FASB Standards.

• Author: Mechannick, Jeff
• Position: Professionalissues

throughout the last six years, the Financial Accounting Standards Board (FASH) and the Private Company Council (PCC) have spent considerable time listening to and engaging with private company stakeholders.

Private company preparers, auditors and financial statement users have told both groups of their concerns, and we have listened attentively. The FASB and the PCX: have continued to collaborate to address a wide variety of financial accounting and reporting issues that affect private companies.

Whether making a private company consideration within a broader standard. or establishing a simplification/targeted improvement project from scratch to address a specific concern, both groups have made substantial progress in improving accounting for private companies.

With all this activity, though, comes an even greater need for awareness of the standards that private companies will or may have to apply in the next few years. To help private companies and their CPAs, the following are some of the most important standards and FASH and PCC projects that they should be aware of for the remainder of 2019.

Accounting Standards Now Effective

Revenue Recognition

Revenue is one of the most important measures to users of financial statements. However, legacy accounting guidance is fragmented, with numerous requirements for recognizing revenue for particular industries or transactions. This can sometimes result in different accounting for economically similar transactions.

The new revenue recognition standard overhauls revenue recognition guidance with one cohesive model. In the model, revenue is recognized when or as a company satisfies the performance obligations (delivers the goods or services) upon which entitlement to a customer's payment depends.

The standard also provides guidance on accounting for the costs associated with obtaining or fulfilling a contract with a customer, for sales of nonfinancial assets outside the ordinary course of business (for example, the sale of a headquarters building; and for such challenging areas as licenses of intellectual property.

Finally, the standard includes disclosure requirements to help users of financial statements better understand the nature, timing, amount and uncertainty about the revenue that is recognized. Some of these disclosures are optional for private companies.

Business Combinations--Clarifying the Definition of a Business

The standard helps companies evaluate whether transactions should be...