The Financial Accounting Standards Board (FASB) just released guidance as part of Accounting Standards Update 2016-15—Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force). The FASB has been focused on the overall utility and presentation of the cash flow statement and continues to provide changes to enhance its usefulness.
The FASB has identified diversity in practice on the classification of several items and has provided specific guidance on how to handle certain transactions to ensure continued comparability and uniformity in the cash flow statement.
Debt Prepayment or Debt Extinguishment Costs
Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing
Contingent Consideration Payments Made after a Business Combination
Proceeds from the Settlement of Insurance Claims
Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned Life Insurance Policies
Distributions Received from Equity Method Investees
Beneficial Interests in Securitization Transactions and Separately Identifiable Cash Flows
Application of the Predominance Principle
While most entities will have some time to adopt these changes, once again the FASB is permitting early adoption before periods beginning after December 15, 2017 for public entities or December 31, 2018 for non-public entities. In the period of adoption, the entity will be required to restate its financial statements for all periods presented to conform to the new guidance.
You’ve heard our thoughts… We’d like to hear yours
The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].
Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.
This site uses cookies to ensure that we give you the best user experience. Cookies assist in navigation, analyzing traffic and in our marketing efforts as described in our Privacy Policy.