The deposit asset or liability should be remeasured at subsequent financial reporting dates by calculating the effective yield on the deposit to reflect actual payments to date and expected future payments. In addition to cookies that are strictly necessary to operate this website, we use the following types of cookies to improve your experience and our services: Functional cookies to enhance your experience (e.g. 2014-09 will amend FASB Accounting Standards Codification® (ASC) by creating Topic 606, Revenue from Contracts with Customers and Subtopic 340-40, Other Assets and Deferred Costs—Contracts with Customers. (ASC 340-40-25-1 through 25-4 and ASC 340-40-35-1) Certain costs of obtaining a contract may need to be capitalized and amortized. Before Surgery. The financial statement disclosures that shall be made about advertising. According to ASC 340, these costs can be capitalized only if the costs are recoverable — the customer will pay for it as the contract is fulfilled over the period — and incremental — they arise only if the contract is signed. Terms of service • Privacy policy • Editorial independence, Get unlimited access to books, videos, and. specified in ASC 940-340-25-1(b) • Federal Home Loan Bank and Federal Reserve Bank stock In this publication, we refer to equity securities and other ownership interests that are in the scope of the new ASC 321 guidance as equity investments. • Entities that applied ASC 340-10 by analogy should evaluate their NRE costs : under the fulfillment cost guidance in ASC 340-40 upon adoption of the ASU. The entity applies ASC 340-10 by analogy or applies ASC 605-35 or ASC 350-40. Because the new law was enacted before December 31, 2017, companies were required to include the tax effects of reform in their financial statements for the period through December 31, 2017. • Gate 2 –Does the mechanism meet the 3 criteria of ASC 980-605-25-4 −Established by an order w/automatic rate adjustment • This is not your traditional ASC 980-340 probability model −Amount of additional revenues are objectively determinable −Additional revenues must … We believe the entity needs to perform a thorough analysis of the facts and circumstances to determine whether ASC 340-40 applies. Adoption of ASC 340-40, Other Assets and Deferred Costs - Contracts With Customers. Effective date. The Property, plant, equipment and other assets guide discusses the accounting for acquisition transactions determined to be asset acquisitions under US GAAP. 2.2 Transactions Within the Scope of ASC 805-10, ASC 805-20, and ASC 805-30 11 2.2.1 Roll-Up or Put-Together Transactions 12 2.2.2 Combinations Between Two or More Mutual Entities 12 2.2.3 True Mergers or Mergers of Equals 13 2.2.4 Multiple Arrangements With a … Eye 35 ASC. This is the Cyclone about 3 miles away from TMI that doubles as a Fire siren. Generally, G&A costs are expensed as incurred and are not included in contract costs, except: • To the extent they are considered allowable costs for government contracts. The deposit asset or liability should be remeasured at subsequent financial reporting dates by calculating the effective yield on the deposit to reflect actual payments to date and expected future payments. Box 5116 Norwalk, CT 06856 -5116 ... We believe it is appropriate to apply the guidance in ASC 340-40 if costs relate to a contract with a customer and are not within the scope of other authoritative literature, such as ASC 730, Research ASC 840 is the previous lease accounting standard governing companies that file under US Generally Accepted Accounting Principles (US GAAP). While the easy solution is for companies to expense advertising as it is incurred, both the IRS and FASB say in some circumstances it should be capitalized. accordance with guidance in ASC 340 on prepaid assets or other relevant guidance. Per ASC 340-20-15-4: The ASU addresses the accounting for implementation costs paid by a customer in a cloud computing arrangement (CCA) that’s a service contract. In the time since FASB passed the new accounting standard ASC 842 in 2016, the organization has issued periodic updates to the codification for generally accepted accounting principles (GAAP). ASC 340, Other Assets and Deferred Costs, contains four subtopics.The first, ASC 340‐10, Overall, provides guidance on certain deferred costs and prepaid expenses.The second, ASC 340‐20, Capitalized Advertising Costs, provides guidance on the initial measurement, amortization, realizability, and disclosure of direct response advertising costs reported as assets. Preproduction Costs Related to Long-Term Supply Arrangements, Insurance contracts that do not translate insurance risk. ASC 606 provides a robust framework for recognizing revenue, and upon its … The guidance in ASC 606 and ASC 340-20 is effective for public entities for annual reporting periods beginning after December 15, 2017, including interim periods within those years. ASC 606 and ASC 340-40. Costs incurred for integration with on-premise software, coding and configuration or customization are capitalized as intangible assets. Provide an overview of disclosure requirements. The guidance in this Subtopic is limited to a discussion of the nature of prepaid expenses and preproduction costs related to long-term supply arrangements. 