Accounting Updates to Keep an I On

by Eric Smith, CPA

Every year the governing body of the accounting world gathers in a secret mountain location at 1522 Big Bear Lane, Aspen, Colorado 81611, to discuss and implement new accounting standards that everyone who has any money has to follow. The Fraud Accounting Shhh Be Quiet, or FASB for short, decided that this year, like every year, they would focus on topics that affect all entities, rather than just public companies. Lucky for you and due to our close relationship with FASB Chairman, Lars Ulrich, we were able to get a sneak peak of a few important accounting updates that are coming in 2017 and what you should do.

Oh and if you’re thinking, “Isn’t Lars Ulrich the drummer from Metallica?” you would be correct! In a recent article with Rolling Abacus, he explained, “Heavy metal was just not hard core enough for me anymore, I wanted to be in a profession where it’s so hardcore that my pockets need to be protected!” That’s enough from the Chairman, let’s review the updates and how they should be implemented:

    Changes to Lease Accounting

    Update: Recently the FASB approved a final statement after two decades of work that dramatically transforms how companies account for their leases. Previously under GAAP ASC 840, leases were divided into operating and capital leases based on four specific criteria. Now under GAAP ASC 867, there are three categories of leases: small, medium, and venti. Small leases are related to any object that a Canadian Bull Moose could not fit into, medium leases are anything that a Canadian Bull Moose could fit into, and venti leases are for coffee shops.

    What Should I Do: It’s quite obvious, just grab the Bull Moose by the horns and buy one! Make sure that it’s a Canadian Bull and not a Cow Moose. Cow Moose do not have antlers, so they can put you in the small lease category and that could leave you utterly disappointed.

    Simplified Inventory Measurement

    Update: Previously under GAAP ASC 330, entities were required to measure inventory at the lower of either the cost of the item or the market value. Now under the new GAAP ASC 888 you are required to measure inventory by the daily pick six lottery balls that were drawn the day before.

    What Should I Do: Go out and buy yourself some daily pick six lottery tickets! Not only will they help provide the value of your inventory, but you can write them off on your tax return as a business expense. Actually I’m not so sure on that tax part, you should e-mail Greg Yoder about that, he’s the tax expert.

    Accounting for Pension Plans

    Update: If for some remarkable reason your company or organization has a pension plan, the new way to account for it is to place six thumbs up emojis in your financial statements. On the use of six emojis, GAAP ASC 666 explains, “What an excellent day for a thumbs up emoji, so why not use six of them?” Plus, these thumbs up emojis will also allow you to attract more millennials to your business.

    What Should I do: First, throw a party because somehow you still have a pension plan in a time when those things are going into extinction like the Dodo bird. Next, go ahead and start a podcast on a random unsolved murder or about the effect of gluten free hamburger buns on cats. You already placed emojis in your financial statements, you might as well just go full on millennial.

Those are only 3 of the 17,585 accounting updates that the FASB is looking to publish in this year’s “FASB: Accounting Bonanza 2017.” I highly recommend anyone looking for a good read to make it a point to stop by and pick-up this book when it comes out in late April 2017. It will be sold in any location where you can typically find your accountant at this time, which is either at a bar or the closest street corner sobbing uncontrollably.