Real Estate Accounting and Financial Reporting Update
Real Estate Accounting and Financial Reporting Update
December 2, 2016
Contents
Forewordiv
Acknowledgments and Contact Information
v
Introductionvi
Updates to Guidance
1
Revenue Recognition
2
Leases10
Financial Instruments
13
Impairment13
Classification and Measurement
17
Measurement-Period Adjustments
18
Simplifying the Transition to the Equity Method of Accounting
20
Consolidation -- Interests Held Through Related Parties That Are Under Common Control
21
Employee Share-Based Payment Accounting Improvements
22
Classification of Deferred Taxes
27
Alternatives for Private Companies
28
Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments
30
Restricted Cash
33
On the Horizon
35
Financial Instruments
36
Hedging
36
Liabilities and Equity -- Targeted Improvements
39
Simplifying the Balance Sheet Classification of Debt
41
Goodwill and Business Combinations
43
Subsequent Accounting for Goodwill for Public Business Entities and Not-for-Profit Entities,
Including Goodwill Impairment
43
Clarifying the Definition of a Business
44
Accounting for Identifiable Intangible Assets in a Business Combination
46
Accounting for Derecognition and Partial Sales of Nonfinancial Assets46
Modification Accounting for Share-Based Payment Arrangements
48
Nonemployee Share-Based Payment Accounting Improvements
51
Disclosures by Business Entities About Government Assistance
52
ii
Contents
Disclosure Framework
53
FASB's Decision Process
53
Entity's Decision Process
54
Topic-Specific Disclosure Reviews
54
Next Steps
54
Fair Value Measurement
55
Income Taxes
58
Defined Benefit Plans
61
Other Topics
62
SEC and AICPA Updates
63
Summary of Accounting Pronouncements Effective in 2016
74
Appendixes
78
Appendix A -- Glossary of Standards and Other Literature
79
Appendix B -- Abbreviations
87
iii
Foreword
December 2, 2016
To our clients and colleagues in the real estate sector:
We are pleased to announce our ninth annual accounting and financial reporting update. Some of the notable standard-setting developments that occurred since the previous edition were the issuance of (1) new guidance on the accounting for leases and the impairment of financial instruments, (2) new guidance to clarify the classification of certain cash receipts and payments in the statement of cash flows, and (3) refinements to the FASB's new guidance on the recognition of revenue from contracts with customers.
This publication is divided into three sections: (1) "Updates to Guidance," which highlights changes to accounting and reporting standards that real estate entities need to start preparing for now; (2) "On the Horizon," which discusses standard-setting topics that will affect real estate entities as they plan for the future; and (3) "Other Topics" that may be of interest to entities in the real estate sector.
The annual accounting and financial reporting updates for the banking and securities, insurance, and investment management sectors are available (or will be available soon) on US GAAP Plus, Deloitte's Web site for accounting and financial reporting news.
As always, we encourage you to contact your local Deloitte office for additional information and assistance.
Sincerely,
Chris Dubrowski
Real Estate Industry
Professional Practice Director
Deloitte & Touche LLP
Bob O'Brien Global Real Estate Leader Deloitte & Touche LLP
iv
Acknowledgments and Contact Information
We would like to thank the following individuals for their contributions to this publication:
Johnnie Akin Teri Asarito Alex Braser Ermir Berberi Mark Bolton Lynne Campbell Ashley Carpenter Chris Cryderman Amy Davidson Jamie Davis Joe DiLeo Geri Driscoll
David Eisenberg Trevor Farber Mark Fischer John Franco Rachel Grandovic Emily Hache Eric Hatch Ben Johnson Colin Kronmiller Michelle Lacey Michael Lorenzo Mat Lorie
Stephen McKinney Peter McLaughlin Morgan Miles Adrian Mills Emily Montgomery Rob Morris Jeff Nick Magnus Orrell Jeanine Pagliaro Amy Park Taylor Paul Lauren Pesa
Christine Reicheneder Shahid Shah Inderjeet Singh Stefanie Tamulis PJ Theisen Andrew Warren John Wilde Karen Wiltsie Andrew Winters Sandy Zapata
If you have any questions about this publication, please contact any of the following Deloitte industry specialists:
Chris Dubrowski Real Estate Industry Professional Practice Director +1 203 708 4718 cdubrowski@
James Brant Real Estate Industry Deputy Professional Practice Director -- Engineering and Construction +1 513 784 7348 jbrant@
Bob O'Brien Global Real Estate Leader +1 312 486 2717 robrien@
Wyn Smith Real Estate Industry Deputy Professional Practice Director +1 469 417 2209 gesmith@
Susan L. Freshour Financial Services Industry Professional Practice Director +1 212 436 4814 sfreshour@
v
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