If the first quarter of 2015 is any indication, public and private entities will need to start preparing now for 2016 and 2017. The Financial Accounting Standards Board (FASB) released three recent accounting standards updates that have effective dates beginning on or after December 15, 2015. Additionally, further guidance is expected for fair value measurement, revenue recognition and private company accounting. In this Messenger, we will briefly recap the major changes that took place this quarter. Mayer Hoffman McCann P.C. presented a summary of this information in our CBIZ and MHM Executive Education Series webinar.

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transactions. Generally, the guidance is applicable
to business combinations, investments to which the
equity method is applied and reorganizations using
fresh-start accounting. Entities that choose the
accounting alternative must also apply the guidance
for amortizing goodwill established by ASU 2014-
02. The alternative becomes available for fiscal
years beginning on or after December 15, 2015, but
it can be applied prospectively to the first qualifying
transaction in 2015. See MHM Messenger 2015-03
and Substance of the Standard 2015-01 for more
information.
Extraordinary Items
In U.S. generally accepted accounting principles
(U.S. GAAP), transactions and events are classified
as extraordinary if they are abnormal or unrelated
to the entity’s typical activities and their occurrence
“cannot reasonably be expected” to recur. The FASB
eliminated the extraordinary item classification
with its Accounting Standards Update (ASU) 2015-
01, Simplifying Income Statement Presentation by
Eliminating the Concept of Extraordinary Items. The
Board retained the guidance related to items that are
unusual, infrequently occurring, or both, however,
so entities will continue to present these items as
separate components of continuing operations.
The update takes effect for fiscal years and interim
periods within fiscal years beginning on or after
December 15, 2015. Early adoption through a
prospective or retrospective approach is permitted.
See MHM Messenger 2014-02 for more information.
If the first quarter of 2015 is any indication, public and
private entities will need to start preparing now for
2016 and 2017. The Financial Accounting Standards
Board (FASB) released three recent accounting
standards updates that have effective dates beginning
on or after December 15, 2015. Additionally, further
guidance is expected for fair value measurement,
revenue recognition and private company accounting.
In this Messenger, we will briefly recap the major
changes that took place this quarter. Mayer Hoffman
McCann P.C. presented a summary of this information
in our CBIZ and MHM Executive Education Series
webinar.
Changes for 2016
The following accounting standards changes may
affect your entity’s 2016 year end planning.
Private Company Alternative to Accounting for
Intangible Assets in a Business Combination
ASU 2014-18, Alternative for Identifiable Intangible
Assets in a Business Combination allows private
entities to not recognize customer-related intangible
assets that are inseparable from other acquired
assets and noncompetition agreements in qualifying
March 2015
First Quarter Accounting and Financial Reporting Issues Update

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Consolidation
The accounting standards update to Consolidation
(ASU 2015-02, Consolidation (Topic 810):
Amendments to the Consolidation Analysis) eliminates
the voting interest model for limited partnerships and
similar entities and makes changes to the variable
interest entity (VIE) model.
With the VIE model, the FASB eliminated the deferral
of interests in investment companies, but scoped
out entities that are money market funds or similar
investment vehicles. Among the changes, the update
also simplifies the guidance on fees paid to decision-
makers and service providers, and causes limited
partnerships to be VIEs if the limited partners lack
substantive kick-out or participating rights. Under
the new voting interest model, the guidance for
limited partnerships and similar entities is eliminated,
removing the presumption that a general partner in a
limited partnership would consolidate the entity.
Implementation of the new rules begins for public
entities in annual periods beginning on or after
December 15, 2015. All other entities implement
the changes in fiscal years beginning on or after
December 16, 2016. See MHM Messenger 2015-10
for more information.
Changes on the Horizon
In the next few months, the FASB is expected to issue
final accounting standards related to the measurement
date of plan assets and the presentation of debt issue
costs. We also expect final guidance for customers
accounting for cloud-based computing.
Discussions continue on projects related to income
taxes, leasing, hybrid financial instruments, fair value
measurement and revenue recognition.
Income Taxes
Two proposed accounting standards updates were
jointly issued with the objective of simplifying the
accounting for income taxes. The first proposal
would eliminate the exception for intra-entity asset
transfers amongst a consolidated group and would
result in the accounting for the deferred income tax
effects of intra-entity transactions when they occur.
The second proposes to eliminate the requirement to
distinguish current and noncurrent deferred income
tax assets and liabilities. Rather, as discussed in
MHM Messenger 2015-05, all deferred taxes would
be classified as noncurrent on the balance sheet.
Hybrid Financial Instruments
Changes to accounting for hybrid financial instruments
would require an entity to disclose the carrying
amount, the measurement attribute and the line item
within the balance sheet and income statement with
each bifurcated embedded derivative it presents.
The comment period for the proposed accounting
standards update to Derivatives and Hedging (Topic
815): Disclosures about Hybrid Financial Instruments
with Bifurcated Embedded Derivatives ends April 30,
2015. An example of the proposed tabular presentation
can be found in MHM Messenger 2015-11.
Leasing Project
The FASB has directed its staff to prepare a final
accounting standard update for leasing. In recent
meetings, the FASB affirmed the exemption for short-
term leases (leases that shorter than 12 months) as
well as the requirements that Type A and Type B leases
should be presented separately on the balance sheet.
See MHM Messenger 2015-09 for more information.

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The information in this MHM Messenger is a brief summary and may not include all the details relevant to your situation.
Please contact your MHM auditor to further discuss the impact on your audit or audit report.
Disclosures
Efforts to simplify fair value measurement disclosure
requirements continue. Recent Board discussions
involved the requirements related to the change in
net assets disclosures of recurring Level 1, 2, and
3 assets held as of the end of the reporting period.
The FASB is also examining the policy for timing of
transfers between levels of the fair value hierarchy
and the internal valuation processes for Level 3
Measurements.
Revenue Recognition
In April, the FASB is expected to decide whether to
delay the effective date for the revenue recognition
changes established by ASU 2014-09, Revenue from
Contracts with Customers (Topic 606). Additional
guidance for licenses of intellectual property and
identifying performance obligations is also expected,
as well as several practical expedients to simply
implementation.
Additional Topics
Other activities include updates on the projects
for insurance contracts and the new governmental
accounting standard for fair value. In our first
quarter webinar we also discuss the simplification
of the accounting for share based payments, private
company council activities, and the balance sheet
classification of debt.
For More Information
We are holding a rebroadcast of our First Quarter
Accounting and Financial Issues Updates on April
2. You can also join us for our Second Quarter
Accounting and Financial Issues Update webinar on
June 30 or July 7. For email notices of this course,
MHM Messenger topics and other accounting
updates, please sign up to receive the CBIZ & MHM
Weekly Digest.