Time of change
A glut of broad new accounting changes has overwhelmed the finance and accounting departments of many businesses. Here’s a quick overview of what’s changing when.
Revenue recognition. Starting in 2018 for public companies and 2019 for private ones, revenue must be reported using new principles-based guidance under Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers.
Credit losses. Starting in 2020 for public companies and in 2021 for private ones, ASU No. 2016-13, Financial Instruments — Credit Losses: Measurement of Credit Losses on Financial Instruments, requires banks and other companies that extend credit to immediately record the full amount of expected credit losses in their loan portfolios.
Tax Cuts and Jobs Act. In late 2017, Congress made sweeping changes to the federal tax code. Most of the changes for businesses are permanent and go into effect for tax years starting after December 31, 2017. As the law’s name suggests, many of its provisions cut taxes by lowering federal tax rates and expanding allowable deductions for businesses. But some changes are unfavorable to businesses. To complicate matters, many states have decided to decouple their state income tax rules from the TCJA changes. Differences in tax rules across state lines add complexity to filing business tax returns.
Given the scope of change that’s happening in the business world, it’s no wonder that your finance and accounting personnel feel overwhelmed. To ease frustration, contact an accounting professional to discuss how these changes will affect your business in the coming years.