On May 9, Mike Walworth and I hosted our first webinar of 2019, covering all things 2019. Well, maybe not all things 2019. We didn’t talk about trade wars or the Mueller report, but we did talk about the key Accounting Standards Updates (ASUs) effective for the first time in 2019 that have widespread relevance to most preparers and auditors. It was a lot of fun, but in case you missed it, this post will share the top 5 takeaways and provide you with another opportunity to see it.

1. It ain’t over till it’s over

It seems that we have been talking about ASC 606, the new revenue recognition standard, forever. You might think it is finally over - it was effective for public companies in 2018 and is newly effective for private companies in 2019. However, now is when the fun really begins because the implementation and practical application issues start to emerge. We shared a few of those and highlighted the fact that application of this standard can involve a lot of management judgment. 

2. No rest for the weary

Hot on the heels of the new revenue recognition standard is the new standard on leases, ASC 842. It is effective for public companies in 2019 and will be effective for all others in 2020. Not only does this new standard “blow up the balance sheet” by requiring all leases (except the small population that meet the requirements for the short term lease exception) to be recorded on the balance sheet, but it also introduces numerous other changes. It has been a challenge to implement, particularly because of the volume of data that is required to be captured in order to implement the accounting guidance. In addition, issues have emerged with lease identification, determining an appropriate discount rate, and several others.  

3. The Oracle of Omaha

We heard Warren Buffett speak about new guidance on the accounting for equity securities. Unfortunately, he was busy and couldn’t appear live on our webinar, but we did see a clip of him from a CNBC interview. He told us about his unhappiness with this new standard, particularly because of the volatility that it creates in the income statement. Why? Going forward, most equity securities are required to be accounted for at fair value with the changes recorded in the income statement. There is a measurement alternative available, but it only applies to equity securities without a readily determinable fair value.

4. Don't you forget about me

It’s easy to get caught up in the new revenue recognition and leases standards. However, the FASB has also been busy issuing a number of other ASUs and it is important not to forget about these. The good news is many of these other, mostly smaller, ASUs are actually helpful simplifications or clarifications. Two of the smaller ones we discussed that are effective in 2019 relate to the statement of cash flows and business combinations. And although a lot of you might like to forget about it, there’s also new guidance on hedge accounting. The guidance on cash flows and business combinations provide helpful clarifications and changes in areas where there was previously diversity in practice. The new guidance on hedge accounting begins to simplify an area of known complexity.

5. Fun, fun, fun (until Emily took the microphone away)

Although the FASB has thrown a lot at us for 2019, we tried to break things down in 90 minutes and make you aware of the key changes while having a little fun in the process. Did you miss it? Well, the good news is you have another chance! You can sign up for the playback here.

A couple of sayings, a couple of song lyrics, and a man from Omaha. That about sums up the top 5 takeaways from our webinar: ASUs Effective in 2019. We look forward to seeing you at our next webinar on MD&A Rules and Best Practices on June 13, 2019.

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This post is published to spread the love of GAAP and provided for informational purposes only. Although we are CPAs and have made every effort to ensure the factual accuracy of the post as of the date it was published, we are not responsible for your ultimate compliance with accounting or auditing standards and you agree not to hold us responsible for such. In addition, we take no responsibility for updating old posts, but may do so from time to time.