Nonprofit Accounting Basics

Accounting Standards Updates (ASU) 2018 Effective Date Reminder

Updated: 
Mar 20, 2019
Author: 

This Effective Date Reminder lists only those pronouncements issued as of November 1, 2018, which became effective on or after January 1, 2018 for most entities or have not yet become effective for all entities as of November 1, 2018.

ASU 2014-09, Revenue from Contracts with Customers (Topic 606)

This ASU provides a robust framework for addressing revenue recognition issues and, upon its effective date, replaces almost all existing revenue recognition guidance, including industry-specific guidance, in current U.S. GAAP. For a public business entity, a not-for-profit entity that has issued, or is a conduit bond obligor for, securities that are traded, listed or quoted on an exchange or an over- the-counter market, and an employee benefit plan that files or furnishes financial statements with or to the SEC, the ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. For all other entities, the ASU is effective for annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019.

ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes

This ASU concludes that deferred tax liabilities and assets should be classified as noncurrent in a classified statement of financial position. Public business entities must apply the new requirements for annual periods beginning after December 15, 2016, and interim periods within those annual periods. All other entities must apply the new requirements for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018.

ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities

This ASU updates certain aspects of recognition, measurement, presentation and disclosure of financial instruments and applies to all entities that hold financial assets or owe financial liabilities. The ASU is effective for public business entities for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. For those entities that are not public business entities, the ASU is effective for fiscal years beginning after December 15, 2018, and for interim periods within fiscal years beginning after December 15, 2019.

ASU 2016-02, Leases (Topic 842)

Among many other provisions, this ASU requires lessees to recognize right-of-use assets and leases liabilities for all leases not considered short-term leases. The ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, for (a) a public business entity, (b) a not-for-profit entity that has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market and (c) an employee benefit plan that files financial statements with the SEC. For all other entities, the ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020.

ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)

This ASU clarifies the implementation guidance on principal-versus-agent considerations in Topic 606. For a public business entity, a not-for-profit entity that has issued, or is a conduit bond obligor for, securities that are traded, listed or quoted on an exchange or an over-the-counter market, and an employee benefit plan that files or furnishes financial statements with or to the SEC, the ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. For all other entities, the ASU is effective for annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019.

ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing

This ASU clarifies two aspects of Topic 606—identifying performance obligations and the licensing implementation guidance. For a public business entity, a not-for-profit entity that has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the- counter market, and an employee benefit plan that files or furnishes financial statements with or to the SEC, the ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. For all other entities, the ASU is effective for annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019.

ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients

This ASU addresses various implementation issues by making narrow-scope amendments to the guidance originally included in ASU 2014-09 and providing practical expedients. For a public business entity, a not-for-profit entity that has issued, or is a conduit bond obligor for, securities that are traded, listed or quoted on an exchange or an over-the-counter market, and an employee benefit plan that files or furnishes financial statements with or to the SEC, the ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. For all other entities, the ASU is effective for annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019.

ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments

Among other provisions, this ASU requires the allowance for credit losses to reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. For public business entities that are SEC filers, the ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For all other public business entities, the ASU is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. For all other entities, the ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021.

ASU 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities

This ASU simplifies and improves how a not-for-profit organization classifies its net assets, as well as the information it presents in financial statements and notes about its liquidity, financial performance and cash flows. The ASU is effective for annual financial statements issued for fiscal years beginning after December 15, 2017, and for interim periods within fiscal years beginning after December 15, 2018.

ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (A Consensus of the FASB Emerging Issues Task Force)

To reduce diversity in practice, this ASU provides guidance on eight specific statement of cash flows classification issues. The ASU is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019.

ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory

This ASU requires that an entity recognize the current and deferred income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. For public business entities, the ASU is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. For all other entities, the ASU is effective for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019.

ASU 2016-17, Consolidation (Topic 810): Interests Held through Related parties That Are under Common Control

This ASU amends the consolidation guidance on how a reporting entity that is the single decision maker of a variable interest entity (VIE) should treat indirect interests in the entity held through related parties that are under common control with the reporting entity when determining whether it is the primary beneficiary of that VIE. The ASU is effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. For all other entities, the ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017.

ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force)

Per this ASU, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of- period total amounts shown on the statement of cash flows. The ASU is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, the ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019.

ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers

This ASU makes certain changes to the new revenue recognition guidance added to the FASB’s Accounting Standards Codification by ASU 2014-09. For a public business entity, a not-for-profit entity that has issued, or is a conduit bond obligor for, securities that are traded, listed or quoted on an exchange or an over-the-counter market, and an employee benefit plan that files or furnishes financial statements with or to the SEC, the ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. For all other entities, the ASU is effective for annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019.

ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business

This ASU clarifies the definition of a business, which affects many areas of accounting, such as acquisitions, disposals, goodwill impairment and consolidation. For public companies, the ASU is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. For all other companies and organizations, the ASU is effective for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019.

ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment

This ASU simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. A public business entity that is an SEC filer should adopt the amendments in ASU 2017-04 for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. A public business entity that is not an SEC filer should adopt the amendments for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2020. All other entities, including not-for-profit entities, that are adopting the amendments should do so for their annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2021.

ASU 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets

This ASU clarifies the scope of asset derecognition guidance and the accounting for partial sales of nonfinancial assets. For a public business entity, a not-for-profit entity that has issued, or is a conduit bond obligor for, securities that are traded, listed or quoted on an exchange or an over-the-counter market, and an employee benefit plan that files or furnishes financial statements with or to the SEC, the ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. For all other entities, the ASU is effective for annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019.

