Effective Date Reminder for Accounting Standards Updates for the Financial Institutions Industry

December 2017

The Financial Accounting Standards Board has been extremely busy in the past several years issuing new accounting standards, some of which will have a broad impact. Following is a partial listing of Accounting Standards Updates (ASUs) in the implementation stages that are of interest to the financial institutions industry.

ASU # Name Public Business Entity Effective for: Nonpublic Business Entity Effective for: Summary
Topic 606 – Numerous ASUs starting with 2014-09 Revenue from Contracts with Customers Annual periods, including interim periods within those annual periods, beginning after 12/15/2017 Annual periods, beginning after 12/15/2018 and interim periods beginning after 12/15 2019 Primarily changes revenue recognition principles. Currently revenue is recognized when it is earned and realizable. In plain English revenue will now be recognized by measuring progress toward satisfying identified performance obligations.
2016-01 Recognition and Measurement of Financial Assets and Financial Liabilities Annual periods, including interim periods within those annual periods, beginning after 12/15/2017 Annual periods beginning after 12/15/2018, and for interim periods in annual periods beginning after 12/15/2019 Revised guidance related to certain matters involving the recognition, measurement, and disclosure of financial assets and financial liabilities. Requires equity securities with readily determinable fair values to be measured at fair value with changes in fair value to be recognized through net income.
2016-02 Leases Annual periods, including interim periods within those annual periods, beginning after 12/15/2018 Annual periods beginning after 12/15/2019, and for interim periods in annual periods beginning after 12/15/2020 Requires most leases to be recorded on the balance sheet.
2016-05 Derivatives and Hedging - Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships Annual periods, including interim periods within those annual periods, beginning after 12/15/2016 Annual periods beginning after 12/15/2017, and for interim periods in annual periods beginning after 12/15/2018 Clarifies that a change in one of the parties to a derivative instrument that is part of a hedge accounting relationship does not, on its own, require a dedesignation of that hedge accounting relationship if all other hedge accounting criteria continue to be met.
2016-09 Compensation - Stock Compensation-  Improvements to Employee Share-Based Payment Accounting Annual periods, including interim periods within those annual periods, beginning after 12/15/2016 Annual periods beginning after 12/15/2017, and for interim periods in annual periods beginning after 12/15/2018 Various changes, mostly around requiring all excess tax benefits and tax deficiencies to be recognized as income tax expense or benefit in the income statement
2016-13 Financial Instruments - Measurement of Credit Losses on Financial Instruments Annual periods, including interim periods within those annual periods, beginning after 12/15/2019 for SEC filers; annual periods, including interim periods within those annual periods, beginning after 12/15/2020 for all other public business entities Annual periods beginning after 12/15/2020, and for interim periods in annual periods beginning after 12/15/2021 Replaces existing “incurred loss” model for recognizing credit losses with a “current expected credit loss” model (CECL).
2016-15 Statement of Cash Flows -Classification of Certain Cash Receipts and Cash Payments Annual periods, including interim periods within those annual periods, beginning after 12/15/2017 Annual periods beginning after 12/15/2018, and for interim periods in annual periods beginning after 12/15/2019 Clarifies how certain cash receipts and cash payments, including but not limited to debt prepayment or extinguishments, and insurance settlements should be classified in the statement of cash flows.
2016-18 Statement of Cash Flows - Restricted Cash Annual periods, including interim periods within those annual periods, beginning after 12/15/2017 Annual periods beginning after 12/15/2018, and for interim periods in annual periods beginning after 12/15/2019 Amounts of restricted cash and cash equivalents should be included with cash and cash equivalents in the statement of cash flows.
2017-01 Business Combinations - Clarifying the Definition of a Business Annual periods, including interim periods within those annual periods, beginning after 12/15/2017 Annual periods beginning after 12/15/2018, and for interim periods within annual periods beginning after 12/15/2019 Clarifies guidance regarding whether an integrated set of assets and activities acquired is deemed the acquisition of a business (and, thus, accounted for as a business combination) or the acquisition of assets.
2017-04 Intangibles - Goodwill and Other - Simplifying the Test for Goodwill Impairment SEC Filers - Annual or interim goodwill impairment tests in fiscal years beginning after 12/15/2019

Non SEC Filers - After 12/15/2020
Annual or interim goodwill impairment tests in fiscal years beginning after 12/15/2021 Eliminates step 2 from the goodwill impairment test, which requires comparing the implied fair value of goodwill with its carrying amount.
2017-07 Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost Annual periods, including interim periods within those annual periods, beginning after 12/15/2017 Annual periods beginning after 12/15/2018, and for interim periods in annual periods beginning after 12/15/2019 Changes the income statement classification and presentation of service costs and other components of net benefit costs.
2017-08 Premium Amortization on Purchased Callable Debt Securities Annual periods, including interim periods within those annual periods, beginning after 12/15/2018 Annual periods beginning after 12/15/2019, and for interim periods in annual periods beginning after 12/15/2020 Shortens the amortization period on the premium of certain individual callable debt securities to the earliest call date.
2017-09 Stock Compensation - Scope of Modification Accounting Annual periods, including interim periods within those annual periods, beginning after 12/15/2017 Annual periods, including interim periods within those annual periods, beginning after 12/15/2017 Requires modification accounting to be applied to all changes in terms and conditions of share-based payment awards, unless immediately after the modification, certain items remain unchanged.
2017-11 Earnings Per Share Annual periods, including interim periods within those annual periods, beginning after 12/15/2018 Annual periods beginning after 12/15/2019, and for interim periods in annual periods beginning after 12/15/2020 Simplifies the accounting for certain equity-linked financial instruments (or embedded features) with “Down-Round” features.
2017-12 Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities Annual periods, including interim periods within those annual periods, beginning after 12/15/2018 Annual periods beginning after 12/15/2019, and for interim periods in annual periods beginning after 12/15/2020 Better aligns an entity’s risk management activities and financial reporting for hedging relationships.

The above is not intended to be a complete list of ASUs in the implementation stage. Contact your BNN advisor at 1.800.244.7444 for more information on any of these topics.

Disclaimer of Liability: This publication is intended to provide general information to our clients and friends. It does not constitute accounting, tax, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.