Feb 08, 2016
From the Financial Reporting Network
The FASB recently proposed an ASU, Classification of Certain Cash Receipts and Cash Payments (a consensus of the FASB Emerging Issues Task Force), which addresses eight classification issues related to the statement of cash flows:
- Debt prepayment or debt extinguishment costs;
- Settlement of zero-coupon bonds;
- Contingent consideration payments made after a business combination;
- Proceeds from the settlement of insurance claims;
- Proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies;
- Distributions received from equity method investees;
- Beneficial interests in securitization transactions; and
- Separately identifiable cash flows and application of the predominance principle.
The proposal, which is intended to reduce diversity in practice, generally would be applied retrospectively. If it would be impracticable for an entity to apply the proposal to certain issues retrospectively, it may apply the proposal prospectively as of the earliest date practicable. The FASB will determine the effective date and whether to permit early adoption after considering stakeholder feedback. The comment period ends March 29.