Question

Fall, 2019 Bruce & Emmett Part 3 Group Assignment

In addition, Bruce & Emmett have heard there have been several recent accounting changes as documented in the FASB Codification. Your group will be assigned one or two of the accounting topics below on which to report the following:

          dl.) The main provisions of the new pronouncements

          d2.) How the accounting treatment of the new pronouncement differs from before

          d3.) The effective date(s) of the new pronouncement

          d4.) How the accounting treatment compares with IFRS

The Topics are:

          1. Extraordinary & Unusual Items

          2. Comprehensive Income

          3. Business Combinations

          4. Leases

          5. Distinguishing Liabilities from Equities

          6. Earnings Per Share

          7. Goodwill Impairment

         

          8. Restricted Cash on the Statement of Cash Flows

          9. Revenue from Contracts with Customers

Answer 1

Ans.1. Extraordinary and Unusual Item - Extraordinary items are events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence.

Criteria for extraordinary items:

* Unusual nature

* Infrequency of occurrence

Presentation of extraordinary items:

* Extraordinary items are presented separately in the income statement

* Earnings per share for extraordinary items presented in the income statement or in the notes

Ans.7. Goodwill Impairment - Impairment of goodwill “is the condition that exists when the carrying amount of goodwill exceeds its implied fair value.” The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination.

The new guidance requires only a one-step quantitative impairment test, whereby a goodwill impairment loss will be measured as the excess of a reporting unit’s carrying amount over its fair value. It eliminates Step 2 of the current two-step goodwill impairment test, under which a goodwill impairment loss is measured by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill.