-40-25:
Legal Fees?
FASB Codification:
>
Legal Fees
25-1
{Legal fees and other direct costs incurred by a creditor to effect a troubled debt restructuring shall be included in expense
when incurred. [FAS 015, paragraph 38] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5
Editor’s Note: Paragraph 310-40-25-1 will be superseded upon transition, together with its heading:
> Legal Fees
[Paragraph superseded by Accounting Standards Update No. 2022-02 superseded by Accounting Standards Update]
Is the entity in compliance with the guidance in ASC 310-40-25:
Substitution or Addition of Debtors?
03/09/2023 11:15 AM EST
Page 279 / 1816
FASB Codification:
>
Substitution or Addition of Debtors
25-2
{A troubled debt restructuring may involve substituting debt of another business entity, individual, or government entity for that
of the troubled debtor or adding another debtor (for example, as a joint debtor). [FAS 015, paragraph 42] }{Government entities
include, but are not limited to, states, counties, townships, municipalities, school districts, authorities, and commissions. [FAS 015,
paragraph 42] }{That kind of restructuring should be accounted for according to its substance. [FAS 015, paragraph 42] }{ For
example, a restructuring in which, after the restructuring, the substitute or additional debtor controls, is controlled by (as defined in
paragraphs 810-10-15-8 through 15-8A), or is under common control with the original debtor is an example of one that shall be
accounted for by the creditor as prescribed in this Topic. [FAS 015, paragraph 42] }{This Topic shall also apply to a restructuring in
which the substitute or additional debtor and original debtor are related after the restructuring by an agency, trust, or other relationship
that in substance earmarks certain of the original debtor's funds or funds flows for the creditor although payments to the creditor may
be made by the substitute or additional debtor. [FAS 015, paragraph 42] }{In contrast, a restructuring in which the substitute or
additional debtor and the original debtor do not have any of the relationships described above after the restructuring shall be accounted
for by the creditor according to the provisions of paragraphs 310-40-40-2 through 40-4. [FAS 015, paragraph 42] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5
Editor’s Note: Paragraph 310-40-25-2 will be superseded upon transition, together with its heading:
> Substitution or Addition of Debtors
[Paragraph superseded by Accounting Standards Update No. 2022-02 superseded by Accounting Standards Update]
Consideration Points:
Section 310-40-25 has been updated as the result of the issuance of ASU 2015-02. The pending content resulting from the
issuance of this ASU amended paragraph 310-40-25-2. The amendments in this Update are effective for public business
entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. For all other
entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2016, and for interim
periods within fiscal years beginning after December 15, 2017. A reporting entity may apply this amendments in this ASU
(1) retrospectively or (2) using a modified retrospective approach by recording a cumulative-effect adjustment to equity as
of the beginning of the fiscal year of adoption. Early adoption is permitted, including adoption in an interim period. If an
entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the
fiscal year that includes that interim period. ASU 2016-19 Section 310-40-25 has been updated as the result of the
issuance of ASU 2016-19. The pending content resulting from the issuance of this ASU amended paragraph 310-40-25-2.
The amendments in this Update apply to all reporting entities within the scope of the affected accounting guidance. Most of
the amendments are effective upon issuance of this Update. Early adoption is permitted for the amendments that require
transition guidance and those are amendments to the following Subtopics: Subtopic 350-40, Subtopic 360-20, Topic 820,
Subtopic 405-40, Subtopic 860-20 and Subtopic 860-50.
Assets > 310 Receivables > 40 Troubled Debt Restructurings by Creditors > 35 Subsequent Measurement > General
Is the entity in compliance with the guidance in ASC 310-40-35:
Troubled Debt Restructuring?
03/09/2023 11:15 AM EST
Page 280 / 1816
FASB Codification:
>
Troubled Debt Restructuring
35-2
{A creditor shall account for a troubled debt restructuring according to the type of the restructuring as prescribed in the
following paragraphs. [FAS 015, paragraph 27] }{Paragraphs 310-40-25-1 through 25-2; 310-40-35-7; 310-40-40-2 through 408, and 310-40-50-1 do not apply to a receivable that the creditor is accounting for at fair value (for example, a marketable debt
security accounted for at fair value by a mutual fund). [FAS 015, paragraph 27] }{Estimated cash expected to be received less
estimated costs expected to be incurred is not fair value. [FAS 015, paragraph 27] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5
Editor’s Note: Paragraph 310-40-35-2 will be superseded upon transition, together with its heading:
> Troubled Debt Restructuring
[Paragraph superseded by Accounting Standards Update No. 2022-02 superseded by Accounting Standards Update]
35-3
35-4
[Paragraph Not Used not used]
See Subtopic 470-60 concerning the debtor accounting for troubled debt restructurings.
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5 [Paragraph superseded by Accounting Standards Update No. 2022-02 superseded by Accounting Standards Update]
Consideration Points:
Section 310-40-35 has been updated as the result of the issuance of ASU 2016-19. The pending content resulting from the
issuance of this ASU amended paragraph 310-40-35-2. The amendments in this Update apply to all reporting entities
within the scope of the affected accounting guidance. Most of the amendments are effective upon issuance of this Update.
Early adoption is permitted for the amendments that require transition guidance and those are amendments to the following
Subtopics: Subtopic 350-40, Subtopic 360-20, Topic 820, Subtopic 405-40, Subtopic 860-20 and Subtopic 860-50.
Is the entity in compliance with the guidance in ASC 310-40-35:
Modification of Terms?
