Recent and upcoming Accounting Standards Updates (ASU)

ASU

Topic No.

Beginning / Ending

Date for Public Business Entities

Summary Description (As per the FASB Summary)

ASU 2024-04 - Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments

ASC 470

Beginning After

12/1/2025

The amendments in this Update clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion.

ASU 2025-05 - Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets

ASC 326

Beginning After

12/15/2025

"The amendments in this Update provide (1) all entities with a practical expedient and (2) entities other than public business entities with an accounting policy election when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606, as follows:

1. Practical expedient. In developing reasonable and supportable forecasts as part of estimating expected credit losses, all entities may elect a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset.

2. Accounting policy election. An entity other than a public business entity that elects the practical expedient is permitted to make an accounting policy election to consider collection activity after the balance sheet date when estimating expected credit losses."

ASU

Topic No.

Beginning / Ending

Date for Public Business Entities

Summary Description (As per the FASB Summary)

Update 2023-05 - Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement

ASC 805

On or After

1/1/2025

Requiring a joint venture to recognize and initially measure its assets and liabilities using a new basis of accounting upon formation reduces diversity in practice and provides decision-useful information to a joint venture’s investors. 

Update 2023-08 - Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets

ASC 350

Beginning After

12/15/2024

An entity is required to subsequently measure assets that meet certain criteria (i.e., certain digital intangible assets) at fair value with changes recognized in net income each reporting period. The amendments in this Update also include presentation and disclosure requirements.

Update 2023-09 - Income Taxes (Topic 740): Improvements to Income Tax Disclosures

ASC 740

Beginning After

12/15/2024

The amendments require public business entities to annually (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items meeting a quantitative threshold (≥5% of pretax income multiplied by the statutory tax rate). Other entities must qualitatively disclose specific categories of reconciling items and jurisdictions causing significant differences between the statutory and effective tax rates.

ASU

Topic No.

Beginning / Ending

Date for Public Business Entities

Summary Description (As per the FASB Summary)

Update 2023-07 - Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures

ASC 280

Beginning After

12/15/2023

This ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

Update 2023-02 - Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (A Consensus of the Emerging Issues Task Force)

ASC 323

Beginning After

12/15/2023

This ASU permits reporting entities to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met.

Update 2022-03 - Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions

ASC 820

Beginning After

12/15/2023

This ASU clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. It also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The ASU also requires certain disclosures for equity securities subject to contractual sale restrictions.

ASU

Topic No.

Beginning / Ending

Date for Public Business Entities

Summary Description (As per the FASB Summary)

ASU 2023-09 - Income Taxes (Topic 740): Improvements to Income Tax Disclosures

ASC 740

Beginning After

12/15/2025

The amendments in this Update require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income [or loss] by the applicable statutory income tax rate). For entities other than public business entities, the amendments in this Update require qualitative disclosure about specific categories of reconciling items and individual jurisdictions that result in a significant difference between the statutory tax rate and the effective tax rate. 

ASU 2024-01 - Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards

ASC 718

Beginning After

12/15/2025

This ASU permits reporting entities to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met.

ASU 2024-02 - Codification Improvements—Amendments to Remove References to the Concepts Statements

Concepts Statements

Beginning After

12/15/2025

This Update contains amendments to the Codification that remove references to various Concepts Statements. In most instances, the references are extraneous and not required to understand or apply the guidance. In other instances, the references were used in prior Statements to provide guidance in certain topical areas.

ASU

Topic No.

Beginning / Ending

Date for Public Business Entities

Summary Description (As per the FASB Summary)

ASU 2022-03 - Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions

ASC 820

Beginning After

12/15/2024

This ASU clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. It also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The ASU also requires certain disclosures for equity securities subject to contractual sale restrictions."

ASU 2023-02 - Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (a consensus of the Emerging Issues Task Force)

ASC 323

Beginning After

12/15/2024

This ASU permits reporting entities to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met.

Update 2023-08 - Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets

ASC 350

Beginning After

12/15/2024

An entity is required to subsequently measure assets that meet certain criteria (i.e., certain digital intangible assets) at fair value with changes recognized in net income each reporting period. The amendments in this Update also include presentation and disclosure requirements.

ASU

Topic No.

Beginning / Ending

Date for Non-Public Business Entities

Summary Description (As per the FASB Summary)

Update 2023-01 - Leases (Topic 842): Common Control Arrangements

ASC 842

Beginning After

12/15/2023

This ASU provides a practical expedient for private companies and not-for-profit entities that are not conduit bond obligors to use the written terms and conditions of a common control arrangement to determine:
1. Whether a lease exists and, if so,
2. The classification of and accounting for that lease.
This ASU also requires that leasehold improvements associated with common control leases be:
1. Amortized by the lessee over the useful life of the leasehold improvements to the common control group (regardless of the lease term) as long as the lessee controls the use of the underlying asset (the leased asset) through a lease. However, if the lessor obtained the right to control the use of the underlying asset through a lease with another entity not within the same common control group, the amortization period may not exceed the amortization period of the common control group.
2. Accounted for as a transfer between entities under common control through an adjustment to equity (or net assets for not-for-profit entities) if, and when, the lessee no longer controls the use of the underlying asset.

Update 2022-01 - Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method

ASC 815

Beginning After

12/15/2023

This ASU allows nonprepayable financial assets also to be included in a closed portfolio hedged using the portfolio layer method. That expanded scope permits an entity to apply the same portfolio hedging method to both prepayable and nonprepayable
financial assets, thereby allowing consistent accounting for similar hedges.

Update 2021-08 - Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

ASC 805

Beginning After

12/15/2023

This ASU requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. An acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts.

Update 2020-06 - Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity

ASC 470
ASC 815

Beginning After

12/15/2023

This ASU affects entities that issue convertible instruments and/or contracts in an entity’s own equity. For convertible instruments, the instruments primarily affected are those issued with beneficial conversion features or cash conversion features because the accounting models for those specific features are removed. However, all entities that issue convertible instruments are affected by the amendments to the disclosure requirements in this Update.

For contracts in an entity’s own equity, the contracts primarily affected are freestanding instruments and embedded features that are accounted for as derivatives under the current guidance because of failure to meet the settlement conditions of the derivatives scope exception related to certain requirements of the settlement assessment. The Board simplified the settlement assessment by removing the requirements (1) to consider whether the contract would be settled in registered shares, (2) to consider whether collateral is required to be posted, and (3) to assess shareholder rights. Those amendments also affect the assessment of whether an embedded conversion feature in a convertible instrument qualifies for the derivatives scope exception. Additionally, the amendments in this Update affect the diluted EPS calculation for instruments that may be settled in cash or shares and for convertible instruments.