2 Before applying ASC 340-40, manufacturers should first evaluate whether costs are within the scope of existing U.S. GAAP, such as ASC 330, Inventory, ASC 360, Property, Plant, and Equipment, or ASC 350-40, Internal Use Software. FASB ASC 606-10-25-1(e) and 606-10-55-3(a) through 55-3(c) One of the required criteria in FASB ASC 606-10-25-1 is that it be probable that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer to be In November 2007, Thailand announced the intention to buy two S 100B AEW aircraft from the Swedish Air Force. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Variants Saab 340B AEW / S 100B Argus (FSR-890) Erieye, for the Thai Air Force. In the time since FASB passed the new accounting standard ASC 842 in 2016, the organization has issued periodic updates to the codification for generally accepted accounting principles (GAAP). ASC seeks comments on Lease Liability in a Sale and Leaseback. Entities that determine when adopting the new revenue standard that ASC 340-40 applies should use the ASC 606 transition guidance to account ASC 340 comprises four Subtopics (Overall, Capitalized Advertising Costs, Insurance Contracts that Do Not Transfer Insurance Risk, and Other Assets and Deferred Costs — Contracts With Customers). Advertising Costs. ASC 340-40 allows companies to capitalize some contract fulfillment costs. Nonpublic entities are required to apply the guidance in annual periods beginning after December 15, 2018 and in interim periods beginning after December 15, 2019. ASC 340‐10 provides guidance on certain deferred costs and prepaid expenses. ASC 350-20-35-31 requires that goodwill be tested for impairment only after the carrying amounts of the other assets of the reporting unit, including the long-lived assets covered by ASC 360-10-35-27, have been tested for impairment under other applicable accounting guidance. ASC 340-20 provides guidance on capitalized advertising costs and notes the following: Specifically, for direct-response advertising that may result in reported assets, this Subtopic provides guidance on: ASC 340-30 notes the following in regards to the guidance in this Subtopic: This Subtopic provides guidance on how to apply the deposit method of accounting when it is required for insurance and reinsurance contracts that do not transfer insurance risk. Incremental costs of obtaining a contract with a customer. • Diversity in practice will continue Business Combinations Business Combinations — SEC Reporting Considerations Carve-Out Transactions Comparing IFRS Standards and U.S. GAAP Consolidation — Identifying a Controlling Financial Interest Contingencies, Loss Recoveries, and Guarantees Contracts on an Entity's Own Equity Convertible Debt Current Expected Credit Losses Debt Distinguishing Liabilities From Equity Earnings … The guide also discusses the capitalization of costs, such as construction and development costs and software costs, as well as the subsequent accounting for PP&E, including impairments, depreciation and amortization, and asset … Any costs for business process ASC 340 comprises four Subtopics (Overall, Capitalized Advertising Costs, Insurance Contracts that Do Not Transfer Insurance Risk, and Other Assets and Deferred Costs — Contracts With Customers). Below is an overview of each Subtopic. The FASB’s new model, codified in ASC 606, Revenue from contracts with customers, applies to a company's contracts with customers, except for contracts that are within the scope of other standards (e.g., leases, insurance, financial instruments). The guidance in ASC 340-10 is limited to a discussion of the nature of prepaid expenses and guidance for preproduction costs related to long-term supply arrangements. 2:10 - 3:30. This Topic comprises four Subtopics (Overall, Capitalized Advertising Costs, Insurance Contracts that Do Not Transfer Insurance Risk, and Other Assets and Deferred Costs — Contracts With Customers). Do you accept the terms? A guide to revenue recognition assists middle-market companies in applying the new revenue recognition model in Topic 606, “Revenue from Contracts with Customers,” of the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC). As the deadline for implementation of ASC No. Post navigation. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. The specific costs in each of these categories are listed in the following table and are discussed in detail throughout the article. An insurance or reinsurance contract that transfers only significant timing risk. ASC Codification Topic 310: Receivables : ASC Codification Topic 320: Investments-Debt and Equity Securities: ASC Codification Topic 323: Investments-Equity Method and Joint Ventures: ASC Codification Topic 325: Investments-Other : ASC Codification Topic 330: Inventory : ASC Codification Topic 340: Other Assets and Deferred Costs Public business and certain other entities* Other entities that had not issued or made available for issuance financial statements as of June 3, 2020** The Bottom Line • In May 2014, the FASB and the International Accounting Standards Board (IASB ®) issued their final standard on revenue