By Jen Stretch, CPA - Manager, Professional Services at CertentIn March 2020, the SEC approved and began accepting the 2020 US GAAP taxonomy. Whether your company chooses to convert to the 2020 taxonomy for your next filing or not, it is crucial to be aware of the changes for several reasons. First, the 2020 taxonomy contains improvements for new Accounting Standards Updates (ASU) such as Financial Instruments-Credit Losses. Also, companies should be aware of the 2020 taxonomy changes because the EDGAR system will issue warnings for deprecated elements, even if your filing is using the 2019 or 2018 US GAAP taxonomy. While it is not required to clear these warnings, some filers may choose to do so anyway.
When making tagging changes to your filing, make sure they are consistent with the intended use of the taxonomy structure. Taxonomy implementation guides provided by the Financial Accounting Standards Board (FASB), which maintains the US GAAP taxonomy, are available on their web site. These implementation guides are an excellent resource for implementing taxonomy changes in your filing as they promote consistency and quality in taxonomy application.
Read on for highlighted topic areas related to the 2020 US GAAP taxonomy changes.
Financial Instruments: Credit Losses
Many filers will be adding disclosures related to ASU 2016-13: Financial Instruments – Credit Losses. Since this ASU has been public for a while, many of the related elements exist in taxonomies previous to 2020, but there are still new elements for it this year. If you have new disclosures related to this ASU, be sure to check out FASB’s related taxonomy implementation guide, Financing Receivable and Current Expected Credit Loss Disclosures (2020). It includes an overview of the taxonomy modeling for ASU 2016-13 disclosures, as well as nine examples with specific guidance on taxonomy application with the 2020 taxonomy.
Consolidated and Non consolidated Entities
There have been several fundamental changes to the taxonomy for disclosures related to variable interest entities (VIEs) and equity method investments (EMIs). In earlier taxonomies, tagging disclosures related to VIEs and EMIs would use line items that are specific to equity method investments. For instance, in the example below, the highlighted line item would be tagged with the element Equity Method Investment, Summarized Financial Information, Net Income (Loss).
The 2020 taxonomy deprecates this and other similar elements. New axes were added, which should be used with existing line items to replace the deprecated elements. For example, the line item in the example below, when tagged with the 2020 taxonomy, should use Net Income Loss and Equity Method Investment, Nonconsolidated Investee or Group of Investees [Member] under the new EMI axis. See below for specifics. While the taxonomy implementation guide related to this topic is currently only in a proposed status, it is unlikely there will be significant changes before it is accepted, so it is still useful to reference while tagging these types of disclosures.
A similar dimensional approach has been taken with disclosures related to accounting changes, such as retrospective and opening balance adjustments on the equity statement and estimates of the effect of new accounting pronouncements. FASB has added a taxonomy implementation guide to its web site, which guides tagging accounting changes disclosures with the 2020 taxonomy. In it, you can find examples for both textual and table disclosures related to ASUs, including the equity statement.
The above highlights are not all-inclusive of the changes made to the 2020 US GAAP taxonomy; however, these are the most impacted areas. When you are ready to make the changes in your filing, utilize the resources available to you. These resources include taxonomy implementation guides on the above topics and more, the FASB 2020 taxonomy page, XBRL US’s data quality testing, and, most importantly, your XBRL vendor, who will be able to provide information specific to your filing.
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