FASB Codification:
>
Modification of Terms
35-5
{A creditor in a troubled debt restructuring involving only a modification of terms of a receivable—that is, not involving receipt
of assets (including an equity interest in the debtor)—shall account for the troubled debt restructuring in accordance with the provisions
of this Topic. [FAS 015, paragraph 30] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5
Editor’s Note: Paragraph 310-40-35-5 will be superseded upon transition, together with its heading:
> Modification of Terms
[Paragraph superseded by Accounting Standards Update No. 2022-02 superseded by Accounting Standards Update]
Is the entity in compliance with the guidance in ASC 310-40-35:
Partial Satisfaction of a Receivable?
03/09/2023 11:15 AM EST
Page 281 / 1816
FASB Codification:
>
Partial Satisfaction of a Receivable
35-6
{In a partial satisfaction of a receivable (see the following paragraph), the fair value of the assets received shall be used in all
cases to avoid the need to allocate the fair value of the receivable between the part satisfied and the part still outstanding. [FAS 015,
paragraph 28] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5
Editor’s Note: Paragraph 310-40-35-6 will be superseded upon transition, together with its heading:
> Partial Satisfaction of a Receivable
[Paragraph superseded by Accounting Standards Update No. 2022-02 superseded by Accounting Standards Update]
35-7
{A troubled debt restructuring may involve receipt of assets (including an equity interest in the debtor) in partial satisfaction of a
receivable and a modification of terms of the remaining receivable. [FAS 015, paragraph 33] }{Even if the stated terms of the
remaining receivable, for example, the stated interest rate and the maturity date or dates, are not changed in connection with the
receipt of assets (including an equity interest in the debtor), the restructuring shall be accounted for as prescribed by this paragraph.
[FAS 015, paragraph 33] }{A creditor shall account for a troubled debt restructuring involving a partial satisfaction and modification of
terms as prescribed in this Topic except that, first, the assets received shall be accounted for as prescribed in paragraphs 310-40-40-2
through 40-4 and the recorded investment in the receivable shall be reduced by the fair value less cost to sell of the assets
received. [FAS 015, paragraph 33] }{If cash is received in a partial satisfaction of a receivable, the recorded investment in the
receivable shall be reduced by the amount of cash received. [FAS 015, paragraph 33] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{A troubled debt restructuring may involve receipt of assets (including an equity interest in the debtor) in partial satisfaction
of a receivable and a modification of terms of the remaining receivable. [FAS 015, paragraph 33] }{Even if the stated terms of the
remaining receivable, for example, the stated interest rate and the maturity date or dates, are not changed in connection with the
receipt of assets (including an equity interest in the debtor), the restructuring shall be accounted for as prescribed by this paragraph.
[FAS 015, paragraph 33] }{A creditor shall account for a troubled debt restructuring involving a partial satisfaction and modification of
terms as prescribed in this Topic except that, first, the assets received shall be accounted for as prescribed in paragraphs 310-40-40-2
through 40-4 and the amortized cost basis shall be reduced by the fair value less cost to sell of the assets received. [FAS 015,
paragraph 33] }{If cash is received in a partial satisfaction of a receivable, the amortized cost basis shall be reduced by the amount of
cash received. [FAS 015, paragraph 33] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5 [Paragraph superseded by Accounting Standards Update No. 2022-02 superseded by Accounting Standards Update]
Is the entity in compliance with the guidance in ASC 310-40-35:
Impairment?
FASB Codification:
>
Impairment
35-8
{Paragraph 310-10-35-16 explains that a loan is impaired when, based on current information and events, it is probable that a
creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. [FAS 114, paragraph 8] }
{For a loan that has been restructured in a troubled debt restructuring, the contractual terms of the loan agreement refers to the
contractual terms specified by the original loan agreement, not the contractual terms specified by the restructuring agreement. [FAS
114, paragraph 8] }{ That paragraph explains that the related guidance does not specify how a creditor should determine that it is
probable that it will be unable to collect all amounts due according to the contractual terms of a loan. [FAS 114, paragraph 8] }See
paragraph 310-10-35-16 for guidance concerning the application of Topic 450 to contractual terms. See paragraph 310-10-35-17 for
03/09/2023 11:15 AM EST
Page 282 / 1816
guidance concerning normal review procedures and insignificant delays and payment shortfalls.