from contracts with customers. In the case of non-contractual liability, the Union shall, in accordance with the general principles common to the laws of the Member States, make good any damage caused by its institutions or by its servants in the performance of their duties. Speak with a patient counselor to discuss questions and concerns, verify insurance coverage, and confirm date/time of your surgery appointment. ASC 340, Other Assets and Deferred Costs, contains three subtopics: The guidance in ASC 340-10 is limited to a discussion of the nature of prepaid expenses and guidance for preproduction costs related to long-term supply arrangements. This may be a significant change for many companies who expensed those costs as incurred under ASC 605. Previous. Provide a foundational understanding of identifying costs to be capitalized under ASC 340-40. The standard, issued as ASU 2014-09. In 2019, the latest FASB standard on lease accounting, ASC 842 (ASU 2018-11), went into effect for most public companies. Grant Thornton’s Accounting Principles Group has released an update of its comprehensive guide on the ASC 606 and ASC 340-40 revenue standard called Revenue from Contracts with Customers—Navigating the Guidance in ASC 606 and ASC 340-40. The final ASU is expected to give nonpublic entities the option of adopting the revenue recognition standard (FASB ASC Topic 606, Revenue From Contracts With Customers) on the current implementation date or deferring implementation for one year. differences that will be discussed later in this brief.FASB ASU No. Capitalized Advertising Costs, ASC 340. accta December 15, 2015 November 30, 2018 U.S. GAAP by Topic. FASB ASC 340-40-25-2 further defines incremental costs of obtaining a contract are those costs that an entity 340-30 Insurance Contracts that Do Not Transfer Insurance Risk, 340-40 Other Assets and Deferred Costs — Contracts With Customers, FASB Accounting Standards Codification Manual, SEC Rules & Regulations (Title 17 — Commodity and Securities Exchanges), Trust Services Principles, Criteria, and Illustrations, Principles and Criteria for XBRL-Formatted Information, Audit and Accounting Guides & Audit Risk Alerts, Other Publications, Press Releases, and Reports, Dbriefs Financial Reporting Presentations, Business Combinations — SEC Reporting Considerations, Consolidation — Identifying a Controlling Financial Interest, Contingencies, Loss Recoveries, and Guarantees, Environmental Obligations and Asset Retirement Obligations, Equity Method Investments and Joint Ventures, Equity Method Investees — SEC Reporting Considerations, Foreign Currency Transactions and Translations, Guarantees and Collateralizations — SEC Reporting Considerations, Impairments and Disposals of Long-Lived Assets and Discontinued Operations, Multiple-Element Arrangements — A Roadmap to Applying the Revenue Recognition Guidance in ASU 2009-13, Qualitative Goodwill Impairment Assessment — A Roadmap to Applying the Guidance in ASU 2011-08, SEC Comment Letter Considerations, Including Industry Insights, Software Revenue Recognition — A Roadmap to Applying ASC 985-605, Transfers and Servicing of Financial Assets, Roadmaps Currently Available Only as a PDF. The upgraded Saab 340 AEW-300 aircraft, are planned to enter service by 2009. Accounting Standards Update 2017-04—Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment By clicking on the ACCEPT button, you confirm that you have read and understand the FASB Website Terms and Conditions. ASC amends SFRS(I)s and FRSs on Interest Rate Benchmark Reform—Phase 2. When implementing ASC 340-40, companies should first assess whether the cost in question is covered by other guidance. Welcome to the Deloitte Accounting Research Tool (DART)! Costs incurred in fulfilling a contract with a customer that are not in the scope of another Topic. ASC 842 Leases Impact on lessee’s key performance indicators for operating leases KPIs Effect of ASC 842 (operating leases) Increase (because most leases previously accounted for as operating leases will now be on balance sheet) Gearing (Debt to Equity Ratio) Liabilities/Equity Remains unchanged (because lease expense New leases standard You must log in{"id":"id-0bbb2a25-2dc6-47ab-8a96-b78991a53f6d","action":"login-q3j74v"} to view this content and have a subscription package that includes this content. ASC 730-20-25-5 states that “[i]f those conditions suggest that it is probable that the entity will repay any of the funds regardless of the outcome of the research and development, there is a presumption that the entity has an obligation to repay the other parties.” Further, such a … THE MOST FORMIDABLE BARRIER A COMPANY Welcome to EY.com. An insurance or reinsurance contract that transfers only significant underwriting risk. These Accounting Standards Updates (ASUs) include practical expedients that have been created to simplify ASC 842 transition requirements.. As we mentioned in our blog on lease data … An insurance or reinsurance contract with an indeterminate risk. EY, Financial Reporting Developments: “Revenue from contracts with customers.” October 2018. Exercise your consumer rights by contacting us at donotsell@oreilly.com. ASC 340‐10 