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On The Horizon: Determining IBR under ASC 842, Leases

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On the Horizon newsletterContents Current reporting issueFASB posts highlights from Jan. 23 meetingSEC resumes normal operationsIASB approves proposals to amend IFRS 17

Current reporting issue Grant Thornton has issued Snapshot 2019-01 focusing on how to determine the incremental borrowing rate under ASC 842, Leases.



FASB posts highlights from Jan. 23 meeting All decisions reached at Board meetings are tentative and may be changed at future meetings.

The FASB met on Jan. 23 to consider a proposed amendment to ASC 326, Financial Instruments – Credit Losses, and to redeliberate proposals related to income tax disclosures and the classification of debt.

The Board’s actions related to these topics are summarized below.

Credit losses – transition reliefThe Board tentatively decided to exclude debt securities classified as held-to-maturity from the scope of a proposed ASU that would permit targeted transition relief for ASC 326.

The Board directed the staff to draft this proposed ASU for vote by written ballot, with a comment period of 30 days.

See the Nov. 29 On the Horizon for a summary of the Board’s previous tentative decisions related to this proposal.  

Disclosure framework: disclosure review – income taxesThe FASB continued to redeliberate the proposed ASU, Income Taxes (Topic 740): Disclosure Framework – Changes to the Disclosure Requirements for Income Taxes, which included a discussion of stakeholder feedback on a draft of a revised proposed ASU.

The Board tentatively decided not to require an entity to disclose:

  • The amount of the transition tax liability resulting from the Tax Cuts and Jobs Act and the line item in the balance sheet where this liability is presented
  • A description of a legally enforceable agreement with a government, including the duration of the agreement, the commitments made with the government under that agreement, and the amount of benefit that reduces or may reduce the entity’s income tax burden

The Board directed the staff to perform outreach related to how entities might classify certain tax expense and taxes paid on foreign earnings.

Simplifying the balance-sheet classification of debtThe Board continued redeliberations on its project to simplify the balance-sheet classification of debt. No tentative decisions were made.



SEC resumes normal operationsThe SEC has resumed normal operations following the federal government shutdown. Announcements from the staffs of the Divisions of Corporation Finance and Investment Management explain that items will generally be addressed in the order in which they were received and include instructions for requesting expedited assistance. The announcements indicate that the staff may consider requests to accelerate the effectiveness of certain registration statements and explain that the staff will notify a registrant if they believe it is appropriate to amend a registration statement to include a delaying amendment.



IASB approves proposals to amend IFRS 17All decisions reached at IASB meetings are tentative and may be changed or modified at future meetings. Board decisions become final only after completion of a formal ballot to issue a new Standard or Interpretation or to publish an Exposure Draft.

The IASB voted in January to propose three targeted improvements to IFRS 17, Insurance Contracts, related to (1) recognizing insurance acquisition cash flows for certain renewals, (2) accounting for reinsurance contracts when the underlying insurance contracts are onerous, and (3) recognizing contractual service margin in profit or loss for contracts without direct participation features (that is, contracts to which the general model in IFRS 17 applies).

When issued by the Board, these proposals to amend IFRS 17 will be subject to public comment.

The IASB issued an Update summarizing these and other tentative decisions reached during its January public meeting at which the Board discussed the following topics:

  • Amendments to IFRS 17
  • Extractive activities
  • IFRS implementation issues
  • Proposed amendments to IAS 12, Income Taxes
  • Rate-regulated activities



© 2019 Grant Thornton LLP, U.S. member firm of Grant Thornton International Ltd. All rights reserved. This Grant Thornton LLP On the Horizon provides information and comments on current accounting and SEC reporting issues and developments. It is not a comprehensive analysis of the subject matter covered and is not intended to provide accounting or other advice or guidance with respect to the matters addressed in this publication. All relevant facts and circumstances, including the pertinent authoritative literature, need to be considered to arrive at conclusions that comply with matters addressed in this publication. For additional information on topics covered in this publication, contact a Grant Thornton client-service partner.