United States

Rescission of certain SEC guidance on revenue recognition and derivatives

FINANCIAL REPORTING INSIGHTS  | 

The Financial Accounting Standards Board (FASB) recently issued Accounting Standards Update (ASU) 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting. Per ASU 2016-11, as a result of the issuance of ASU 2014-09, Revenue from Contracts with Customers (Topic 606), the SEC staff is rescinding the following SEC Staff Observer comments, effective upon adoption of Topic 606:

  • “Revenue and Expense Recognition for Freight Services in Process,” which is codified in FASB Accounting Standards Codification (ASC) paragraph 605-20-S99-2
  • “Accounting for Shipping and Handling Fees and Costs,” which is codified in ASC paragraph 605-45-S99-1
  • “Accounting for Consideration Given by a Vendor to a Customer (Including Reseller of the Vendor’s Products),” which is codified in ASC paragraph 605-50-S99-1
  • “Accounting for Gas-Balancing Arrangements,” which is codified in ASC paragraph 932-10-S99-5

Also, per ASU 2016-11, as a result of the amendments in ASU 2014-16, Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity (a consensus of the FASB Emerging Issues Task Force), the SEC staff is rescinding its SEC Staff Announcement, “Determining the Nature of a Host Contract Related to a Hybrid Instrument Issued in the Form of a Share under Topic 815,” which is codified in ASC paragraph 815-10-S99-3, to coincide with the effective date of ASU 2014-16.