provides guidance on certain deferred costs and prepaid expenses. All rights reserved. What to Expect. The term authoritative includes all level AD GAAP that has been issued by a standard setter. Key Areas and Examples ASC 340-40 also includes guidance for recognizing costs incurred in fulfilling a contract that are not in the scope of another ASC topic (i.e., inventory, property, plant, equipment). ey.com . Accounting for Loans with Deteriorated Credit Quality All software and software-as-a-service companies; Relevant dates. The FASB Accounting Standards Codification simplifies user access to all authoritative U.S. generally accepted accounting principles (GAAP) by providing all the authoritative literature related to a particular Topic in one place. ASC 340-40 notes the following in regards to the guidance in this Subtopic: This Subtopic provides accounting guidance for the following costs related to a contract with a customer within the scope of Topic 606 on revenue from contracts with customers: Copyright © 2020 Deloitte Development LLC. Loan and pool level examples are included to demonstrate the effects of the accounting quarter over quarter. Under Accounting Standards Codification (ASC) 605, companies have the option to treat these incremental costs as expenses or to capitalize (and subsequently amortize) them. The Overall Subtopic addresses the accounting and reporting for certain deferred costs and prepaid expenses. The commission accounting standard has been in effect for public companies since December 2017. Within ASC 606 is a sub-chapter titled ASC 340-40-25 that prescribes how the costs related to obtaining a contract should be capitalized. The term authoritative includes all level AD GAAP that has been issued by a standard setter. 2014-09, Revenue from Contracts with Customers (Topic 606), approaches, the time to begin planning for implementation is now. ASC 340-20, Capitalized Advertising Costs, which provides guidance on the initial measurement, amortization, realizability, and disclosure of direct response advertising costs reported as assets. ASC 340-40-25-3 further explains that costs to obtain a contract that would have been incurred regardless of whether the contract was obtained should be recognized as an expense when incurred, unless those costs are explicitly chargeable to the customer regardless of … As FRSs are based on International Financial Reporting Standards (IFRS Standards) issued by the International Accounting Standards Board and the copyright to IFRS Standards is owned by the IFRS Foundation, permission to use FRSs for any other purpose is required from the ASC and the IFRS Foundation with regard to FRSs and IFRS Standards, respectively. Below is an overview of each Subtopic. An Amendment of the FASB Accounting Standards Codification® No. An insurance or reinsurance contract that transfers neither significant timing nor significant underwriting risk. Those costs incurred for data conversion and training are expensed as incurred. 30 Insurance Contracts That Do Not Transfer Insurance Risk, 940 Financial Services—Brokers and Dealers, How such assets shall be measured initially, How the amounts ascribed to such assets shall be amortized, How the realizability of such assets shall be assessed. PwC's in-depth accounting guidance for topics of significant interest. Next. As a part of Accounting Standards Update (ASU) 2014-09, ASC 340-40 Other Assets … Ms. Susan M. Cosper Technical Director Financial Accounting Standards Board 401 Merritt 7 P.O. Other entities, including private companies, were granted a later adoption date, which has now been extended to years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. Therefore, four possible categories for deposit arrangements have been identified as follows: ASC 340-40 was added by ASU 2014-09, Revenue From Contracts With Customers, which is not effective until fiscal years beginning after December 15, 2017 (see ASC 606, Revenue From Contracts With Customers, for the full effective date information). KPMG, Handbook: “Revenue Recognition.” November 2018. ASC 340, Other Assets and Deferred Costs, contains three subtopics: ASC 340-10, Overall, which provides guidance on certain deferred costs and prepaid expenses. If no other U.S. GAAP applies, manufacturers should apply ASC 340-40, which requires the following: Comparison between U.S. GAAP and IFRS Standards 2 Introduction – International standards and the Board © 2019 Grant Thornton LLP The specific guidance for many other deferred costs is included in various other areas of the Codification. What if we still intend to utilize the software for the duration of … On August 29, 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2018-15 Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract.. 2. for new debt or as a discount or immediate expense under the debt modification guidance in ASC 470-50, 3. with the increase in fair value considered a Day 1 outflow in the 10% cash ASC Codification Topic 310: Receivables : ASC Codification Topic 320: Investments-Debt and Equity Securities: ASC Codification Topic 323: Investments-Equity Method and Joint Ventures: ASC Codification Topic 325: Investments-Other : ASC Codification