In 2025, the Federal Accounting Standards Board (FASB) issued several targeted updates that could significantly impact how companies account for digital assets, internal-use software, credit losses, derivatives, and customer-related share-based arrangements. Staying ahead of these changes is critical: early understanding enables organizations to evaluate financial statement implications, update processes and controls, and foster a smooth transition. 

At CohnReznick, we’re here to help you navigate these updates with confidence, keeping your organization compliant and strategically positioned for growth. 

Below is a summary of selected ASUs issued in 2025. This list is not exhaustive; please refer to our additional publications for a comprehensive view. 

ASU 2025-02 – Liabilities (Topic 405): SEC amendments on crypto-asset safeguarding  

Effective immediately upon issuance in March 2025. 
 
What you need to know: 

• Scope: ASU 2025-02 eliminates codification guidance requiring recognition of safeguarding liabilities for crypto assets held for platform users, following the rescission of SAB Topic 5.FF No. 122. 
• Alignment: This update removes ASC 450-10-S99-1, aligning FASB standards with the SEC’s updated position. 
•  Accounting treatment: Entities no longer recognize a liability and corresponding asset for safeguarding obligations related to crypto assets held for platform users. 
• Impact: This change may reduce reported assets and liabilities on the balance sheet for entities previously recognizing such obligations. 

Your next steps: 

•  Public companies should evaluate whether they have crypto-asset safeguarding obligations. 
• Make sure disclosures align with SAB 122 in MD&A and footnotes. 
•  Coordinate with legal and risk teams to assess custodial arrangements.  
   

ASU 2025-03 - Business Combinations (Topic 805) and Consolidation (Topic 810): Accounting acquirer in VIE acquisition 

Effective for fiscal years beginning after December 15, 2026, with early adoption allowed.  
 
What you need to know: 

• Scope: This update addresses the determination of the accounting acquirer in business combinations involving a variable interest entity (VIE) that is a business, particularly when equity interests are exchanged.  
• Accounting acquirer determination: When a business combination is affected primarily by exchanging equity interests and the legal acquiree is a VIE that meets the definition of a business, entities must evaluate the factors in ASC 805-10-55-12 through 55-15 to determine the accounting acquirer. 
• Reverse acquisitions: More transactions may be accounted for as reverse acquisitions, where the legal acquiree is the accounting acquirer. 
• Consistency: This update aligns VIE acquisition accounting with non-VIE transactions, reducing inconsistencies. 

Your next steps: 

•  Review acquisition transactions involving VIEs for compliance with new acquirer assessment. 
• Update internal control procedures for acquisition transactions involving VIEs.
• Consult technical accountant advisors when structuring acquisition transactions involving VIEs. 

ASU 2025-04 - Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Clarifications on share-based consideration to customers  

Effective for fiscal years beginning after December 15, 2026, including interim periods. 
 
What you need to know: 

• Performance conditions: The revised definition encompasses conditions tied to the volume or value of a customer’s purchases from the grantor, as well as performance targets based on purchases made by downstream parties that buy the grantor’s products or services from its customers. 
• Forfeiture policy election: The update removes the forfeiture rate policy election for customer awards with service conditions that are not tied to a distinct good or service. Entities must now estimate forfeitures for these awards rather than recognizing them as they occur. 
• Separate policy elections for forfeitures remain available for share-based payment awards with service conditions granted to employees and nonemployees in exchange for goods or services to be used or consumed in the grantor’s own operations. 
• Measurement and recognition: This update clarifies that a grantor should not apply the guidance in Topic 606 on constraining estimates of variable consideration to share-based consideration payable to a customer. The grantor should apply the guidance in ASC 718 for awards with performance conditions to assess the probability that an award will vest. 

Your next steps: 

• Review customer contracts involving stock compensation for compliance.  
• Adjust revenue recognition models and related disclosures. 
• Coordinate with tax and legal advisors to reassess equity-based incentives.  

ASU 2025-05 – Financial Instruments - Credit Losses (Topic 326): Measurement for accounts receivable and contract assets  

Effective for fiscal years beginning after December 15, 2025, with early adoption allowed. 
 
What you need to know: 

• Practical expedient: ASU 2025 05 allows entities to elect a practical expedient that assumes current conditions at the balance sheet date remain unchanged over the remaining life of the asset when developing reasonable and supportable forecasts. This expedient applies to estimating expected credit losses on current accounts receivable and current contract assets. 
• Accounting policy election for nonpublic entities: This update allows nonpublic business entities that elect the practical expedient to make an accounting policy election to consider post-balance-sheet collection activity when estimating credit losses. 
• Scope: It applies to current accounts receivable and current contract assets, including those acquired in a business combination or via VIE consolidation stemming from ASC 606 transactions.  
• Disclosures: Entities must disclose whether they elected the expedient and, if applicable, the policy election; if the policy election is made, disclose the date through which subsequent collections are evaluated. 

Your next steps: 

• Document rationale, scope, and controls; update methodology and accounting policies.  
• Align aging reports and close procedures to capture qualifying items.  
• Make sure accounting systems are appropriately configured to support the required reporting and data needs, including allowance forecasting and KPIs (e.g., bad-debt percentages).  

ASU 2025-06 – Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted improvements to the accounting for internal-use software  

Effective for fiscal years beginning after December 15, 2025 (public entities) and December 15, 2026 (others); early adoption permitted.  
 
What you need to know: 

• No more development stages: This update removes all references to prescriptive and sequential software development stages, often referred to as project stages. Website guidance consolidated: ASC 350-50 eliminated; website costs are now accounted for within ASC 350-40.  
• Enhanced disclosures: Entities must provide ASC 360 “Property, Plant, and Equipment” (“ASC 360”) disclosures for capitalized software. 
• Principles-based threshold: The ability to capitalize software costs is now based on management’s authorization and commitment to funding the software project, as well as the probability of completion of the software and its ability to function as intended. Management judgment and documentary support required. 

Your next steps: 

• Update accounting policy to reflect the new capitalization threshold and remove stage-gate procedures. Document the criteria for “authorization,” “commitment,” and “probable-to- complete.”  
•  Strengthen controls for tracking development costs, approvals, and capitalizable vs. maintenance activities.  
• Update note templates for ASC 360 disclosures: additions, accumulated amortization, useful lives, amortization method, and policy elections.  

ASU 2025-07 - Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives scope refinements and clarifications for share-based noncash consideration 

Effective for fiscal years beginning after December 15, 2026, including interim periods. 
 
What you need to know: 

• Expanded non-exchange-traded exception: More contracts tied to the operations/activities of a single party will be excluded from derivative accounting, lowering the chance those arrangements are treated as derivatives. 
• Operational vs. financial underlying: The exception focuses on operations/activity-based underlying (e.g., unit volumes, production metrics); it does not apply to financial underlying or market-traded indices. 
•  Impact: It is particularly relevant for entities with commodity-linked or digital-asset-related contracts; changes may alter the classification of certain arrangements and reduce earnings volatility. 

Your next steps: 

• Inventory non-exchange-traded contracts with underlying tied to your operations (e.g., supply agreements with variable payments linked to buyer production). Evaluate whether they fall within the expanded exception.  
• Reassess existing hedge designations and embedded derivative analyses and update documentation with any changes. 
• Train accounting teams on new scope criteria, especially for commodity and digital asset exposures.