Regulatory updates

Highlights of the key points in the proposed ASU

The amendments in this proposed Update would apply to crypto assets that meet all the following criteria:

1. Meet the definition of intangible asset as defined in the Codification Master Glossary
2. Do not provide the asset holder with enforceable rights to, or claims on, underlying goods, services, or other assets
3. Are created or reside on a distributed ledger based on blockchain technology
4. Are secured through cryptography
5. Are fungible
6. Are not created or issued by the reporting entity or its related parties.

An entity would be required to subsequently measure crypto assets that meet those criteria at fair value with changes recognised in net income each reporting period.

Comment deadline: 6 June 2023

To access the text of the proposed accounting standard update, please click here

Highlights of the key points in the proposed ASU

The amendments in this proposed Update would 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 five percent of the amount computed by multiplying pretax income [or loss] by the applicable statutory tax rate).

For entities other than public business entities, the amendments in the proposed update would require qualitative disclosure about specific categories of items and individual jurisdictions that result in a significant difference between the statutory tax rate and the effective tax rate.

Comment deadline: 30 May 2023

To access the text of the proposed accounting standard update, please click here

Recently, FASB issued a new chapter of its Conceptual Framework w.r.t. recognition and derecognition of an item in the financial statements.

The new chapter becomes Chapter 5 of the FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting. The new chapter sets forth recognition and derecognition criteria and provides guidance on when an item should be incorporated into and removed from the financial statements. It specifies the three criteria; an item should meet to be recognised in the financial statements. These are:

• Definitions: The item meets the definition of an element of financial statements
• Measurability: The item is measurable and has a relevant measurement attribute, and
• Faithful representation: The item can be depicted and measured with faithful representation.

It also sets forth the concept that derecognition, i.e., the process of removing an item from the financial statements of a reporting entity, as an asset, liability or equity should occur, when an item no longer meets any one of the recognition criteria.

To access the text of the new chapter, please click here