Question

Accounting for business combinations poses many challenges for accounting standard setters. Related topics, such as goodwill impairment, segment reporting and intangible assets, remain on the SEC's radar screen. There are many developments in this sector.

For example, in May 2016 FASB proposed eliminating Step 2 of goodwill impairment testing process.

Research current projects on the FASB's agenda in the following areas:

business combinations

consolidations

segment reporting

accounting for intangible assets

Locate financial statements of any publicly traded company that include footnote disclosures concerning any one of the above areas.

Identify proposed legislative changes that may affect the company. What database was this located?

Does the proposed legislative changes have a high likelihood of affecting the business of the company researched?

Answer 1

The Financial Statements of Walmart Inc., which is a publicly traded company includes footnote disclosures on Consolidation and Segment Reporting.

Proposed legislative changes with regard to Segment Reporting:

Disclose management judgments in applying the aggregation criteria. The IASB issued this in 2013, and it is a current area of difference between IFRS and US GAAP. The FASB is examining whether a similar disclosure should be included in US GAAP to further converge the standards.

Explain how consolidated amounts relate to financial statement lines. Currently consolidated amounts may be disclosed in the statements but not shown as a line item, such as depreciation. The proposal is that an entity could be required to describe both the amount and the lines on the income statement, showing the total depreciation and what line it is included on the financial statements.

Explore the composition of reportable segments. This would provide clearer information as to what elements have been aggregated into reportable segments. Separate information would not be required for each, but this would provide users with the information as to what each reportable segment consists of.

Likelihood of affecting the business:

Segment reporting may not change any of the numbers that are produced within a set of financial statements, but the proposals on the table could have a significant impact on the amount of information disclosed. It is likely that the IASB will examine the FASB’s work with a keen eye, as it is in the interest of all parties for the standards to remain as converged as possible. Ultimately, a long and happy marriage is likely to exist within segmental reporting, especially with the IASB’s current focus on better communication within financial reporting.
The proposed changes are for better disclosure and it doesn't affect the business of the company.

Source: 2018 Walmart Annual Report, www.accaglobal.com for proposed legislative changes