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AccountingAlert
AICPA: TPAs released
For more information
The AICPA recently issued several nonauthoritative
Technical Practice Aids (TPAs), as discussed in greater
detail below.
Kim McCormick
National Professional
Standards Group partner
T 408.346.4324
Subsequent events
Technical Inquiry Service (TIS) Section 9070.06,
“Decline in Market Value of Assets Subsequent to the
Balance Sheet Date,” clarifies that a decline in the
market value of an asset after the balance sheet date
should not result in an adjustment of the financial
statements, consistent with the guidance in ASC 855,
Subsequent Events, 10-25-1 and 25-3.
Frank Kurre
National managing partner
of Grant Thornton's Not-forProfit practice
T 212.542.9530
Thought leadership
Accounting for certificates of deposit
The AICPA expanded the guidance in TIS Section
2130, “Receivables,” to include the following items:
•
•
•
2130.38, “Certificates of Deposit and Financial
Accounting Standards Board (FASB)
Accounting Standards Codification (ASC) 820,
Fair Value Measurements and Disclosures,”
explains that certificates of deposit are
generally not within the scope of ASC 820.
2130.39, “Balance Sheet Classification of
Certificates of Deposit,” clarifies that
certificates of deposit with original maturities
of 90 days or less are commonly classified as
cash and cash equivalents on the balance sheet.
2130.40, “Certificates of Deposit and FASB
ASC 320, Investments – Debt and Equity
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Securities,” explains that certificates of deposit
are generally not within the scope of ASC 320.
Fair value disclosures
TIS Section 1800.05, “Applicability of Fair Value
Disclosure Requirements and Measurement Principles
in Financial Accounting Standards Board (FASB)
Accounting Standards Codification (ASC) 820, Fair
Value Measurements and Disclosures, to Certain
Financial Instruments,” clarifies that the measurement
principles in ASC 820 apply to financial instruments
that are not recognized at fair value in the statement of
financial position, but that must be disclosed at fair
value in the notes to the financial statements.
Not-for-profit entities
The AICPA expanded the guidance in TIS Section
6140, “Not-for-Profit Entities,” to include the
following items:
•
•
•
6140.23, “Changing Net Asset Classifications
Reported in a Prior Year,” explains that
individual net asset classes, rather than net
assets in the aggregate, are relevant in
determining whether a not-for-profit entity’s
correction of net asset classifications previously
reported in prior years’ financial statements is
considered an error in previously issued
financial statements.
6140.24, “Contributions of Certain
Nonfinancial Assets, Such as Fundraising
Material, Informational Material, or
Advertising, Including Media Time or Space
for Public Service Announcements or Other
Purposes,” explains how not-for-profit entities
should consider whether certain nonfinancial
assets used for the entity’s benefit, such as
fundraising material, informational material, or
advertising including media time or space for
public service announcements or other
purposes, constitute a contribution.
6140.25, “Multiyear Unconditional Promises to
Give – Measurement Objective and the Effect
of Changes in Interest Rates,” clarifies that the
measurement objective for multiyear
unconditional promises to give, including both
revenue and contributions receivable, is fair
value, except for subsequent measurement of
contributions receivable for which the entity
has not elected the fair value option.
Cash value life insurance policies
TIS Section 2240.06, “Measurement of Cash Value
Life Insurance Policy,” cites guidance from ASC 325,
Investments – Other, 30, “Investments in Insurance
Contracts,” 25-1, 35-1, and 35-3 through 35-7, to
explain the appropriate measurement and recognition
of a cash value life insurance policy that a company
purchases for itself.
TIS Section 6930.02, “Defined Benefit Plan
Measurement of a Life Insurance Policy,” clarifies that
for some insurance contracts with insurance entities,
the best available evidence of fair value may be
contract value. Further, if the contract has a
determinable cash surrender value or conversion value,
that is presumed to represent the contract’s fair value.
Applying FIN 48
The AICPA expanded the guidance in TIS Section
5250, “Tax Allocation,” to include the following items:
•
•
5250.14, “Application of Financial Accounting
Standards Board (FASB) Interpretation No. 48,
Accounting for Uncertainty in Income Taxes
(codified in FASB Accounting Standards
Codification [ASC] 740-10) to Taxes Other
Than Income Taxes,” clarifies that the scope of
FASB Interpretation 48, Accounting for
Uncertainty in Income Taxes, as codified in
ASC 740-10, Income Taxes, includes income
taxes only.
5250.15, “Application of Certain FASB
Interpretation No. 48 (codified in FASB ASC
740-10) Disclosure Requirements to Nonpublic
Entities That Do Not Have Uncertain Tax
Positions,” clarifies that the guidance in ASC
740-10-50-15(e), which requires a description
of tax years that remain subject to examination,
applies to nonpublic entities, even if they have
no uncertain tax positions.
Questions?
For additional information, contact Kim McCormick,
national Professional Standards Group partner, at
408.346.4324, Frank Kurre, national managing partner
of Grant Thornton's Not-for-Profit practice, at
212.542.9530, or your local client-service partner.
This Grant Thornton LLP bulletin provides information and
comments on current accounting and tax issues and
developments. It is not a comprehensive analysis of the
subject matter covered and is not intended to provide
accounting, tax, or other advice or guidance with respect to
the matters addressed in the document. All relevant facts
and circumstances, including the pertinent authoritative
literature, need to be considered to arrive at conclusions
that comply with matters addressed in this bulletin.