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-9
{Usually, a loan whose terms are modified in a troubled debt restructuring already will have been identified as impaired
because the condition specified in the preceding paragraph will have existed before a formal restructuring. However, if a loan is
excluded from the scope of this Subtopic under paragraph 310-10-35-13(a), a creditor may not have accounted for that loan in
accordance with this Subtopic before the loan was restructured. The creditor shall apply the provisions of this Subtopic to that loan when
it is restructured. [FAS 114, paragraph 9] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
35-10
{A loan restructured in a troubled debt restructuring is an impaired loan. It should not be accounted for as a new loan because
a troubled debt restructuring is part of a creditor's ongoing effort to recover its investment in the original loan. A loan usually will have
been identified as impaired because the conditions specified in paragraphs 310-10-35-16 through 35-17 will have existed before a
formal restructuring. [FAS 118, paragraph 23] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{A loan restructured in a troubled debt restructuring shall not be accounted for as a new loan because a troubled debt
restructuring is part of a creditor's ongoing effort to recover its investment in the original loan. [FAS 118, paragraph 23] }{Topic 326
provides guidance on measuring credit losses on financial assets and requires credit losses to be recorded through an allowance for
credit loss account, including concessions given to the borrower upon a troubled debt restructuring. [ASU 2016-13, paragraph 13] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5
Editor’s Note: Paragraph 310-40-35-10 will be superseded upon transition, together with its heading:
> Impairment
[Paragraph superseded by Accounting Standards Update No. 2022-02 superseded by Accounting Standards Update]
35-11
{The Impairment or Disposal of Long-Lived Assets Subsections of Subtopic 360-10 do not allow the lender to look-back to
lending impairments measured and recognized under this Topic or Topic 450 for purposes of measuring the cumulative loss previously
recognized in determining the gain to be recognized on the increase in fair value less cost to sell of a foreclosed property under
paragraph 360-10-35-40. [FSP FAS144-1, paragraph 3] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{The Impairment or Disposal of Long-Lived Assets Subsections of Subtopic 360-10 do not allow the lender to look-back to
credit losses measured and recorded under Topic 326 for purposes of measuring the cumulative loss previously recognized in
determining the gain to be recognized on the increase in fair value less cost to sell of a foreclosed property under paragraph 360-1035-40. [FSP FAS144-1, paragraph 3] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5 [Paragraph superseded by Accounting Standards Update No. 2022-02 superseded by Accounting Standards Update]
03/09/2023 11:15 AM EST
Page 283 / 1816
Consideration Points:
Section 310-40-35 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU superseded paragraphs 310-40-35-8, 35-9 and amended 35-10 and 35-11. For public business entities
that are U.S. Securities and Exchange Commission (SEC) filers, the amendments in the ASU are effective for fiscal years
beginning after December 15, 2019, including interim periods within those fiscal years. For all other public business
entities, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, including interim
periods within those fiscal years. For all other entities, including not-for-profit entities and employee benefit plans within
the scope of ASC 960 through ASC 965 on plan accounting, the amendments in the ASU are effective for fiscal years
beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. All entities
may adopt the amendments in this Update earlier as of the fiscal years beginning after December 15, 2018, including
interim periods within those fiscal years.
Is the entity in compliance with the guidance in ASC 310-40-35:
Effective Interest Rate for a Restructured Loan?
FASB Codification:
>
Effective Interest Rate for a Restructured Loan
35-12
{The effective interest rate for a loan restructured in a troubled debt restructuring is based on the original contractual rate,
not the rate specified in the restructuring agreement. [FAS 114, paragraph 14] }{It has been indicated that a troubled debt
restructuring does not result in a new loan but rather represents part of a creditor's ongoing effort to recover its investment in the
original loan. Therefore, the interest rate used to discount expected future cash flows on a restructured loan shall be the same interest
rate used to discount expected future cash flows on an impaired loan. [FAS 114, paragraph 62] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{The effective interest rate for a loan restructured in a troubled debt restructuring is based on the original contractual
rate, not the rate specified in the restructuring agreement. [FAS 114, paragraph 14] }{As indicated in paragraph 310-40-35-10, a
troubled debt restructuring does not result in a new loan but rather represents part of a creditor's ongoing effort to recover its
investment in the original loan. Therefore, the interest rate used to discount expected future cash flows on a restructured loan shall be
the same interest rate used to discount expected future cash flows on the original loan. [FAS 114, paragraph 62] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5
Editor’s Note: Paragraph 310-40-35-12 will be superseded upon transition, together with its heading:
> Effective Interest Rate for a Restructured Loan
[Paragraph superseded by Accounting Standards Update No. 2022-02 superseded by Accounting Standards Update]
Consideration Points:
Section 310-40-35 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU amended paragraph 310-40-35-12. For public business entities that are U.S. Securities and Exchange
Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after December 15, 2019,
including interim periods within those fiscal years. For all other public business entities, the amendments in the ASU are
effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. For all
other entities, including not-for-profit entities and employee benefit plans within the scope of ASC 960 through ASC 965 on
plan accounting, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, and interim
periods within fiscal years beginning after December 15, 2021. All entities may adopt the amendments in this Update
earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.
Assets > 310 Receivables > 40 Troubled Debt Restructurings by Creditors > 40 Derecognition > General
Is the entity in compliance with the guidance in ASC 310-40-40:
Substituted Debtors in a Troubled Debt Restructuring?
03/09/2023 11:15 AM EST
Page 284 / 1816
FASB Codification:
>
Substituted Debtors in a Troubled Debt Restructuring
40-1
{A creditor shall recognize a loss on the disposition of the original loan and record an asset for the fair value of the payments to
be received from the purchaser. [EITF 87-19, paragraph DISCUSSION] }{Under paragraphs 310-40-40-2 through 40-4, the loss
would be measured as the amount by which the creditor's net investment in the loan exceeds the fair value of the assets received in full
satisfaction of the debt. [EITF 87-19, paragraph DISCUSSION] }{For example, in connection with a troubled debt restructuring, a
debtor, with the creditor's approval, sells the collateral (real estate) on a contract for deed for a purchase price, the present value of
which is less than the creditor's net investment in the related loan. The creditor does not release its lien on the property. The sellerdebtor provides 100 percent financing for the third-party purchaser, with payment terms identical to the seller-debtor's obligation under
the restructured terms. The third-party purchaser must make the monthly payments directly to the creditor and not to the seller-debtor.