Topic 330: Inventory : ASC Codification Topic 340: Other Assets and Deferred Costs Scope and Scope Exceptions. The costs of going public can be separated into four main categories; Pre-IPO direct costs, pre-IPO indirect costs, post-IPO one-time costs and post-IPO recurring costs. May 2018 (Updated June 2019) Download the guide. ASC 805: Applies to business combinations with an acquisition date on or after the beginning of the first annual Private companies will follow starting January 1, 2020. EXECUTIVE SUMMARY THE QUESTION OF WHEN TO CAPITALIZE ADVERTISING costs has long presented a problem for CPAs. FAS ASC 310-30, when it should be applied, how it should be applied, and provide best practices on implementation. ASC 340-40 states the following: The incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained (for example, a sales commission). Section 15. ASC 340-10 will continue to apply such guidance upon adoption of the ASU. All entities may early adopt the new guidance, but not before annual reporting periods beginning after December 15, 2016. When it comes to ASC 740, here are 5 things you need to know: Tax reform impacts all companies, regardless of size, industry or ownership structure. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Key Differences Between ASC 605-35 (Formerly SOP 81-1) and ASC 606. 1 (and codified in ASC 606) by the FASB and as IFRS 15. The deadline for private companies to implement is December 2018. ASC 340-10 notes the following: The transfer of insurance risk requires transferring both timing risk and underwriting risk. ASC 340-10-S99-1 • To issue or modify debt — as a debt issuance cost or a discount under ASC 470. O’Reilly members experience live online training, plus books, videos, and digital content from 200+ publishers. I just happened to be driving by with my radio and heard the call, so I … We recommend you to carefully evaluate … PwC’s Revenue from contracts with customers guide addresses each step of the five-step revenue recognition model, along with other practical application matters.. Download to your iPad. 340-10 Overall. The FASB Accounting Standards Codification simplifies user access to all authoritative U.S. generally accepted accounting principles (GAAP) by providing all the authoritative literature related to a particular Topic in one place. FASB ASC 805: Business Combinations describes the proper accounting treatment to be used by an acquirer in business combinations . ASC 340-40-50-2 to 50-3; ASU 2014-09: “Revenue from Contracts with Customers.” BC336, BC338-BC340. To download the guide onto an iPad, please open the PDF.Once open, click on the Action button, which appears as a square icon with an upwards pointing arrow. © 2020, O’Reilly Media, Inc. All trademarks and registered trademarks appearing on oreilly.com are the property of their respective owners. The sentence in ASC 350-40-35-1 about "Costs of developing or modifying internal-use computer software significantly exceed the amount originally expected to develop or modify the software" it particularly worrisome. Provide a foundational understanding of how to amortize incremental contract costs. Sync all your devices and never lose your place. Under the revised portion of ASC 340, that option no longer exists, and these costs are to be recognized as assets and amortized. “Direct-response advertising activities exclude advertising that, though related to the direct-response advertising, is directed to an audience that could not be shown to have responded ... Take O’Reilly online learning with you and learn anywhere, anytime on your phone and tablet. ASC’s new Variance Requests (VR) process, which gives greater opportunity for stakeholders such as local communities and NGOs to contribute to decisions on local variances to ASC standards, has now… Read more First kelp and hiziki seaweed farms achieve ASC-MSC certification Preparation for the new Revenue Recognition Standard (ASC 606 / IFRS 15) has taken on greater urgency. Get Wiley GAAP 2015: Interpretation and Application of Generally Accepted Accounting Principles 2015 now with O’Reilly online learning. Financial Accounting Standards oard (“FAS”) ASC 340-40-25-1 states that an entity should recognize an asset for the incremental costs of obtaining a contract with a customer if the entity expects to recover those costs. G&A Expenses. This guide: Summarizes the new five-step revenue model and implementation guidance Article 340 (ex Article 288 TEC) The contractual liability of the Union shall be governed by the law applicable to the contract in question. 2019-06 May 2019 Intangibles—Goodwill and Other (Topic 350), Business Combinations (Topic 805), and Not-for-Profit Entities (Topic 958) The specific guidance for many other costs that have been deferred is included in various other financial, broad, and industry Topics. ASC amends SFRS(I) 17 and FRS 117 and defers effective date to 1 January 2023. ASC seeks comments on Business Combinations under Common Control. Section 10. Arrange for a friend or family member to accompany you to Eye 35 ASC. ASC 842 replaced ASC 840 for public companies starting on January 1, 2019. 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