This is a continuation of my Research Paper part 1 ( see below )

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This is a continuation of my Research Paper part 1 ( see below ) . I am required to do the following below and don't know where to start. Any help would be appreciated. I left all 8 topics I initially wrote about but only two from each IFRS & two from FASB are needed. I'm not clear what it means by " develop these issues in a final research paper". Is there some standard format I should be following for this ( i.e., find outside opinion , formulate assumptions based on issues and opinions, etc) ?

 

Requirements :

Research Paper - Part 2 Building on the assignment completed in Research Paper - Part 1, you are required to choose 2 issues from both the FASB and IFRS websites, for which you previously provided summaries. You will then develop these issues in a final research paper.

 

 

Disclosure Initiative—Subsidiaries that are SMEs (IFRS)

The Disclosure Initiative-Subsidiaries that are SMEs is a Standard -Setting Project that was initially brought to the board's attention in 2015, expressing how the subsidiaries reporting to their parent company thought it more suitable to follow the recognition and measurement requirements with the IFRS Standards than to apply the IFRS for SMEs Standard. The caveat of the request being they wanted a reduction in the arduous disclosures in hopes of reducing cost. Despite the disclosure reduction, all needed information would still be reported. Since then, this project has gradually progressed through the various stages of the research program (March 2019), was brought before the board for review, and moved to a standard-setting program (Sept 2019 - Jan 2020, analyzed by staff to determine which set of standards should change (IFRS Standards or IFRS for SMEs Standards). Finally, an exposure draft was agreed upon as the next stage in the process. (ifrs.org,2021)

Management Commentary(IFRS)

Management Commentary is a Standard-Setting project to revise the IFRS Practice Statement 1 Management Commentary section (i.e., MD&A, Strategic Report, Management Report, etc.) that resides within a company's financial reporting to provide beneficial information that would instruct outside viewers on the Entity's financial position. Currently, the Management Commentary focuses on explanations regarding an Entity's long-term prospects, cash flow, and performance. The revised statement intends to enlighten viewers on short-term focuses, overcome gaps in the current reporting, disclose pertinent entity information, consolidate innovation reporting, and ensure adequate details are disclosed by an auditor's review. This project was in the research stage from Dec 2010 - Nov 2017 and expects its Exposure Draft this April 2021.  (ifrs.org, 2020)

Business Combinations under Common Control (IFRS)

The Business Combinations under Common Control is currently a research project that was initially brought to the board in 2007. It was realized that within the IFRS Standards, there were gaps or inadequate direction when it came to the receiving Company reporting business acquisitions under the same party. For example, if Tesla (Controlling Party) owned both Volkswagen and Ferrari, Volkswagen (Transferring Company) owned Porsche and sold Porsche (Transferred Company) to Ferrari (Receiving Company). IFRS had established standards on how Tesla and Volkswagen reported the merger, but there were no defined standards on how Ferrari should report the combination. In light of this deficiency, different asset recognition approaches were inconsistently utilized (i.e., Fair Value, Book Value) and reported within the Financial Statements. (ifrs.org, 2020) This project was decided to remain in the comment period up to 270 days (on October 2020) and set to review preliminary feedback in September 2021 to determine the next steps. (ifrs.org)

Primary Financial Statements (IFRS)

The Primary Financial Statements is a Standard-Setting project due to a growing concern of the inadequacies of transparency and comparability conveyed within the financial statement disclosures regarding an Entity's performance. The proposed changes focus on revising subtotals to reflect consistent and applicable information within the statement of profit or loss as well.  It is also proposing to granularly classify components on the statement of financial position and the statement of profit or loss to allow for applicable information (i.e., break down operation expenses (by function or nature), unusual income & expenses, etc.). The board also suggests removing classification within the statement of cash flows to refine inconsistencies. The project is set to reconsider the proposals (on January 2021). Once finalized, the new standard will replace the current IAS 1 Presentation of Financial Statements. (ifrs.org, 2021)

Accounting by a Joint Venture for Nonmonetary Assets Contributed by Investors (FASB)

The Accounting by a Joint Venture for Nonmonetary Assets Contributed by Investors project was ultimately discussed by the board in September 2019 after many requests by the SEC staff and practitioners advising deficiencies of the inceptive assessment of contributions by a Joint Venture. In July (2020), the board decided to include both monetary or nonmonetary contributions within the project's criteria and require they are not only recognized by their fair value (per Subtopic 805-20, Business Combinations), but the acquirer must apply the fresh-start method. The board also included within the scope direction on formation and acquisition dates. The project stage remains in deliberation, and additional discussion will ensue the following meeting.

Leases (Topic 842): Targeted Improvements (FASB)

Leases (Topic 842): Targeted Improvements project intends to make changes to standard No. 2016-02, Leases per the petitioning of stakeholders to address the following:

"1. Sales-type leases with variable lease payments—lessor only (Issue 1)

 2. Option to remeasure lease liability—lessee only (Issue 2)

 3. Modifications reducing the scope of a lease contract (Issue 3)" (fasb.org, 2020).

 

The improvements will clarify lease type classifications with variable payments (issue 1), allow remeasurement of lease liabilities when changes to referenced index or rates are scheduled to occur on future payments (also resolving differences between IFRS and GAAP) (issue 2), and remove the need to reconsider classification on remaining leases in the event that one or more separate lease has an early termination (issue 3). This project is currently redeliberating after the comment period has concluded with potential updates to the proposed changes based on the feedback that was rendered. (fasb.org 2020)

Recognition and Measurement of Revenue Contracts with Customers under Topic 805 (FASB)

The Recognition and Measurement of Revenue Contracts with Customers under Topic 805 is currently at the Exposure Draft Comment Period (ending March 2021). Revisions to the standard would resolve the deficiencies on how to realize contractual liabilities and assets as well as address the payment timing and recognition of revenue contracts when obtained through acquisition by a business combination. (fasb.org) The board met on September (2020) and concluded that criteria from Topic 606 (Revenue from Contracts with Customers) should be adopted and would resolve all concerns regarding acquired revenue contracts with customers in a business combination. They also extended the project to include and cover all contracts that measure Gains or Losses of Nonfinancial Assets. (fasb.org, 2020)

 

Simplifying the Balance Sheet Classification of Debt (FASB)

The Simplifying the Balance Sheet Classification of Debt project resulted from a simplification initiative by the board and was initially discussed in August 2014. In an effort to reduce unnecessary complexity and provide consequential classifications for debt within the balance sheet, the board has concluded the revisions on Topic 470, Debt is necessary. The effects of this project could potentially shift classifications from noncurrent liabilities to current liabilities, reduce cost, and increase transparency. These changes will be applicable to "all entities that enter into a debt agreement" (fasb.org, 2017). The project has a status of Revised Exposure Draft Redeliberations but no definitive next steps. (fasb.org, 2020)