Version 9 - April 2026 (CUD release)

Content update

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

Legislative changes for December 2026 financial year

The amendments in this Update are effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted for entities that have adopted ASU 2020-06: Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity.
The amendments in this Update permit an entity to apply the new guidance on either a prospective or a retrospective basis.
The main provisions in this Update are as follows:
The amendments in this Update clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion.
Under the amendments, to account for a settlement of a convertible debt instrument as an induced conversion, an inducement offer must provide the debt holder with, at a minimum, the consideration (in form and amount) issuable under the conversion privileges provided in the terms of the instrument.
An entity is required to assess whether this criterion is satisfied as of the date the inducement offer is accepted by the debt holder.
If, when applying the criterion, the convertible debt instrument had been exchanged or modified (without being deemed substantially different) within the one-year period preceding the offer acceptance date, an entity should compare the inducement offer with the terms that existed one year before the offer acceptance date.
The amendments in this Update do not change the other criteria that are required to be satisfied to account for a settlement transaction as an induced conversion.
The amendments in this Update provide additional clarification regarding the effect of changes to volume-weighted average price (VWAP) formulas, as follows:
The incorporation, elimination, or modification of a VWAP formula does not automatically result in extinguishment accounting.
An entity should instead assess whether the form and amount of conversion consideration are preserved, using the fair value of the entity's shares as of the inducement offer acceptance date.
The amendments in this Update clarify that the induced conversion guidance applies to a convertible debt instrument that is not currently convertible, provided that the instrument had a substantive conversion feature both as of both its issuance date and the date the inducement offer is accepted.

The amendments will be effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. If applicable, the amendments in this Update should be applied prospectively.
The main provisions in this Update are as follows:
In response to feedback from stakeholders, the amendments in this Update provide all entities with a practical expedient and entities other than public business entities with an accounting policy election when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606, as follows:
Practical expedient:
In developing reasonable and supportable forecasts as part of estimating expected credit losses, all entities may elect a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset.
Accounting policy election:
An entity other than a public business entity that elects the practical expedient is permitted to make an accounting policy election to consider collection activity after the balance sheet date when estimating expected credit losses.

Early adoption for accounting standards

ASU 2024-04:
Early adoption of the amendment is permitted, including adoption in an interim period, for all entities that have adopted the amendments in ASU 2020-06. If an entity adopts the amendment in an interim reporting period, it must adopt them as of the beginning of the fiscal year that includes that interim period.
ASU 2025-04:
Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. If an entity adopts the amendment in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period.