400 Meridian Street, Suite 201
Huntsville, AL 35801
256-539-8002
 |
 |
 |
 |
 |
 |
 |
 |
 |
Changes in Accounting Standards on the Horizon
Though very few new accounting standards will take effect in 2012, several major changes to financial reporting are in the works. Standards that are under development include changes to revenue recognition, accounting for leases, and accounting for financial instruments. These changes are due to the convergence of the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB).
The FASB/IASB joint project on revenue recognition is expected to create a common revenue recognition standard that would join US GAAP and IFRS and apply to all industries and transactions. The standard is expected to eliminate the transaction and industry specific revenue recognition guidance under US GAAP and improve comparability for revenue recognition across industries.
The FASB/IASB joint project on leases expects to address the US GAAP policy which results in off-balance sheet treatment of obligations by lessees and the criticism that US GAAP standards are overly complex and allow creative structuring of leases to avoid balance sheet recognition by lessees. Under the proposed standard, all leases would result in asset and liability recognition, except for possibly very short-term leases.
The FASB/IASB joint project on financial instruments intends to address all aspects of accounting for financial instruments including classification, measurement, impairment, presentation within comprehensive income, and hedging. All entities that have financial instruments would be affected by the proposed standard. However, the degree of impact would depend upon the significance of financial instruments to the entity’s operations and financial position as well as the entity’s business strategy.
Unfortunately, it is impossible to give comprehensive tax and accounting advice over the internet, no matter how well researched or written. Before relying on any information provided here, contact a tax or accounting professional to discuss your particular situation.