[EITF 87-19, paragraph ISSUE] }{In this case, the sale of collateral and related requirement for the purchaser to make payments
directly to the creditor warrants the creditor's recognition of a loss related to the amount by which the net investment in the loan
exceeds the fair value of the payments to be received from the purchaser. [EITF 87-19, paragraph ISSUE] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5
Editor’s Note: Paragraph 310-40-40-1 will be superseded upon transition, together with its heading:
> Substituted Debtors in a Troubled Debt Restructuring
[Paragraph superseded by Accounting Standards Update No. 2022-02 superseded by Accounting Standards Update]
Consideration Points:
Section 310-40-40 has been updated as the result of the issuance of ASU 2016-19. The pending content resulting from the
issuance of this ASU amended paragraph 310-40-40-1. The amendments in this Update apply to all reporting entities
within the scope of the affected accounting guidance. Most of the amendments are effective upon issuance of this Update.
Early adoption is permitted for the amendments that require transition guidance and those are amendments to the following
Subtopics: Subtopic 350-40, Subtopic 360-20, Topic 820, Subtopic 405-40, Subtopic 860-20 and Subtopic 860-50.
Is the entity in compliance with the guidance in ASC 310-40-40:
Receipt of Assets in Full Satisfaction of a Receivable?
FASB Codification:
>
Receipt of Assets in Full Satisfaction of a Receivable
40-2
{A creditor that receives from a debtor in full satisfaction of a receivable either or both of the following shall account for those
assets (including an equity interest) at their fair value at the time of the restructuring: [FAS 015, paragraph 28] }
a.
{Receivables from third parties, real estate, or other assets [FAS 015, paragraph 28] }
b.
{Shares of stock or other evidence of an equity interest in the debtor. [FAS 015, paragraph 28] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5
Editor’s Note: Paragraph 310-40-40-2 will be superseded upon transition, together with its heading:
> Receipt of Assets in Full Satisfaction of a Receivable
[Paragraph superseded by Accounting Standards Update No. 2022-02 superseded by Accounting Standards Update]
40-3
{A creditor that receives long-lived assets that will be sold from a debtor in full satisfaction of a receivable shall account for
those assets at their fair value less cost to sell, as that term is used in paragraph 360-10-35-43. [FAS 015, paragraph 28] }{The
excess of [FAS 015, paragraph 28] }{ the recorded investment in the receivable satisfied over [FAS 015, paragraph 28] }{the fair
03/09/2023 11:15 AM EST
Page 285 / 1816
value of assets received (less cost to sell, if required above) is a loss that shall be recognized. [FAS 015, paragraph 28] }{For purposes
of this paragraph, losses, to the extent they are not offset against allowances for uncollectible amounts or other valuation accounts,
shall be included in measuring net income for the period. [FAS 015, paragraph 28] }{Recorded investment in the receivable is used in
paragraphs 310-40-25-1 through 25-2; 310-40-35-7; 310-40-40-2 through 40-8; and 310-40-50-1 instead of carrying amount of
the receivable because the latter is net of an allowance for estimated uncollectible amounts or other valuation account, if any, while the
former is not. [FAS 015, paragraph 28] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{A creditor that receives long-lived assets that will be sold from a debtor in full satisfaction of a receivable shall account for
those assets at their fair value less cost to sell, as that term is used in paragraph 360-10-35-43. [FAS 015, paragraph 28] }{The
excess of [FAS 015, paragraph 28] }{ the amortized cost basis satisfied over [FAS 015, paragraph 28] }{the fair value of assets
received (less cost to sell, if required above) is a loss that shall be recognized. [FAS 015, paragraph 28] }{For purposes of this
paragraph, losses, to the extent they are not offset against allowances for uncollectible amounts or other valuation accounts, shall be
included in measuring net income for the period. [FAS 015, paragraph 28] }{The amortized cost basis is used in paragraphs 310-4025-1 through 25-2; 310-40-35-7; 310-40-40-2 through 40-8; and 310-40-50-1 instead of carrying amount of the receivable
because the latter is net of an allowance for estimated uncollectible amounts or other valuation account, if any, while the former is not.
[FAS 015, paragraph 28] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5 [Paragraph superseded by Accounting Standards Update No. 2022-02 superseded by Accounting Standards Update]
40-4
{That guidance is not intended to preclude using the fair value of the receivable satisfied if more clearly evident than the fair
value of the assets received in full satisfaction of a receivable. [FAS 015, paragraph 28] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5 [Paragraph superseded by Accounting Standards Update No. 2022-02 superseded by Accounting Standards Update]
40-5
{After a troubled debt restructuring, a creditor shall account for assets received in satisfaction of a receivable the same as if the
assets had been acquired for cash. [FAS 015, paragraph 29] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5 [Paragraph superseded by Accounting Standards Update No. 2022-02 superseded by Accounting Standards Update]
Consideration Points:
Section 310-40-40 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU amended paragraph 310-40-40-3. For public business entities that are U.S. Securities and Exchange
Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after December 15, 2019,
including interim periods within those fiscal years. For all other public business entities, the amendments in the ASU are
effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. For all
other entities, including not-for-profit entities and employee benefit plans within the scope of ASC 960 through ASC 965 on
plan accounting, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, and interim
periods within fiscal years beginning after December 15, 2021. All entities may adopt the amendments in this Update
earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.
