Pershing Yoakley & Associates, P.C., is pleased to present the January 2012 Audit & Accounting Update. This update is designed to provide direct access to current audit and accounting information that is relevant to you.
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The Financial Accounting Standards Board (FASB) has released three Accounting Standards Updates (ASU). A summary of these items is provided below.
ASU No. 2011-10, Property, Plant, and Equipment (Topic 360): Derecognition of in Substance Real Estate-a Scope Clarification
The objective of this ASU is to resolve the diversity in practice about whether the guidance in Accounting Standards Codification (ASC) Subtopic 360-20, Property, Plant, and Equipment – Real Estate Sales , applies to a parent that ceases to have a controlling financial interest in a subsidiary that is in substance real estate, as a result of default on the subsidiary’s nonrecourse debt. When this event occurs, the amendments in this ASU indicate the reporting entity should apply the guidance in Subtopic 360-20 to determine whether it should derecognize the in substance real estate. Generally, the reporting entity would continue to include the real estate, debt, and the results of the subsidiary’s operations in its consolidated financial statements until legal title to the real estate is transferred to legally satisfy the debt.
The amendments in this ASU should be applied on a prospective basis to deconsolidation events occurring after the effective date. For public entities, the amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning on or after June 15, 2012. For nonpublic entities, the amendments are effective for fiscal years ending after December 15, 2013, and interim and annual periods thereafter. Early adoption is permitted.
ASU No. 2011-11, Balance Sheet (Topic 210): Disclosure about Offsetting Assets and Liabilities
The objective of this ASU is to facilitate comparison between those entities that prepare their financial statements on the basis of U.S. Generally Accepted Accounting Principles (GAAP) and those entities that prepare their financial statements on the basis of International Financial Reporting Standards (IFRS) through the issuance of joint requirements that will enhance current disclosures regarding the offsetting (netting) of assets and liabilities.
The amendments in this ASU require entities to disclose both gross information and net information about both instruments and transactions eligible for offset and instruments and transactions subject to an agreement similar to a master netting arrangement. This scope would include derivatives, sale and repurchase agreements and reverse sale and repurchase agreements, and securities borrowing and securities lending arrangements.
The amendments in this ASU should be applied retrospectively for all comparative periods presented. The amendments in this ASU are effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods.
ASU No. 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05
This ASU was issued to defer only those changes in ASU 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income, that relate to the presentation of reclassification adjustments. The amendments in this ASU are being made to allow the FASB time to decide whether to present, on the face of the financial statements, the effects of reclassifications out of accumulated comprehensive income on the components of net income and other comprehensive income for all periods presented. For now, entities should continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect prior to ASU 2011-05.
All other requirements in ASU 2011-05 are not affected by this ASU, including the requirements to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements.
The amendments in this ASU are effective at the same time as the amendments in ASU 2011-05 so that entities will not be required to comply with the presentation requirements in ASU 2011-05 that this ASU is deferring. The amendments in this ASU are effective for public entities for fiscal years, and interim periods within those years, beginning after December 15, 2011. For nonpublic entities, the amendments are effective for fiscal years ending after December 15, 2012, and interim and annual periods thereafter.
To view these ASUs in their entirety, please gohere.
For more information, please contact the experts listed below at PYA, (800) 270-9629.
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