FASB issues Codification improvements
Defining Issues | December 2025
The amendments affect several topics to clarify, correct errors in and make improvements to the FASB Codification.
ASU 2025-12 enhances the usability of the Codification by refining accounting guidance and streamlining its application through technical corrections, making standards more consistent and easier to interpret for preparers and users.
Applicability
- All entities
Relevant dates
| Effective date | All entities |
|---|---|
| Annual periods – Fiscal years beginning after | Dec. 15, 2026 |
| Interim periods – In fiscal years beginning after | Dec. 15, 2026 |
Key impacts
The amendments clarify, correct errors in and make improvements to several Codification Topics, including amendments to:
- clarify the determination of the effect of potential common shares on the diluted earnings per share (EPS) computation, even if a loss from continuing operations exists;
- clarify that lease receivables arising from sales-type leases or direct financing leases should be excluded from the disclosure requirements for certain loan modifications to borrowers experiencing financial difficulty;
- revise the calculation of the reference amount description for beneficial interests, and clarify the calculation of interest income;
- explicitly permit the excess of repurchase price over par or stated value to be deducted from additional paid-in capital (APIC), as long as APIC does not become negative;
- clarify that the transfer of receivables from contracts with customers that meets the definition of a financial asset is subject to the requirements of ASC 860 (transfers and servicing); and
- clarify that not-for-profit entities (NFP)'s need to measure receivables arising from exchange transactions using the credit losses guidance.
The amendments are part of an ongoing FASB project to make non-substantive technical corrections, clarifications, and improvements that are not expected to have a significant effect on accounting practice or create a significant administrative cost to most entities.