Is the entity in compliance with the guidance in ASC 310-40-40:
Foreclosure? [Guidance on the classification and measurement of
certain government-guaranteed mortgage loans upon foreclosure by
a creditor can be found at paragraphs 310-40-40-7A and 7B]
03/09/2023 11:15 AM EST
Page 286 / 1816
FASB Codification:
>
Foreclosure
40-6
{A troubled debt restructuring that is in substance a repossession or foreclosure by the creditor, that is, the creditor receives
physical possession of the debtor's assets regardless of whether formal foreclosure proceedings take place, or in which the creditor
otherwise obtains one or more of the debtor's assets in place of all or part of the receivable, shall be accounted for according to the
provisions of paragraphs 310-40-35-7, 310-40-40-2 through 40-4, and, if appropriate, 310-40-40-8. [FAS 015, paragraph 34] }
{See paragraphs 310-40-40-7A through 40-7B for the classification and measurement of certain government-guaranteed mortgage
loans. [ASU 2014-14, paragraph 3] }{For guidance on when a creditor shall be considered to have received physical possession
(resulting from an in substance repossession or foreclosure) of residential real estate property collateralizing a consumer mortgage
loan, see paragraph 310-40-55-10A. [ASU 2014-04, paragraph 4] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5
Editor’s Note: Paragraph 310-40-40-6 will be superseded upon transition, together with its heading:
> Foreclosure
[Paragraph superseded by Accounting Standards Update No. 2022-02 superseded by Accounting Standards Update]
40-6A
40-7
[Paragraph superseded by Accounting Standards Update No. 2014-09 superseded by Accounting Standards Update]
[Paragraph superseded by Accounting Standards Update No. 2014-09 superseded by Accounting Standards Update]
> >
Classification and Measurement of Certain Government-Guaranteed Mortgage Loans upon Foreclosure
40-7A
{A guaranteed mortgage loan receivable shall be derecognized and a separate other receivable shall be recognized upon
foreclosure (that is, when a creditor receives physical possession of real estate property collateralizing a mortgage loan in accordance
with the guidance in paragraph 310-40-40-6) if the following conditions are met: [ASU 2014-14, paragraph 3] }
a.
{The loan has a government guarantee that is not separable from the loan before foreclosure. [ASU 2014-14, paragraph 3] }
b.
{At the time of foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a claim on
the guarantee, and the creditor has the ability to recover under that claim. A creditor would be considered to have the ability to
recover under the guarantee at the time of foreclosure if the creditor determines that it has maintained compliance with the
conditions and procedures required by the guarantee program. [ASU 2014-14, paragraph 3] }
c.
{At the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the real estate is fixed.
[ASU 2014-14, paragraph 3] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5
Editor’s Note: Paragraph 310-40-40-7A will be superseded upon transition, together with its heading:
> > Classification and Measurement of Certain Government-Guaranteed Mortgage Loans upon Foreclosure
[Paragraph superseded by Accounting Standards Update No. 2022-02 superseded by Accounting Standards Update]
40-7B
{Upon foreclosure, the separate other receivable shall be measured based on the amount of the loan balance (principal and
interest) expected to be recovered from the guarantor. [ASU 2014-14, paragraph 3] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5 [Paragraph superseded by Accounting Standards Update No. 2022-02 superseded by Accounting Standards Update]
03/09/2023 11:15 AM EST
Page 287 / 1816
Is the entity in compliance with the guidance in ASC 310-40-40:
Sale of Assets from a Troubled Debt Restructuring?
FASB Codification:
>
Sale of Assets from a Troubled Debt Restructuring
40-8
{A receivable from the sale of assets previously obtained in a troubled debt restructuring shall be accounted for according to
Subtopic 835-30 regardless of whether the assets were obtained in satisfaction (full or partial) of a receivable to which that Topic was
not intended to apply. A difference, if any, between the amount of the new receivable and the carrying amount of the assets sold is a
gain or loss on sale of assets. [FAS 015, paragraph 39] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5
Editor’s Note: Paragraph 310-40-40-8 will be superseded upon transition, together with its heading:
> Sale of Assets from a Troubled Debt Restructuring
[Paragraph superseded by Accounting Standards Update No. 2022-02 superseded by Accounting Standards Update]
Is the entity in compliance with the guidance in ASC 310-40-40:
Cost Basis of Debt Security Received in a Restructuring?
FASB Codification:
>
Cost Basis of Debt Security Received in a Restructuring
40-8A
{The initial cost basis of a debt security of the original debtor received as part of a debt restructuring shall be the security's
fair value at the date of the restructuring. Any excess of the fair value of the security received over the net carrying amount of the loan
shall be recorded as a recovery on the loan. Any excess of the net carrying amount of the loan over the fair value of the security
received shall be recorded as a charge-off to the allowance for credit losses. [EITF 94-08, paragraph DISCUSSION] }{Subsequent to
the restructuring, the security received shall be accounted for according to the provisions of Topic 320. [EITF 94-08,
paragraph DISCUSSION] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5
Editor’s Note: Paragraph 310-40-40-8A will be superseded upon transition, together with its heading:
> Cost Basis of Debt Security Received in a Restructuring
[Paragraph superseded by Accounting Standards Update No. 2022-02 superseded by Accounting Standards Update]
40-9
{A security received in a restructuring in settlement of a claim for only the past-due interest on a loan shall be measured at the
security's fair value at the date of the restructuring and accounted for in a manner consistent with the entity's policy for recognizing cash
received for past-due interest. [EITF 94-08, paragraph DISCUSSION] }{Subsequent to the restructuring, the security received shall be
accounted for according to the provisions of Topic 320. [EITF 94-08, paragraph DISCUSSION] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5 [Paragraph superseded by Accounting Standards Update No. 2022-02 superseded by Accounting Standards Update]
Is the entity in compliance with the guidance in ASC 310-40-40:
Cost Basis of a Long-Lived Asset Received in Full Satisfaction of a
Receivable?
