Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski, and I’m here today with Ryan Istre, an audit director and a member of the PKF Texas SEC team. Ryan, welcome back to the Playbook.

Ryan: Thanks, Jen. Appreciate it.

Jen: So, I’ve heard FASB is making some changes to share-based payment accounting. What do public companies need to know about this?

Ryan: Changes to the share-based payment accounting is happening pretty soon. A lot of companies will issue share-based payments to some of their employees, sometimes they’ll issue it to some of their consultants, and in the past, the accounting for those two may differ significantly.

Jen: It seems like that would be a little bit confusing to companies.

Ryan: It could be. The FASB issued this new standard to try to simplify the problem of divergent accounting. Now, one of the items, for example, that’s going to change with the new rules is that the point in time when you have to measure and the amount that you have to measure the compensation at, was different if it was a non-employee versus an employee. And historically it was at the commitment date, and now it’s going to be at the grant date of the actual share-based payment, so that’s going to bring the two in line and make it a little bit simpler for companies to apply.

Jen: Sounds good. Now when is this actually going to be effective?

Ryan: For most public companies, it’s going to be effective starting January 1, 2019, but an earlier option is permitted.

Jen: And what do they need to do to get ready for that?

Ryan: They just need to assess how much share-based payments they issue to non-employees and determine whether it benefits them to early adopt or to wait until the normal adoption date.

Jen: Perfect, sounds good. Well, we’ll get you back to talk about some public company information.

Ryan: Sure.

Jen: For more about this topic, visit This has been another Thought Leader production brought to you by PKF Texas The Entrepreneur’s Playbook. Tune in next week for another chapter.

As part of its Disclosure Effectiveness Initiative of the Division of Corporation Finance, the SEC, in Final Rulemaking Release No. 33-10532, Disclosure Update and Simplification, has adopted amendments to certain of its disclosure requirements that are redundant or outdated or that overlap with, or have been superseded by, other SEC disclosure requirements — disclosures required by United States generally accepted accounting principles (“U.S. GAAP”) or those required by International Financial Reporting Standards (“IFRS”). The objective of the amendments is to facilitate disclosure of information to investors and to simplify compliance without significantly altering the total mix of information provided.

The amendments are also in response to a provision of the Fixing America’s Surface Transportation Act (FAST Act), which mandates the SEC to eliminate provisions of Regulation S-K that are no longer deemed necessary.

“It is important to review our regulations to ensure that they evolve along with our capital markets and remain effective and efficient,” said SEC Chairman Jay Clayton. “Today’s amendments are an example of how thoughtful reviews can prompt changes for the benefit of investors, public companies, and our capital markets.”

Additionally, the SEC is referring to the Financial Accounting Standards Board (“FASB”) for potential incorporation into U.S. GAAP certain disclosure requirements that overlap with U.S. GAAP but that call for incremental information. For the time being, pending subsequent action by the FASB, such incremental disclosures are being retained. The SEC has requested, however, that, within the ensuing 18 months, the FASB determine whether (and which of) the referred disclosure items will be added to its standard-setting agenda. The SEC notes that the incorporation of any of its incremental disclosure requirements into U.S. GAAP could potentially affect all entities that prepare financial statements in accordance with U.S. GAAP, including Regulation A issuers, smaller reporting companies, and non-public entities.

Continue Reading SEC Amends Rules to Eliminate Redundant, Overlapping and Outdated Disclosures

The Financial Accounting Standards Board (“FASB”) recently issued Accounting Standards Update (“ASU”) No. 2018-11 with targeted improvements to ASC Topic 842, Leases, to (1) add an optional transition method that would permit entities to apply the new requirements by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the year of adoption, and (2) provide a practical expedient for lessors regarding the separation of the lease and non-lease components of a contract.

Prior to the amendments in ASU No. 2018-11, the upcoming requirements in ASC 842 had to be initially applied using a modified retrospective transition method under which lessees were required to recognize lease assets and lease liabilities on the balance sheet for all leases and provide the new and enhanced disclosures for each comparative period presented. In response to constituents’ concerns about unanticipated costs and complexities, ASU No. 2018-11 now allows entities, upon initial adoption, to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Under the new optional transition method, reporting for comparative periods presented must continue to follow the guidance under existing U.S. GAAP.

Continue Reading FASB Issues Targeted Improvements to New Lease Accounting Standard

The Financial Accounting Standards Board (FASB) has issued Accounting Standards Update (ASU) No. 2018-08, Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made. ASU No. 2018-08 provides clarifying and amended guidance concerning:

  • the determination of whether a transaction should be accounted for as an exchange or as a contribution, and
  • whether a contribution received is conditional or unconditional.

