A couple key accounting updates that were identified in our Spring 2015 Newsletter as “Updates in the Works” were finalized by the FASB in the second half of 2015:
Presentation of Deferred Income Tax Accounts In the past, deferred income taxes were allowed to be classified as either current or non-current and presented as such as two separate items on the balance sheet. Because of this update, all deferred income tax accounts shall now be offset against each other and be presented as a single non-current asset or liability. Effective date: Fiscal years beginning after December 15, 2017. Early adoption permitted.
Inventory Valuation In the past, companies were required to state their inventory at the lower of cost or market price. The FASB has issued a new standard that requires inventory to be stated at the lower of cost or net realizable value. Simply stated; inventory will now be carried on the balance sheet at cost, unless it is being sold for less. Effective date: Fiscal years beginning after December 15, 2016. Early adoption permitted.