03/09/2023 11:15 AM EST
Page 288 / 1816
FASB Codification:
>
Cost Basis of a Long-Lived Asset Received in Full Satisfaction of a Receivable
40-10
{A valuation allowance for a loan collateralized by a long-lived asset shall not be carried over as a separate element of the
cost basis for purposes of accounting for the long-lived asset under Topic 360 after foreclosure. [FSP FAS144-1, paragraph 2] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5
Editor’s Note: Paragraph 310-40-40-10 will be superseded upon transition, together with its heading:
> Cost Basis of a Long-Lived Asset Received in Full Satisfaction of a Receivable
[Paragraph superseded by Accounting Standards Update No. 2022-02 superseded by Accounting Standards Update]
Assets > 310 Receivables > 40 Troubled Debt Restructurings by Creditors > 50 Disclosure > General
Has the entity complied with the creditor disclosure requirements
of troubled debt restructurings of ASC 310-40-50-1 thru 50-4?
[ASC 310-40-50-1 through 50-4]
03/09/2023 11:15 AM EST
Page 289 / 1816
FASB Codification:
>
Creditor Disclosure of Troubled Debt Restructurings
50-1
{As of the date of each balance sheet presented, a creditor shall disclose, either in the body of the financial statements or in the
accompanying notes, the [FAS 015, paragraph 40] }{ amount of commitments, if any, to lend additional funds to debtors owing
receivables whose terms have been modified in troubled debt restructurings. [FAS 015, paragraph 40] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5
Editor’s Note: Paragraph 310-40-50-1 will be superseded upon transition, together with its heading:
> Creditor Disclosure of Troubled Debt Restructurings
[Paragraph superseded by Accounting Standards Update No. 2022-02 superseded by Accounting Standards Update]
50-1A
{For guidance on the disclosures about modifications of financing receivables, see paragraphs 310-10-50-31 through 50-
34. [ASU 2010-20, paragraph 25] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5 [Paragraph superseded by Accounting Standards Update No. 2022-02 superseded by Accounting Standards Update]
50-2
{Information about an impaired loan that has been restructured in a troubled debt restructuring involving a modification of
terms need not be included in the disclosures required by paragraphs 310-10-50-15(a) and 310-10-50-15(c) in years after the
restructuring if both of the following conditions exist: [FAS 114, paragraph 20] }
a.
{The restructuring agreement specifies an interest rate equal to or greater than the rate that the creditor was willing to accept at
the time of the restructuring for a new loan with comparable risk. [FAS 114, paragraph 20] }
b.
{The loan is not impaired based on the terms specified by the restructuring agreement. [FAS 114, paragraph 20] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
50-3
{That exception shall be applied consistently for paragraph 310-10-50-15(a) and 310-10-50-15(c) to all loans restructured in
a troubled debt restructuring that meet the criteria in the preceding paragraph. [FAS 114, paragraph 20] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
50-4
{Usually, a loan whose terms are modified in a troubled debt restructuring already will be identified as impaired. However, if
the creditor has written down a loan and the measure of the restructured loan is equal to or greater than the recorded investment, no
impairment would be recognized in accordance with this Topic. The creditor is required to disclose the amount of the write-down and the
recorded investment in the year of the write-down but is not required to disclose the recorded investment in that loan in later years if
the two criteria of paragraph 310-40-50-2 are met. [EITF D-080, paragraph 31] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1 [Paragraph superseded by Accounting Standards Update No. 2016-13 superseded by Accounting Standards Update]
03/09/2023 11:15 AM EST
Page 290 / 1816
Consideration Points:
Section 310-40-50 has been updated as the result of the issuance of ASU 2016-13. The pending content resulting from the
issuance of this ASU superseded paragraphs 310-40-50-2, 3 and 4. For public business entities that are U.S. Securities and
Exchange Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after December 15,
2019, including interim periods within those fiscal years. For all other public business entities, the amendments in the
ASU are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.
For all other entities, including not-for-profit entities and employee benefit plans within the scope of ASC 960 through ASC
965 on plan accounting, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, and
interim periods within fiscal years beginning after December 15, 2021. All entities may adopt the amendments in this
Update earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.
