It's Here! FASB Issues Update to ASC 718

Just in the nick of time to make their Q1 deadline, the FASB has issued the Accounting Standards Update to ASC 718. Now that the ASU has been issued, companies are free to adopt it.

Here are answers to a few questions you might have:

When do companies have to adopt the ASU?

Public companies have to adopt it by their first annual and interim fiscal period beginning after December 15, 2016. Private companies get an extra year to adopt it for annual periods and an extra two years for interim periods.

Do companies have to adopt the whole ASU at once?

You betcha!  I've said it before: this isn't a salad bar!  You can't pick and choose the parts of the ASU that you like: it's all or nothing.

Can we adopt the ASU this quarter even though the quarter ends tomorrow? 

Yep, you sure can.  If you are prepared to change over to the new tax accounting procedures, have already decided whether you want to change how you account for forfeitures (and, if you are changing approaches, are ready to go with the new approach), and are prepared to comply with any other aspects of the ASU that apply to your company, you can adopt it in this quarter. But if you aren't ready to go on any aspects of the ASU, you might want to wait until at least Q2 to give yourself a little more time.

Do we have to adopt it in this quarter if we want to adopt early? 

No, this is not required. Companies can adopt it in any interim period up until they are required to adopt the update.

Are there any surprises in the final ASU?

Got me.  I'm actually on vacation this week.  I'm at spring training in Phoenix—where ASU stands for Arizona State University and I'm sitting four rows back behind home plate.  I wrote this last week, before the FASB had issued the ASU, just in case.  With the end of the quarter imminent, I wanted to have a blog entry ready to go so that any NASPP members whose employers want to adopt the ASU in Q1 would know that it had been issued.  But I haven't had a chance to do anything more than skim the ASU between innings.

I plan to have more complete coverage when I'm back in the office next week. For now, go A's!

- Barbara