The document provides an overview of several recent accounting standards updates (ASUs) from the FASB, including ASUs on revenue recognition, going concern considerations, extraordinary items, consolidation, debt issuance costs, and leases. It summarizes the key changes and effective dates of each ASU. The ASUs aim to simplify accounting guidance and financial reporting requirements in various areas.

1. 1
*list of accounting standards updates presented
is not all inclusive. For a complete list of ASU’s,
refer to the FASB website

2. PRADEEP BUDHIRAJA, CPA
AUDIT AND ACCOUNTING PRINCIPAL, GUMBINER SAVETT
• Has helped startup companies in various industries
successfully navigate through the process of IPO
• Provides audit and financial reporting for SEC
registered and privately held entities and business
consulting. Clients include companies in the
technology, manufacturing and distribution, retail
and telecommunications industries
• Has worked at PwC India as a manager in assurance
and business advisory services
• Has also worked with GE India in their international
accounting services division
2

3. 3
ASU 2014-09
REVENUE FROM CONTRACTS WITH CUSTOMERS (TOPIC 606)
• What has changed?
• Eliminates transaction- and industry-specific revenue recognition guidance
under current GAAP
• Replaces it with a principle based approach for determining revenue
recognition
• Will require that companies recognize revenue based on the value of
transferred good or services as they occur in the contract
• Requires additional disclosure about the nature, amount, timing, and
uncertainty of revenue and cash flows arising from customer contracts,
including significant judgments and changes in judgments and assets
recognized from costs incurred to obtain or fulfill a contract

4. 4
ASU 2014-09
REVENUE FROM CONTRACTS WITH CUSTOMERS (TOPIC 606)
• When is this effective?
• For reporting periods beginning after December 15, 2017 for public
entities
• Early adoption permitted only as of annual reporting periods beginning
after December 15, 2016 (including interim reporting periods within that
reporting period)
• Entities will be able to transition to the standard either retrospectively or as
a cumulative-effect adjustment as of the date of adoption
• Nonpublic entities will have an additional year to adopt the new standard

5. 5
ASU 2014-15
PRESENTATION OF FINANCIAL STATEMENTS – GOING CONCERN (SUBTOPIC 205-10)
• What has changed?
• Provides guidance as to management’s responsibility to evaluate whether
there is substantial doubt about an entity’s ability to continue as a going
concern and to provide related footnote disclosures
• Entity’s management should evaluate whether there are condition or events
that raise substantial doubt about the entity’s ability to continue as a going
concern within one year after the date that the financial statements are
issued (or within one year after the date that the financial statements are
available to be issued)
• Management’s evaluation should be based on relevant conditions and
events that are known and reasonably knowable at the date that the financial
statements are issued (or available to be issued)
• Substantial doubt about an entity’s ability to continue as a going concern
exists when relevant conditions and events, considered in the aggregate,
indicate that it is probable that the entity will be unable to meet its obligations
as they become due within one year after the date that the financial
statements are issued (or are available to be issued)

6. 6
ASU 2014-15
PRESENTATION OF FINANCIAL STATEMENTS – GOING CONCERN (SUBTOPIC 205-10)
• When is this effective?
• For the annual period ending after December 15, 2016, and for annual
periods and interim periods thereafter
• Early application is permitted

7. 7
ASU 2015-01
INCOME STATEMENT – EXTRAORDINARY AND UNUSUAL ITEMS (SUBTOPIC 225-20)
• What has changed?
• Eliminates from GAAP the concept of extraordinary items.
• Subtopic 225-20, Income Statement – Extraordinary and Unusual Items, required that
an entity separately classify, present, and disclose extraordinary events and
transactions.
• Presently, an event or transaction is presumed to be an ordinary and usual activity of
the reporting entity unless evidence clearly supports its classification as an
extraordinary item.
• Paragraph 225-20-45-2 contains the following criteria that must both be met for
extraordinary classification:
• Unusual nature: The underlying event or transaction should possess a high degree
of abnormality and be of a type clearly unrelated to, or only incidentally related to, the
ordinary and typical activities of the entity, taking into account the environment in
which the entity operates,
• Infrequency of occurrence: The underlying event or transaction should be of a type
that would not reasonably be expected to recur in the foreseeable future, taking into
account the environment in which the entity operates.
• If an event or transaction meets the criteria for extraordinary classification, an
entity is required to segregate the extraordinary item from the results of ordinary
operations and show the item separately in the income statement, net of tax, after
income from continuing operations.
• Entity also is required to disclose applicable income taxes and either present or
disclose earnings-per-share data applicable to the extraordinary item.

