Can a public company continue to use transitional elements intended to be used by nonpublic entity after adoption of new guidance?Answered
We have adopted a new accounting guidance last quarter in Q119, where we make changes to the presentation of the Q119 numbers in accordance to the guidance, but didn’t make conforming changes to the PY Q118 numbers (which is allowed by the new guidance). As such, different elements were used for the Q119 and Q118 numbers.
When we migrate to the FY18 taxonomy this quarter, we have downloaded a migration summary that details the various change in concepts and standard label along with “WK Notes”
One of the WK Notes related to element used for prior year Q118 said “This concept has a Taxonomy Implementation Note. FASB has provided additional information about this concept's intended use. Please review this information concerning appropriate use of the concept.”
Looking up the TIN on FASB Yeti website, it said “Element is transitional and intended to be used by entities that apply nonpublic entity timing in adoption of amendments from Accounting Standards Updates. “ I believe this comment is saying it’s OK to be used by private companies since they have a delay in required adoption date of the new guidanceSince we are a public company and did not make conforming changes to the PY balances which is allowed by the new guidance, can we still keep using the same element for the PY numbers? The description and nature of the element is still correct, but only concern is we are not a private company.
Great question! This has actually been a more recent topic at the FASB regarding XBRL tagging as it relates to accounting adoption, specifically prospective and cumulative-effect adjustment adoption methods. While there has been inconsistencies in approach and different information provided via Taxonomy Implementation Notes (TINs), the FASB has provided prior specific ASU guidance around the use to two different elements when prior year values have not been restated due to an ASU adoption method. Our understanding, at Workiva, is that if prior year numbers have not been restated or adjusted per the new accounting guidance, the transitional elements can be applied to these prior year numbers. For current period numbers, it expected the new elements (if applicable) will be utilized.
As noted above, this could therefore lead to two different elements being applied (new element on current year and transitional element on prior year). In addition, this topic is currently under discussion and could lead to possible updates or further clarification on approach in the future.
Hope this helps! Holler if you have any additional questions or need anything else. Thanks, and happy Friday!0
Hi Mike - Many thanks for your quick response. Hope you have a Happy Friday and good weekend!0
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