Version 8 - September 2025 (CUD release)

Content update

Financial period type: 12 Months (Annual)
Target Industry Type: Manufacturing, Services, and Generic (excluding Financial Services)

Legislative changes for December 2025 financial year

The amendments in this Update are effective immediately and on a fully retrospective basis to annual periods beginning after December 15, 2024.
The main provisions in this Update are as follows:
Amend an SEC paragraph pursuant to the issuance of SEC SAB 122.
Amend paragraph 405-10-S99-1, with no link to a transition paragraphragraph.

The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2024. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2025.
The main provisions in this Update are as follows:
Amendments to the Codification that remove references to various Concepts Statements. In most instances, the references are extraneous and not required to understand or apply the guidance. In other instances, the references were used in prior Statements to provide guidance in certain topical areas.
In the Board’s view, removing all references to Concepts Statements in the guidance will simplify the Codification and draw a distinction between authoritative and nonauthoritative literature.

For public business entities, these amendments take effect for annual periods beginning after December 15, 2024, and interim periods within those annual periods. For all other entities, the amendments take effect for annual periods beginning after December 15, 2025, and interim periods within those annual periods.
This update primarily adds an illustrative example with four fact patterns demonstrating how an entity applies the scope guidance in paragraph 718-10-15-3 to determine whether Topic 718 governs a profits interest award.
The fact patterns focus on the scope conditions in paragraph 718-10-15-3. This example aims to reduce complexity in determining if a profits interest award falls under Topic 718 guidance and reduce existing diversity in practice.
The amendments in paragraph 718-10-15-3 improve its overall clarity and operability without changing the guidance.

For public business entities, the amendments in this Update are effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. For all other entities, the amendments are effective for annual periods beginning after December 15, 2025, and interim periods within those annual periods.
The main provisions in this Update are as follows:
Adding an illustrative example that includes four fact patterns to demonstrate how an entity should apply the scope guidance in paragraph 718-10-15-3 to determine whether a profits interest award should be accounted for in accordance with Topic 718.
The fact patterns in the illustrative example focus on the scope conditions in paragraph 718-10-15-3. The illustrative example is intended to reduce (1) complexity in determining whether a profits interest award is subject to the guidance in Topic 718 and (2) existing diversity in practice.
The amendments in paragraph 718-10-15-3 improve its overall clarity and operability without changing the guidance.

For public business entities, the amendments in this Update are effective for annual periods beginning after December 15, 2024. For entities other than public business entities, the amendments are effective for annual periods beginning after December 15, 2025.
The main provision(s) in this Update are as follows:
The amendments in this Update require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income [or loss] by the applicable statutory income tax rate).
The following specific categories are required to be disclosed:
State and local income tax, net of federal (national) income tax effect
Foreign tax effects
Effect of changes in tax laws or rates enacted in the current period
Effect of cross-border tax laws
Tax credits
Changes in valuation allowances
Nontaxable or nondeductible items
Changes in unrecognized tax benefits.
Separate disclosure is required for any reconciling item listed below in which the effect of the reconciling item is equal to or greater than 5 percent of the amount computed by multiplying the income (or loss) from continuing operations before income taxes by the applicable statutory income tax rate.
If the reconciling item is within the effect of cross-border tax laws, tax credits, or nontaxable or nondeductible items categories, it is required to be disaggregated by nature.
If the reconciling item is within the foreign tax effects category, it is required to be disaggregated by jurisdiction (country) and by nature, except for reconciling items related to changes in unrecognized tax benefits discussed in (4).
If the reconciling item does not fall within any of the categories listed in (1), it is required to be disaggregated by nature.
For the purpose of categorizing reconciling items, except for reconciling items related to changes in unrecognized tax benefits discussed in (4), 3 the state and local income tax category should reflect income taxes imposed at the state or local level within the jurisdiction (country) of domicile, the foreign tax effects category should reflect income taxes imposed by foreign jurisdictions, and the remaining categories listed in (1) should reflect federal (national) income taxes imposed by the jurisdiction (country) of domicile.
For the purpose of presenting reconciling items:
Reconciling items are required to be presented on a gross basis with two exceptions under which unrecognized tax benefits and the related tax positions and tax effects of certain cross-border tax laws and the related tax credits may be presented on a net basis.
Reconciling items presented in the changes in unrecognized tax benefits category may be disclosed on an aggregated basis for all jurisdictions.
The amendments in this Update require that all entities disclose on an annual basis the following information about income taxes paid:
The amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes
The amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received).
The amendments in this Update require that all entities disclose the following information:
Income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign
Income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign.
The amendments in this Update eliminate the requirement for all entities to (1) disclose the nature and estimate of the range of the reasonably possible change in the unrecognized tax benefits balance in the next 12 months or (2) make a statement that an estimate of the range cannot be made.
The amendments in this Update remove the requirement to disclose the cumulative amount of each type of temporary difference when a deferred tax liability is not recognized because of the exceptions to comprehensive recognition of deferred taxes related to subsidiaries and corporate joint ventures.
The amendments in this Update replace the term public entity as currently used in Topic 740 with the term public business entity as defined in the Master Glossary of the Codification.