Continue Reading ASU No. 2018-08 Clarifies Guidance for Not-For-Profit Entities: Contributions Received and Contributions Made

Jen:  This is the PKF Texas Entrepreneur’s Playbook.  I’m Jen Lemanski, this week’s guest host, and I’m here today with Chip Schweiger, an Audit Director and a member of the PKF Texas SEC team.  Chip welcome back to the Playbook.

Chip:  Thanks Jen, good to be here.

Jen:  So I’ve heard there’s new accounting rules for leases, tell me about that.
Continue Reading Accounting Rules for Leases

In February 2017, the Financial Accounting Standards Board issued Accounting Standards Update No. 2017-06. The new standard clarifies the presentation requirement for master trust and requires more detailed disclosures of the Plan’s interest in the master trust. The update is effective for fiscal years beginning after December 15, 2016. Early adoption is permitted and is adopted retrospectively to each period the financial statements are presented.

The new standard includes the following amendments:

  1. Requires a plan’s interest and changes in that interest are shown on the face of the financial statements. The interest should be shown as a single line item for each interest in a master trust that the plan holds.
  2. Removes the requirement to disclose the percentage interest in the master trust for plans with divided interests. The standard instead requires that all plans disclose the dollar amount of their interest in each of the general types of investments.
  3. Requires plans to disclose the master trust’s other assets and liabilities and the dollar amount of the plan’s interest in those items.
  4. Removes the investment disclosures that were required for 401(h) account assets provided in the health and welfare benefit plan’s financial statements. These plans should disclose the name of the defined benefit plan in which the investment disclosures are provided.

The guidance improves financial reporting and clarifies the required disclosures for master trust. Contact us if you have any questions regarding this or anything else related to Employee Benefit Plans.

The Financial Accounting Standards Board (“FASB”) recently issued Accounting Standards Update (“ASU 2017-1”) that clarifies the definition of a business under Accounting Standards Codification Topic 805, Business Combinations, and affects all companies and other reporting organizations that must determine whether they have acquired or sold a business.

The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation.  The new standard is intended to help companies and other organizations evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or of a business.

The amendments in ASU 2017-1 provide a more robust framework to use in determining when a set of assets and activities is a business.  They also provide more consistency in applying the guidance, reduce the costs of application, and make the definition of a business more operable.  Specifically, ASU 2017-1 provides a “screen” to determine when a set of assets and activities is not a business.  The screen requires that when substantially all the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set of assets and activities is not deemed a business.  This screen reduces the number of transactions that need to be further evaluated.  Under the ASU, if the screen is not met, the amendments: a) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output, and b) remove the evaluation of whether a market participant could replace missing elements.  The ASU also provides a framework to assist entities in evaluating whether both an input and a substantive process are present.

According to FASB Chairman Russell Golden, “Stakeholders expressed concerns that the definition of a business is applied too broadly and that many transactions recorded as business acquisitions are, in fact, more akin to asset acquisitions.”  Golden continued, “The new standard addresses this by clarifying the definition of a business while reducing the cost and complexity of analyzing these transactions.”

For public companies, ASU 2017-1 is effective for annual periods beginning after December 15, 2017, including interim periods within those periods.  For all other companies and organizations, the ASU is effective for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019.  Early application of the ASU is allowed as follows:

  • For transactions for which the acquisition date occurs before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance
  • For transactions in which a subsidiary is de-consolidated or a group of assets is derecognized that occur before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance.

Details can be found at

Contact me at or any other member of your PKF Texas service team for more information.

Companies are placing increasingly high values on intangible assets such as brands and customer data. These are strong points of value for companies that can help them create the right products, but what does it mean for accountants?

An article in the Wall Street Journal, Accounting’s 21st Century Challenge – How to Value Intangible Assets, cited that “companies in the U.S. could have more than $8 trillion in intangible assets”, which is nearly half of the “$17.9 trillion market capitalization of the S&P 500 index.” This means that companies are investing far more in their intangibles than ever before, making it an important topic of interest for accountants and how they consult their clients.

The Financial Accounting Standards Board (FASB) is considering the idea of requiring companies to include intangible assets in their books, but some key questions have come to surface such as how the intangible assets should be valued. Should they be based on the cost of creation or should management have to estimate and assign a value?

Of the instances where intangibles must be valued, it is an extremely tedious process, meaning it could take several years for the FASB to come up with a concrete set of rules.

On November 11, the FASB completed almost a decade of meetings and discussions with a vote to publish an accounting standard that will require businesses to record on their balance sheets the effects of its leases. The board approved the plan, to be published in early 2016, with a 6-1 vote. FASB member Marc Siegel voted against it. “This is a really hard decision for me. On the pro side of what the standard is doing, I think obviously an amount [will be recorded] on the balance sheet,” Siegel said. “On the con side, while we will have an amount on the balance sheet, I think it’s going to be mismeasured.” The rest of his FASB colleagues, however, said the forthcoming standard would benefit analysts and investors, even if it was not as broad of a change as the standard-setter once envisioned.