The Proposed Accounting Standards Updates You Might Have Missed

This quarter's accounting-related headlines on regulatory action and standard setting focused on several items covered in Riveron's Q1 2025 accounting guide, including the implementation of new segment reporting guidance, updates to the DISE standard, the repeal of SAB 121, and the expanded availability of confidential filing for issuers. Two relatively niche Accounting Standards Updates (ASUs) are currently out for comment, and it's important to pay attention to these issues, if relevant to your organization:

1 - The proposed environmental credits standard would establish an accounting framework for environmental credits, delineating the accounting based on the intended use of the environmental credits - either for satisfying an environmental obligation or for selling in an exchange transaction. This should provide preparers with more clarity on how to record and disclose environmental credits their organizations may hold. 

2 - A proposed accounting standard, titled “codification improvements,” is a grab bag of targeted clarifications that may not be relevant for every company. But, for companies that are affected, it could represent meaningful clarifications to the accounting guidance. While some of the clarifications are relatively innocuous, like removing a reference to the “pooling of interest method" (better late than never), a handful of these accounting matters could be meaningful to your company, such as: 

• Clarification in ASC 260 regarding how to consider a contract recorded as an asset or liability that is settleable in shares in the diluted EPS calculation when the company has a net loss. 
• Guidance regarding the transfer of receivables related to a receivable recorded before the transfer of a good or service that transfers of these types of receivables should be accounted for under ASC 860. 
• Explanation that under ASC 325, the reference amount for the measurement of a beneficial interest should include the effect of any related credit loss allowances. This can have an impact on the calculated yield of the instrument and result in a difference in the pattern of interest income recognition. 

While these standards are not yet effective, companies should be aware of these potential changes and avail themselves of their ability to comment before the comment window expires. 

Comment letters for these two standards are due by 4/15/2025 for the environmental credit standard and by 4/22/2025 for the codification improvements standard.