8. 8
ASU 2015-01
INCOME STATEMENT – EXTRAORDINARY AND UNUSUAL ITEMS (SUBTOPIC 225-20)
• When is it effective?
• For fiscal years, and interim periods within those fiscal years, beginning after
December 15, 2015
• A reporting entity may apply the guidance prospectively
• Also may apply the guidance retrospectively to all prior periods presented
in the financial statements.
• Early adoption is permitted provided that the guidance is applied from the
beginning of the fiscal year of adoption

9. 9
ASU 2015-02
CONSOLIDATION (TOPIC 810)
• What has changed?
• Changes the guidance with respect to the analysis that a reporting entity
must perform to determine whether it should consolidate certain types of
legal entities
• All legal entities are subject to reevaluation under the revised consolidation
mode
• Affects the following areas:
• limited partnerships and similar legal entities
• evaluating fees paid to a decision maker or a service provider as a
variable interest
• the effect of fee arrangements on the primary beneficiary determination
• the effect of related parties on the primary beneficiary determination
• certain investment funds.

10. 10
ASU 2015-02
CONSOLIDATION (TOPIC 810)
• When is this effective?
• Effective for public business entities for fiscal years, and for interim periods
within those fiscal years, beginning after December 15, 2015.
• Early adoption is permitted, including adoption in an interim period.
• If an entity early adopts the guidance in an interim period, any adjustments
should be reflected as of the beginning of the fiscal year that includes that
interim period.
• A reporting entity may apply the amendments in this guidance using a
modified retrospective approach by recording a cumulative-effect adjustment
to equity as of the beginning of the fiscal year of adoption.
• A reporting entity also may apply the amendments retrospectively.
• Nonpublic entities will have additional one year to adopt the new standard.

11. 11
ASU 2015-03
INTEREST- IMPUTATION OF INTEREST (SUBTOPIC 835-30)
• What has changed?
• Simplifies the presentation of debt issuance costs and requires that debt
issuance costs related to a recognized debt liability be presented in the
balance sheet as a direct deduction from the carrying amount of that debt
liability, consistent with debt discounts.
• The recognition and measurement guidance for debt issuance costs are not
affected by the new guidance.
• An entity is required to apply the new guidance on a retrospective basis,
wherein the balance sheet of each individual period presented is adjusted to
reflect the period-specific effects of applying the new guidance
• Upon transition, an entity is required to comply with the applicable
disclosures for a change in an accounting principle.
• These disclosures include the nature of and reason for the change in
accounting principle, the transition method, a description of the prior-
period information that has been retrospectively adjusted, and the effect of
the change on the financial statement line items (i.e., debt issuance cost
asset and the debt liability).

12. 12
ASU 2015-03
INTEREST- IMPUTATION OF INTEREST (SUBTOPIC 835-30)
• When is this effective?
• Effective for financial statements of public entities issued for fiscal years
beginning after December 15, 2015, and interim periods within that fiscal
year.
• Early adoption is permitted for financial statements that have not been
previously issued.
• For nonpublic entities, the amendments in this ASU are effective for financial
statements issued for fiscal years beginning after December 15, 2015, and
interim periods within fiscal years beginning after December 15, 2016.