Has the entity complied with the creditor disclosure requirements
of troubled debt restructurings when the restructurings result in
two or more loans, as described in ASC 310-40-50-5? [ASC 310-4050-5]
FASB Codification:
>
Loan Restructured Into Two (or More) Loan Agreements
50-5
{When a loan is restructured in a troubled debt restructuring into two (or more) loan agreements, the restructured loans shall be
considered separately when assessing the applicability of the disclosures in paragraph 310-10-50-15 in years after the restructuring
because they are legally distinct from the original loan. The creditor would continue to base its measure of loan impairment on the
contractual terms specified by the original loan agreement in accordance with paragraphs 310-10-35-20 through 35-26 and 310-1035-37. [EITF 96-22, paragraph DISCUSSION] }
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022 Transition Guidance 326-10-65-1
326-10-65-1{When a loan is restructured in a troubled debt restructuring into two (or more) loan agreements, the restructured loans
shall be considered separately when assessing the applicability of the disclosures in Section 326-20-50 in years after the restructuring
because they are legally distinct from the original loan. The creditor would continue to base its measure of credit losses in accordance
with Topic 326 on the contractual terms specified by the original loan agreement. [EITF 96-22, paragraph DISCUSSION] }
Pending Content:
Transition Date: (P) December 16, 2022; (N) December 16, 2022 Transition Guidance 326-10-65-5
326-10-65-5
Editor’s Note: Paragraph 310-40-50-5 will be superseded upon transition, together with its heading:
> Loan Restructured Into Two (or More) Loan Agreements
[Paragraph superseded by Accounting Standards Update No. 2022-02 superseded by Accounting Standards Update]
Consideration Points:
When a loan is restructured in a troubled debt restructuring into two (or more) loan agreements, the restructured loans
shall be considered separately when assessing the applicability of the disclosures in paragraph 310-10-50-15 in years after
the restructuring because they are legally distinct from the original loan. The creditor would continue to base its measure of
loan impairment on the contractual terms specified by the original loan agreement in accordance with paragraphs 310-1035-20 through 35-26 and 310-10-35-37. Section 310-40-50 has been updated as the result of the issuance of ASU 2016-13.
The pending content resulting from the issuance of this ASU amended paragraph 310-40-50-5 and superseded paragraph
50-6. For public business entities that are U.S. Securities and Exchange Commission (SEC) filers, the amendments in the
ASU are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.
For all other public business entities, the amendments in the ASU are effective for fiscal years beginning after December
15, 2020, including interim periods within those fiscal years. For all other entities, including not-for-profit entities and
employee benefit plans within the scope of ASC 960 through ASC 965 on plan accounting, the amendments in the ASU are
effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after
December 15, 2021. All entities may adopt the amendments in this Update earlier as of the fiscal years beginning after
December 15, 2018, including interim periods within those fiscal years.
Assets > 320 Investments > 10 Overall > 25 Recognition > General
03/09/2023 11:15 AM EST
Page 291 / 1816
Is the entity in compliance with the guidance in ASC 320-10-25:
Classification of Debt Securities?
FASB Codification:
>
Classification of Debt Securities
25-1
a.
{At acquisition, an entity shall classify debt securities into one of the following three categories: [FAS 115, paragraph 6] }
Trading securities. {If a security is acquired with the intent of selling it within hours or days, the security shall be classified as
trading. However, at acquisition an entity is not precluded from classifying as trading a security it plans to hold for a longer
period. [QA 115, paragraph 34] }{Classification of a security as trading shall not be precluded simply because the entity does
not intend to sell it in the near term. [QA 115, paragraph 35] }
b.
{Available-for-sale securities. [FAS 115, paragraph 12] }{Investments in debt securities [FAS 115, paragraph 12] }{not
classified as trading securities or as held-to-maturity securities shall be classified as available-for-sale securities. [FAS 115,
paragraph 12] }
c.
{Held-to-maturity securities. Investments in debt securities shall be classified as held-to-maturity only if the reporting entity has
the positive intent and ability to hold those securities to maturity. [FAS 115, paragraph 7] }
25-2
{At acquisition, an investor shall document the classification of debt securities. [FAS 115, paragraph 83] }
Consideration Points:
Section 320-10-25 has been updated as the result of the issuance of ASU 2016-01. The pending content resulting from the
issuance of this ASU amended paragraphs 320-10-25-1 through 25-2. For public business entities, the amendments in the
ASU are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.
For all other entities including not-for-profit entities and employee benefit plans within the scope of ASC 960 through ASC
965 on plan accounting, the amendments in the ASU are effective for fiscal years beginning after December 15, 2018, and
interim periods within fiscal years beginning after December 15, 2019. All entities that are not public business entities
may adopt the amendments in the ASU earlier as of the fiscal years beginning after December 15, 2017, including interim
periods within those fiscal years. Early application by public business entities to financial statements of fiscal years or
interim periods that have not yet been issued or, by all other entities, that have not yet been made available for issuance of
the following amendments in this Update are permitted as of the beginning of the fiscal year of adoption. Except for this,
early adoption of the amendments is not permitted.
Is the entity in compliance with the guidance in ASC 320-10-25:
Restrictions on Classification of a Debt Security as Held-toMaturity?
FASB Codification:
>
Restrictions on Classification of a Debt Security as Held-to-Maturity
25-3
{Amortized cost is relevant only if a security is actually held to maturity. [FAS 115, paragraph 59] }{Use of the held-to-
maturity category is restrictive because the use of amortized cost must be justified for each investment in a debt security. At acquisition,
an entity shall determine if it has the positive intent and ability to hold a security to maturity, which is distinct from the mere absence
of an intent to sell. [FAS 115, paragraph 59] }{If management's intention to hold a debt security to maturity is uncertain, it is not
appropriate to carry that investment at amortized cost. [FAS 115, paragraph 59] }{In establishing intent, an entity shall consider
pertinent historical experience, such as sales and transfers of debt securities classified as held-to-maturity. A pattern of sales or
transfers of those securities is inconsistent with an expressed current intent to hold similar debt securities to maturity. [FAS 115,
paragraph 59] }
> >
Circumstances Not Consistent with Held-to-Maturity Classification
25-4
{An entity shall not classify a debt security as held-to-maturity if the entity has the intent to hold the security for only an
indefinite period. Consequently, a debt security shall not, for example, be classified as held-to-maturity if the entity anticipates that the
security would be available to be sold in response to any of the following circumstances: [FAS 115, paragraph 9] }
03/09/2023 11:15 AM EST
Page 292 / 1816
a.
