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Bridging The GAAP: November 2024

Centri’s Bridging the GAAP newsletter highlights this month’s news, developments and emerging issues in the accounting and financial reporting world.

FASB Standard Setter Updates

Financial Accounting Standards Board

October 28, 2024 EITF Meeting

The Emerging Issues Task Force (EITF) recommended that the Board add a project to its technical agenda to clarify when a transaction with multiple creditors involves the contemporaneous exchange of cash between the same debtor and creditor in connection with the issuance of a new debt obligation and satisfaction of an existing debt obligation by the debtor should be accounted for as a debt extinguishment and issuance of new debt. The EITF recommended that the proposed changes apply to all entities, be applied prospectively, and that early adoption be permitted. The Board will discuss this issue at a public Board meeting to determine whether to add a project to the FASB’s technical agenda.

FASB Proposes Amendments to Accounting for Internal-Use Software

On October 29, the FASB issued a proposed Accounting Standards Update (ASU), Targeted Improvements to the Accounting for Internal-Use Software, that would amend certain guidance on accounting for internal-use software. The proposal aims to update the accounting standards to be more compatible with current agile software development practices and to more closely align the recognition requirements for internal-use software costs with those requirements for software that is licensed, sold, or otherwise externally marketed. Comments on the proposal are due by January 27, 2025.

FASB Issues Proposal on Determining Accounting Acquirer When the Legal Acquiree is a VIE

On October 30, the FASB proposed amending the guidance for identifying the accounting acquirer in a transaction achieved primarily through an exchange of equity interests in which the legal acquiree is a variable interest entity (VIE) that meets the definition of a business. The proposal was based on a June recommendation of the Emerging Issues Task Force (EITF). The proposal would more closely align the requirements for identifying the accounting acquirer in the acquisition of a VIE with those that apply to acquisitions that do not involve a VIE. Comments on the proposal are due by December 16, 2024.

FASB Issues New Disaggregated Expense Disclosure Requirements (DISE)

On November 4, the FASB issued new guidance requiring additional disclosure of the nature of expenses included in the income statement in response to longstanding requests from investors for more information about an entity’s expenses. The new standard requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. ASU 2024-03, Disaggregation of Income Statement Expenses (DISE), applies to all public business entities (PBEs) and is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. The requirements will be applied prospectively with the option for retrospective application. Early adoption is permitted.

November 6, 2024 Meeting

The Board discussed extending the comment period for the proposed Accounting Standards Updates and decided to set the following comment period deadlines:

1. Interim Reporting—Narrow-Scope Improvements—March 31, 2025
2. Accounting for Government Grants—March 31, 2025
3. Accounting for Environmental Credit Programs—April 15, 2025.

For more information, see the FASB’s Tentative Board Decisions.

SEC Regulatory Updates

Securities Exchange Commission

SEC Announces New Members of Small Business Capital Formation Advisory Committee

On October 30, the SEC announced four new members of the Small Business Capital Formation Advisory Committee. The new members were appointed to four-year terms and will join the 14 current Commission-appointed committee members. The new Commission-appointed committee members are:

• Jennifer Newton – Managing Attorney and Founder, StartSmart Counsel; Miami
• Rose Standifer – Partner, Foley Hoag LLP; Denver
• Wendy Stevens – Partner, Forvis Mazars LLP; New York
• Emily Underwood – Clinical Professor of Law, Bluhm-Helfand Director of the Innovation Clinic, The University of Chicago Law School; Chicago

Other Regulatory Updates

Nigeria and Egypt Deemed Highly Inflationary

The relevant government agencies in Egypt and Nigeria indicate that both have three-year cumulative inflation rates above 100% as of September 30, 2024. As a result, Nigeria and Egypt must both be considered highly inflationary economies as of October 1, 2024 for calendar year-end reporting entities that report on an interim basis. Although the determination of a highly inflationary economy under US GAAP and IFRS is similar, IAS 29, Financial Reporting in Hyperinflationary Economies, allows for qualitative considerations, which may result in a different determination. Under US GAAP, no such qualitative considerations should be considered.

Rikki Williams

Senior Director | CPA

Rikki is a Senior Director at Centri Business Consulting. He has more than 16 years of public and private accounting experience. View Rikki Williams's Full Bio