ASU 2017-06, Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting (a consensus of the Emerging Issues Task Force)

This ASU clarifies presentation requirements for a plan’s interest in a master trust and requires more detailed disclosures of the plan’s interest in the master trust. The ASU is effective for fiscal years beginning after December 15, 2018.

ASU 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

This ASU provides guidance related to the presentation of defined benefit costs in the income statement. The ASU is effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those annual periods. For other entities, the ASU is effective for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019.

ASU 2018-01, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842

This ASU clarifies that land easements should be evaluated under the new guidance in Topic 842 to determine whether the arrangements are or contain a lease. However, the ASU also permits an entity to elect an optional transition practical expedient to not apply Topic 842 to land easements that exist or expired before the effective date of Topic 842 and that were not previously assessed under Topic 840. The ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, for (a) a public business entity, (b) a not-for-profit entity that has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market and (c) an employee benefit plan that files financial statements with the SEC. For all other entities, the ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. The ASU is effective immediately for entities that previously early adopted ASU 2016-02.

ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

This ASU allows entities to make a one-time reclassification from accumulated other comprehensive income to retained earnings for the effects of remeasuring deferred tax liabilities and assets originally recorded in other comprehensive income as a result of the change in the federal tax rate by the Tax Cut and Jobs Act. The ASU is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.

ASU 2018-03, Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825- 10): Recognition and Measurement of Financial Assets and Financial Liabilities

This ASU provides narrow-scope clarifying amendments to certain guidance in ASU 2016-01. For public business entities, ASU 2018-03 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years beginning after June 15, 2018. Public business entities with fiscal years beginning between December 15, 2017, and June 15, 2018, are not required to adopt ASU 2018-03 until the interim period beginning after June 15, 2018, and public business entities with fiscal years beginning between June 15, 2018, and December 15, 2018, are not required to adopt ASU 2018-03 before adopting ASU 2016-01. For all other entities, the effective date for ASU 2018-03 is the same as the effective date in ASU 2016-01.

This ASU expands the scope of Topic 718 to also address share-based payments for goods and services to nonemployees. The ASU is effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. For all other entities, the ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020.

ASU 2018-08, Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made

This ASU clarifies the scope and the accounting guidance for contributions received and contributions made. For transactions in which an entity is either a public business entity or a not-for-profit entity that has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market and serves as a resource:

  • Recipient, the entity should apply the amendments on contributions received to annual periods beginning after June 15, 2018, including interim periods within those annual periods.
  • Provider, the entity should apply the amendments on contributions made to annual periods beginning after December 15, 2018, including interim periods within those annual periods.

All other entities should apply the amendments for transactions in which the entity serves as the resource:

  • Recipient to annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019.
  • Provider to annual periods beginning after December 15, 2019, and interim periods within annual periods beginning after December 15, 2020.

ASU 2018-09, Codification Improvements

This ASU updates the Accounting Standards Codification for minor technical corrections and clarifications that are deemed necessary. The transition and effective date guidance in the ASU is based on the facts and circumstances of each amendment.

ASU 2018-10, Codification Improvements to Topic 842, Leases

This ASU clarifies and corrects unintended application of narrow aspects of the lease accounting guidance. For entities that early adopted Topic 842, the amendments are effective upon issuance of ASU 2018-10, and the transition requirements are the same as those in Topic 842. For entities that have not adopted Topic 842, the effective date and transition requirements for ASU 2018-10 are the same as the effective date and transition requirements in Topic 842.

ASU 2018-11, Leases (Topic 842): Targeted Improvements

This ASU (a) allows entities to initially apply ASC 842 at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption; and (b) provides a practical expedient under which lessors may elect, by class of underlying assets, to not separate nonlease components from the associated lease component. For entities that have not adopted Topic 842 before the issuance of ASU 2018-11, the effective date and transition requirements for the amendments related to separating components of a contract are the same as those in ASU 2016-02. For entities that have adopted Topic 842 before the issuance of ASU 2018-11, the practical expedient for separating components may be elected either in the first reporting period following the issuance of ASU 2018-11 or at the original effective date of Topic 842 for that entity.

ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement

This ASU removes, modifies and adds certain disclosure requirements of ASC Topic 820. The ASU is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans

This ASU removes, adds and clarifies certain disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The ASU is effective for fiscal years ending after December 15, 2020 for public business entities, and for fiscal years ending after December 15, 2021 for all other organizations.

ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force)

This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). ASU 2018-15 is effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. For all other entities, the ASU is effective for annual reporting periods beginning after December 15, 2020 and interim periods within annual periods beginning after December 15, 2021.

ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance Variable Interest EntitiesUnder the ASU, a private company (reporting entity) may elect not to apply variable interest entity guidance to legal entities under common control (including common control leasing arrangements) if both the parent and the legal entity being evaluated for consolidation are not public business entities. ASU 2018-17 also amends certain VIE guidance for related party arrangements. For entities other than private companies, ASU 2018-17 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The ASU is effective for a private company for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021.

Statement on Auditing Standards (SAS) 132, The Auditor’s Consideration of an Entity’s Ability to Continue as a Going Concern

Among other requirements, SAS 132 clarifies that the auditor’s objectives include separate determinations and conclusions with respect to (a) the appropriateness of management’s use of the going concern basis of accounting in the preparation of the financial statements; and (b) whether substantial doubt about an entity’s ability to continue as a going concern for a reasonable period of time exists, based on the audit evidence obtained. The SAS is effective for audits of nonissuer financial statements for periods ending on or after December 15, 2017 and reviews of interim financial information for interim periods beginning after fiscal years ending on or after December 15, 2017.