{Changes in market interest rates and related changes in the security's prepayment risk [FAS 115, paragraph 9] }
b.
{Needs for liquidity (for example, due to the withdrawal of deposits, increased demand for loans, surrender of insurance policies,
or payment of insurance claims) [FAS 115, paragraph 9] }
c.
{Changes in the availability of and the yield on alternative investments [FAS 115, paragraph 9] }
d.
{Changes in funding sources and terms [FAS 115, paragraph 9] }
e.
{Changes in foreign currency risk. [FAS 115, paragraph 9] }
25-5
Specific scenarios in which a debt security shall not be classified as held-to-maturity (or where sale or transfer of a held-to-
maturity security will call into question an investor's stated intent to hold other debt securities to maturity in the future) are as follows:
a.
{A security shall not be classified as held-to-maturity if that security can contractually be prepaid or otherwise settled in such a
way that the holder of the security would not recover substantially all of its recorded investment. [FAS 115, paragraph 7] }{The
justification for using historical-cost-based measurement for debt securities classified as held-to-maturity is that no matter how
market interest rates fluctuate, the holder will recover its recorded investment and thus realize no gains or losses when the
issuer pays the amount promised at maturity. [FAS 140, paragraph 293] }{However, that justification does not extend to
receivables purchased at a substantial premium over the amount at which they can be prepaid, and it does not apply to
instruments whose payments derive from prepayable receivables but have no principal balance. [FAS 140, paragraph 293] }
{Therefore, a callable debt security purchased at a significant premium might be precluded from held-to-maturity classification
under paragraph 860-20-35-2 if it can be prepaid or otherwise settled in such a way that the holder of the security would not
recover substantially all of its recorded investment. [QA 115, paragraph 19] }{In addition, a mortgage-backed interest-only
certificate shall not be classified as held-to-maturity. [QA 115, paragraph 22] }Paragraphs 860-20-35-3 through 35-6 provide
further guidance on application of this paragraph. {Note that a debt security that is purchased late enough in its life such that,
even if it was prepaid, the holder would recover substantially all of its recorded investment, [QA 140, paragraph 108] }{could
be initially classified as held-to-maturity if the conditions of this paragraph and paragraph 320-10-25-1 are met. [QA 140,
paragraph 108] }{(A debt security that can contractually be prepaid or otherwise settled in such a way that the holder of the
security would not recover substantially all of its recorded investment may contain an embedded derivative. Therefore, such a
security should be evaluated in accordance with Subtopic 815-15 to determine whether it contains an embedded derivative that
needs to be accounted for separately.) [FAS 115, paragraph 7] }
b.
{A debt security that is available to be sold in response to changes in market interest rates, changes in the security's prepayment
risk, the entity's need for liquidity, changes in foreign exchange risk, or other similar factors shall not be included in the held-tomaturity category because the possibility of a sale is indicative that the entity does not have a positive intent and ability to hold
the security to maturity. [FAS 115, paragraph 60] }{A debt security that is considered available to be sold as part of an entity's
asset-liability management activities shall not be classified as held-to-maturity. Similarly, an entity that maintains a dynamic
hedging program in which changes in external factors require that certain securities be sold to maintain an effective hedge would
not have the intent and ability to hold those securities to maturity. [FAS 115, paragraph 60] }
c.
{Securities that may need to be sold to implement tax-planning strategies [FAS 115, paragraph 71] }{(for example, to generate
taxable gains to offset existing taxable losses—or vice versa—or [FAS 115, paragraph 71] }{in response to changes in the
entity's anticipated future profitability [FAS 115, paragraph 71] }{—for example, if taxable losses were expected for the next
several years) [FAS 115, paragraph 71] }{should be classified as available-for-sale, not held-to-maturity. [FAS 115,
paragraph 71] }
d.
{The sale of a held-to-maturity security in advance of any deterioration in the creditworthiness of the issuer, perhaps based solely
on industry statistics, will call into question an investor's stated intent to hold other debt securities to maturity in the future. The
sale of a held-to-maturity security must be in response to an actual deterioration, not mere speculation. That deterioration shall
03/09/2023 11:15 AM EST
Page 293 / 1816
be supported by evidence about the issuer's creditworthiness; however, the entity need not await an actual downgrading in the
issuer's published credit rating or inclusion on a credit watch list. [FAS 115, paragraph 72] }
e.
{The sale of held-to-maturity securities to meet regulatory capital requirements will call into question an investor's stated intent
to hold other debt securities to maturity in the future. [FAS 115, paragraph 76] }{An entity's ability and intent to hold securities
to maturity would be called into question by the sale of held-to-maturity securities to realize gains to replenish regulatory capital
that had been reduced by a provision for loan losses. [FAS 115, paragraph 76] }{Gains trading with held-to-maturity securities to
meet an entity's capital requirements is inconsistent with the held-to-maturity notion. [FAS 115, paragraph 76] }
f.
{The exercise of a put option on a security classified as held-to-maturity will call into question an investor's stated intent to hold
other debt securities to maturity in the future. Furthermore, a puttable debt security might be precluded from held-to-maturity
classification pursuant to paragraph 860-20-35-2. [QA 115, paragraph 20] }
g.
{Convertible debt securities shall not be classified as held-to-maturity. [QA 115, paragraph 18] }{Classifying a security as heldto-maturity means that the entity is indifferent to future opportunities to profit from changes in the security's fair value and
intends to accept th