13. 13
ASU 2015-17
INCOME TAXES (TOPIC 740): BALANCE SHEET CLASSIFICATION OF DEFERRED TAXES
• What has changed?
• To simplify the presentation of deferred income taxes, the amendments in
this update require that deferred tax liabilities and assets be classified as
noncurrent in a classified statement of financial position
• The amendments in this update apply to all entities that present a classified
statement of financial position

14. 14
ASU 2015-17
INCOME TAXES (TOPIC 740): BALANCE SHEET CLASSIFICATION OF DEFERRED TAXES
• When is this effective?
• Effective for financial statements issued for annual periods beginning after
December 15, 2016, and interim periods within those annual periods
• Earlier application is permitted as of the beginning of an interim or annual
reporting period

15. 15
ASU 2015-05
INTANGIBLES-GOODWILL AND OTHER- INTERNAL-USE SOFTWARE (SUBTOPIC 250-40):
CUSTOMER’S ACCOUNTING GEES PAID IN A CLOUD COMPUTING ARRANGEMENT
• What has changed?
• The amendments in this Update provide guidance to customers about
whether a cloud computing arrangement includes a software license
• If a cloud computing arrangement includes a software license, then the
customer should account for the software license element of the
arrangement consistent with the acquisition of other software licenses
• If a cloud computing arrangement does not include a software license, the
customer should account for the arrangement as a service contract. The
guidance will not change GAAP for a customer’s accounting for service
contracts

16. 16
ASU 2015-05
INTANGIBLES-GOODWILL AND OTHER- INTERNAL-USE SOFTWARE (SUBTOPIC 250-40):
CUSTOMER’S ACCOUNTING GEES PAID IN A CLOUD COMPUTING ARRANGEMENT
• When is this effective?
• For public business entities, the amendments will be effective for annual
periods, including interim periods within those annual periods, beginning
after December 15, 2015
• For all other entities, the amendments will be effective for annual periods
beginning after December 15, 2015, and interim periods in annual periods
beginning after December 15, 2016
• Early adoption is permitted for all entities
• An entity can elect to adopt the amendments either:
• prospectively to all arrangements entered into or materially modified after
the effective date
• retrospectively

17. 17
ASU 2016-02
LEASES (TOPIC 842)
• What has changed?
• requires lessee recognition on the balance sheet of a right-of-use asset and
a lease liability, initially measured at the present value of the lease payments
• requires recognition in the income statement of a single lease cost,
calculated so that the cost of the lease is allocated over the lease term on a
generally straight-line basis
• requires classification of all cash payments within operating activities in the
statement of cash flows
• When is this effective?
• For fiscal years commencing after December 15, 2018
• Early adoption is permitted
• Nonpublic entities will have additional one year to adopt the new standard

18. 18
ASU 2015-05
INTANGIBLES-GOODWILL AND OTHER (TOPIC 350); BUSINESS COMBINATIONS (TOPIC
805); CONSOLIDATION (TOPIC 810); DERIVATIVES AND HEDGING TOPIC (TOPIC 815)
• What has changed?
• Removes the effective dates for all of the Private Company Council (PCC)
accounting alternatives, making them effective immediately and indefinitely
• Also provides an unconditional one-time option to forgo a preferability
assessment the first time a PCC accounting alternative is elected
• When is this effective?
• Immediately

19. 19
ASU 2016-07
INVESTMENTS-—EQUITY METHOD AND JOINT VENTURES (TOPIC 323)
• What has changed?
• Simplifies the Transition to the Equity Method of Accounting, which is part of
the FASB Simplification Initiative to identify specific areas of U.S. GAAP for
which cost and complexity can be reduced while maintaining or improving
the usefulness of the information provided
• Eliminates the current requirement for retroactive adjustment
• Previously, when an investment qualified for use of the equity method as a
result of an increase in the level of ownership interest or degree of
influence, retroactive adjustment was required on a step-by-step basis as
if the equity method had been in effect during all previous periods that the
investment had been held
• This change was in response to constituents' views that retroactive
adjustment, which can be costly and complex, does not provide a clear
benefit to users of financial statements

20. 20
ASU 2016-07
INVESTMENTS-—EQUITY METHOD AND JOINT VENTURES (TOPIC 323)
• When is this effective?
• Effective for all entities for fiscal years, and for interim periods within those
fiscal years, beginning after December 15, 2016 (i.e., calendar-year 2017)
• Early adoption is allowed
• Amended guidance should be applied prospectively to increases in the level
of ownership interest or degree of influence that result in the adoption of the
equity method

21. p. 310.828.9798
e.
pbudhiraja@gscpa.com
21

22. 22
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