Skip to Main Content
Wiley GAAP 2020
book

Wiley GAAP 2020

by Joanne M. Flood
February 2020
Intermediate to advanced content levelIntermediate to advanced
1456 pages
52h 54m
English
Wiley
Content preview from Wiley GAAP 2020

27ASC 405 LIABILITIES

PERSPECTIVE AND ISSUES

Technical Alert

ASU 2016-04.

In March 2016, the FASB issued ASU 2016-04, Recognition of Breakage for Certain Prepaid Stored-Value Products. The ASU is a consensus of the EITF.

Guidance.

ASC 2016-04 was created to align the guidance in ASC 405-20 for financial liabilities with the guidance for nonfinancial liabilities in ASU 2014-09, Revenue Recognition, and codified in ASC 606. To do so, the guidance in ASU 2016-04 creates an exception to the requirements of ASC 405-20. It requires issuers to derecognize financial liabilities related to breakage amounts in either of the following two ways:

  • If the entity expects to have a related breakage amount, derecognize the liability:
    • In amounts proportionate to the pattern of rights expected to be exercised by the holder of the product
    • To the extent that a significant reversal of the breakage amount will not subsequently occur, or
  • If the entity does not expect to be entitled to a breakage amount, the entity derecognizes the liability when the ...

Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.
Start your free trial

You might also like

Wiley GAAP 2016

Wiley GAAP 2016

Joanne M. Flood
Wiley IFRS 2017

Wiley IFRS 2017

PKF International Ltd

Publisher Resources

ISBN: 9781119652625