The amendments in this Update are effective for all entities for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years.
The amendments in this Update apply to assets (which will be subsequently measured at fair value with changes recognized in net income each reporting period) that meet all the following criteria:
Meet the definition of intangible assets as defined in the Codification
Do not provide the asset holder with enforceable rights to or claims on underlying goods, services, or other assets
Are created or reside on a distributed ledger based on blockchain or similar technology iv. Are secured through cryptography v. Are fungible
Are not created or issued by the reporting entity or its related parties.
The amendments in this Update also require that an entity present (1) crypto assets measured at fair value separately from other intangible assets in the balance sheet and (2) changes from the remeasurement of crypto assets separately from changes in the carrying amounts of other intangible assets in the income statement (or statement of activities for not-for-profit entities).
While the amendments in this Update do not otherwise change the presentation requirements for the statement of cash flows, the amendments require specific presentation of cash receipts arising from crypto assets that are received as noncash consideration in the ordinary course of business (or as a contribution, in the case of a not-for-profit entity) and are converted nearly immediately into cash.
For annual and interim reporting periods, the amendments in this Update require that an entity, including an entity that is subject to industry-specific guidance, disclose the following information:
The name, cost basis, fair value, and number of units for each significant crypto asset holding and the aggregate fair values and cost bases of the crypto asset holdings that are not individually significant
For crypto assets that are subject to contractual sale restrictions, the fair value of those crypto assets, the nature and remaining duration of the restriction(s), and the circumstances that could cause the restriction(s) to lapse.
For annual reporting periods, the amendments in this Update require that an entity disclose the following information:
A rollforward, in the aggregate, of activity in the reporting period for crypto asset holdings, including additions (with a description of the activities that resulted in the additions), dispositions, gains, and losses
For any dispositions of crypto assets in the reporting period, the difference between the disposal price and the cost basis and a description of the activities that resulted in the dispositions
If gains and losses are not presented separately, the income statement line item in which those gains and losses are recognized iv. The method for determining the cost basis of crypto assets.

For public business entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years.
The amendments in this Update permit reporting entities to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met.
Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the income tax credits and other income tax benefits received and recognizes the net amortization and income tax credits and other income tax benefits in the income statement as a component of income tax expense (benefit). To qualify for the proportional amortization method, if elected in accordance with paragraph 323-740-25-4, all of the following conditions must be met:
It is probable that the income tax credits allocable to the tax equity investor will be available.
The tax equity investor does not have the ability to exercise significant influence over the operating and financial policies of the underlying project.
Substantially all of the projected benefits are from income tax credits and other income tax benefits. Projected benefits include income tax credits, other income tax benefits, and other non-income-tax-related benefits. The projected benefits are determined on a discounted basis, using a discount rate that is consistent with the cash flow assumptions used by the tax equity investor in making its decision to invest in the project.
The tax equity investor’s projected yield based solely on the cash flows from the income tax credits and other income tax benefits is positive.
The tax equity investor is a limited liability investor in the limited liability entity for both legal and tax purposes, and the tax equity investor’s liability is limited to its capital investment.
The amendments in this Update require that all tax equity investments accounted for using the proportional amortization method use the delayed equity contribution guidance in paragraph 323-740-25-3 (which requires that a liability be recognized for delayed equity contributions that are unconditional and legally binding or for equity contributions that are contingent upon a future event when that contingent event becomes probable). LIHTC investments not accounted for using the proportional amortization method will no longer be permitted to use the delayed equity contribution guidance in paragraph 323-740-25-3. In addition, the amendments in this Update remove the equity method impairment example for LIHTC investments in Example 1 in Subtopic 323-740.
As a result of this change, LIHTC investments accounted for using the equity method must apply the impairment guidance in Subtopic 323-10, Investments—Equity Method and Joint Ventures—Overall. Furthermore, the amendments in this Update require that LIHTC investments that are not accounted for using the proportional amortization method or the equity method apply the guidance in Topic 321 on the accounting for equity investments. As a result of these changes, the guidance in Subtopic 323- 740 is applicable only to tax equity investments accounted for using the proportional amortization method.
The amendments in this Update require specific disclosures that must be applied to all investments that generate income tax credits and other income tax benefits from a tax credit program for which the entity has elected to apply the proportional amortization method in accordance with Subtopic 323-740 (including investments within that elected program that do not meet the conditions to apply the proportional amortization method). The amendments require that a reporting entity disclose certain information in annual and interim reporting periods that enable investors to understand the following information about its investments that generate income tax credits and other income tax benefits from a tax credit program:
The nature of its tax equity investments
The effect of its tax equity investments and related income tax credits and other income tax benefits on its financial position and results of operations.
The amendments also provide examples of disclosures that an entity could provide in meeting the disclosure objectives.

For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years.
The amendments in this Update clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction.
The amendments in this Update also require the following disclosures for equity securities subject to contractual sale restrictions:
The fair value of equity securities subject to contractual sale restrictions reflected in the balance sheet
The nature and remaining duration of the restrictions

Early adoption for accounting standards

ASU 2024-02:
Early adoption of the amendments is permitted, including adoption in an interim period. If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period.
ASU 2024-01:
Early adoption of the amendments is permitted, including adoption in an interim period. If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period.
ASU 2023-09
: Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.
ASU 2023-08:
Early adoption of the amendments is permitted, including adoption in an interim period. If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period.
ASU 2023-02:
Early adoption is permitted for all entities in any interim period.
ASU 2022-03:
Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance..