Latest news with #FinancialAccountingStandardsBoard
Yahoo
01-05-2025
- Business
- Yahoo
FASB seeks public input on changes to debt exchange accounting
The Financial Accounting Standards Board (FASB) is requesting public feedback on a proposed Accounting Standards Update (ASU) that would provide specific guidance on accounting for debt exchange transactions involving multiple creditors. The proposal, based on a recommendation by the Emerging Issues Task Force (EITF), is open for stakeholder review and comment until 30 May. Under the current generally accepted accounting principles, entities are required to determine if a modified or exchanged debt instrument should be treated as a modification of the existing obligation or as the issuance of a new one, with the old obligation extinguished. The proposed ASU clarifies that certain debt instrument exchanges should be recognised as the issuance of a new debt obligation and the extinguishment of the existing one. The FASB believes this update would enhance the decision-usefulness of financial reporting by ensuring economically similar transactions are accounted for in a consistent manner. It also aims to reduce the varied practices in accounting for such exchanges. Stakeholders have raised issues with the current approach, suggesting it does not accurately reflect the economic reality of certain exchanges, especially when the issuance of new debt and repayment of existing debt are independent events. Moreover, the current requirement for a quantitative analysis of cash flow changes has been deemed complex and costly. The Board said proposed amendments would simplify this by specifying conditions under which debt exchanges should be accounted for as new issuances and extinguishments. In March 2025, the US Securities and Exchange Commission (SEC) approved the 2025 taxonomies for financial reporting as released by the FASB. These include the GAAP Financial Reporting Taxonomy, the SEC Reporting Taxonomy, and the GAAP Employee Benefit Plan Taxonomy. "FASB seeks public input on changes to debt exchange accounting " was originally created and published by The Accountant, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
Yahoo
04-04-2025
- Business
- Yahoo
FASB clarifies guidance for construction contract holdbacks
This story was originally published on CFO Dive. To receive daily news and insights, subscribe to our free daily CFO Dive newsletter. The Financial Accounting Standards Board issued a report Tuesday clarifying how companies should apply generally accepted accounting principles to construction contracts that include retainage provisions, according to a press release. Also called retentions or holdbacks, retainage refers to a portion of a client's payment that is withheld until certain project milestones are reached, a common practice in the construction industry. The FASB staff's educational report, which does not change or modify GAAP standards, seeks to answer questions that have arisen on how construction firms should apply revenue recognition guidance to the provisions. It stems from input about the matter that came from stakeholders and the Private Company Council, an advisory body to the U.S. accounting standard setter on private company accounting matters. 'Topic 606, Revenue from Contracts with Customers, establishes guidance on the presentation of a contract with a customer on the balance sheet as a contract asset or a contract liability and related disclosures, but Topic 606 does not include specific guidance on retainage,' the four-page paper states. As such, the report fills in the gaps and explains GAAP presentation and disclosure requirements for typical construction contracts. Accounting related to revenue recognition generally has been one of the thornier areas that have tripped up financial report preparers. In fiscal year 2024, the most common allegations in Securities and Exchange Commission actions alleging violations were related to companies' revenue recognition and internal accounting controls, according to a report from Cornerstone Research, an economic consulting firm. For its part, the PCC cited its efforts related to the presentation of contract assets and contract liabilities for construction contractors as one of the key areas of progress it made last year, according to its annual report. According to the report, when a company inks a contract with a customer, the rights and performance obligations of that agreement should be accounted for and presented 'on a net basis as either a contract asset or a contract liability.' Further, it says payments must be unconditional to be considered receivables. The report also states that certain users of private construction financial statements said sometimes the netting of contract assets and contract liabilities can make it hard to interpret the information about holdbacks, suggesting that presenting and disclosing the information companies might want to provide added information to explain the situations. Examples of voluntary additional presentation disclosure information that would be allowed under GAAP would be parenthetical disclosures of the retainage's value, the use of subtitles, or added information that detail information such as billing in excess of revenue or revenue in excess of billings on the company's balance sheet, according to the report. It's not unusual for the FASB to publish papers to help clarify issues raised by stakeholders, according to Christine Klimek, a board spokesperson. In March the board issued a paper detailing the intersection of environmental, social and governance matters with financial accounting standards. Sign in to access your portfolio
Yahoo
31-01-2025
- Business
- Yahoo
Tesla Marked Up Bitcoin Holdings Valuation in Q4, Booking a $600M Gain
Elon Musk's Tesla (TSLA) appeared to take advantage of a new accounting rule allowing for holdings of digital assets to be marked-to-market each quarter. The company's fourth quarter earnings report shows its 9,720 bitcoin valued at $1.076 billion as of the end of 2024. That's up from what had been $184 million for several quarters prior. Alongside that change, Tesla also recorded a GAAP income boost of $600 million on its digital holdings. For perspective, the company had overall GAAP income of $2.3 billion in the fourth quarter. A new rule from the Financial Accounting Standards Board (FASB) requires corporate holders of digital assets to begin marking those assets to market each quarter, no later than the first quarter of 2025. Companies could take advantage of the new rule prior to that at their own discretion, which Tesla has appeared to do. Prior to this new rule, corporate holders of digital assets were required to report those holdings at what was their lowest valuation during the time of ownership. Tesla overall reported adjusted EPS of $0.73 in the fourth quarter, missing estimates for $0.76. The gain on its bitcoin holdings was for GAAP purposes and would have had no effect on adjusted EPS. Shares are higher by 3.5% in after hours trading. Tesla holds 9,720 BTC, according to Bitcoin Treasuries, making it the sixth largest publicly traded company to hold bitcoin on its balance sheet. Sign in to access your portfolio
Korea Herald
30-01-2025
- Automotive
- Korea Herald
Tesla books $600 million boost from Bitcoin after accounting change
Tesla Inc.'s holdings of Bitcoin gave its latest quarterly results a boost, courtesy of new accounting rules for digital assets. Its net income got a $600 million mark-to-market benefit from the digital tokens due to the adoption of the accounting approach, Chief Financial Officer Vaibhav Taneja said on Tesla's earnings call on Wednesday. The electric vehicle maker's fourth-quarter adjusted earnings were 73 cents a share, missing analysts' average estimates of 75 cents. But investors took heart from the Elon Musk-led firm's plan to begin robotaxi operations and forecast of a sales recovery this year, driving its shares up in extended New York trading. Tesla revealed an aggregate $1.5 billion investment in Bitcoin back in 2021, during an earlier boom in crypto prices. Its latest quarterly update lists a net $1.08 billion worth of digital assets on its balance sheet. Financial Accounting Standards Board regulations requiring companies to record digital assets at fair value go into effect this year, but earlier adoption is permitted. The rules, published at the end of 2023, are intended to capture the most up-to-date value of digital assets which are notoriously volatile. The outgoing practice only let companies record lower valuations, and businesses that bet on Bitcoin bemoaned such one-sided accounting treatment. The crypto market is in the midst of a renewed boom prompted by US President Donald Trump's pledge of supportive regulations. The value of Bitcoin more than doubled over the past year and a hit a record $109,241 on Jan. 20 before slipping back. Bitcoin rose about 1.4% to $105,150 on Thursday.
