Author: Jaclyn Veno, CPA
This article originally appeared in the Winter 2026 issue of the South Carolina CPA Report
As the accounting profession navigates a rapidly evolving financial landscape, the Financial Accounting Standards Board (FASB) continues refining the rules that govern how organizations report, measure, and disclose financial information. The latest Accounting Standards Updates (ASUs) that are effective this year, spanning joint ventures, crypto assets, equity securities, tax credit investments, and income tax disclosures, introduce significant changes that impact CPAs and financial leaders.
Joint Ventures: New Guidance for Formation and Measurement
The formation of joint ventures now face clarification: contributed assets and liabilities must be measured at fair value upon formation, according to ASU 2023-05. Unlike traditional business combinations, joint ventures are formed without an acquirer, and the initial measurement of net assets and goodwill is based on the fair value of all outstanding equity interests at the formation date. Private companies may elect an alternative for recognizing intangible assets and must amortize goodwill. This update applies prospectively to joint ventures formed on or after January 1, 2025, with early adoption permitted.
Crypto Assets: Fair Value Measurement and Enhanced Disclosure
With crypto assets gaining traction, ASU 2023-08 sets clear guidance for crypto assets that meet the definition of intangible assets. These assets must be subsequently measured at fair value, with gains and losses recognized in net income. On the balance sheet, crypto assets appear separately from other intangibles, and organizations may further disaggregate holdings by asset type. Disclosures are robust: for each significant holding, companies must report the name, cost basis, fair value, and number of units held. Annual disclosures include the method used to determine cost basis, a reconciliation of activity, and details about additions, dispositions, and realized gains or losses. Entities that receive crypto assets as noncash consideration and convert them quickly to cash are exempt from certain reconciliation requirements. The standard is effective for fiscal years beginning after December 15, 2024.
Equity Securities: Clarifying Fair Value Amid Contractual Restrictions
Companies holding equity securities under contractual sale restrictions will see greater clarity with ASU 2022-03. The update clarifies that such restrictions are not part of the unit of account, and should not affect fair value measurement. For example, shares under a lock-up agreement are valued based on the market price of identical unrestricted shares. Companies must disclose the fair value of restricted securities, the nature and duration of restrictions, and circumstances that could cause restrictions to lapse. The effective date is December 15, 2023, for public business entities and December 15, 2024, for others.
Tax Credit Investments: Expanding the Proportional Amortization Method
ASU 2023-02 expands the proportional amortization method, previously limited to low-income housing tax credit (LIHTC) structures, to other tax equity investments. Entities can now elect to amortize the initial investment cost in proportion to the income tax credits and benefits received, recognizing the net effect in income tax expense. The election is made on a program-by-program basis, and organizations must disclose the nature and impact of their tax equity investments. The update is effective for public business entities for fiscal years after December 15, 2023, and for other entities after December 15, 2024.
Income Tax Disclosures: Greater Transparency for Stakeholders
Transparency takes center stage with ASU 2023-09, which enhances income tax disclosures. Public business entities must disclose specific categories in the rate reconciliation and provide qualitative descriptions of major state and local jurisdictions. Nonpublic entities must offer qualitative disclosure about reconciling items and jurisdictions that significantly affect the effective tax rate. All entities must report the amount of income taxes paid, disaggregated by jurisdiction, and disclose income from continuing operations before tax, split between domestic and foreign sources. The update also streamlines reporting by eliminating certain disclosure requirements. Effective dates vary by entity type, with early adoption permitted.
Other Notable Updates: Profits Interest Awards, Codification Improvements, and CECL Amendments
Additional updates include guidance on profits interest and similar awards (ASU 2024-01), clarifying when such awards fall under share-based payment arrangements. Codification improvements (ASU 2024-02) remove references to nonauthoritative Concepts Statements, reinforcing the authority of the ASC. ASU 2025-05 introduces a practical expedient and an accounting policy elections for measuring credit losses on accounts receivable and contract assets, offering relief for private companies and nonprofits facing challenges under Topic 326.
Looking Ahead
The latest FASB updates reflect ongoing efforts to address gaps in guidance, improve transparency, and respond to emerging issues in financial reporting. By understanding these changes and their effective dates, CPAs and financial professionals can ensure compliance and maintain high standards in financial statement preparation and disclosure.
Disclosure: This article was generated using AI technology based on previously presented content. Jaclyn Veno and the SC.CPA team have reviewed, edited, and verified the article for accuracy, quality, and relevance.
