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New U.S. Accounting Rule to Establish How Companies Record Environmental Credits
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Good morning, CFOs. New accounting rules on environmental credits are coming; the FASB explores crypto accounting again following a Trump group recommendation; travel-industry outlook stabilizes; and Walmart extends 10% employee discount to nearly all groceries.
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Ford said it had concerns with the proposed requirement to measure its liabilities tied to environmental credit obligations and provide detailed disclosure. PHOTO: BLOOMBERG NEWS
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The Financial Accounting Standards Board voted to set first-ever requirements on how companies account for environmental credits such as renewable-energy certificates and carbon offsets, while dialing back the extent of disclosures it had proposed last year.
The standard setter on Wednesday voted to require U.S. public and private companies to apply one model to various credits that companies obtain for their compliance programs or voluntary use.
The new rule covers carbon offsets, cap-and-trade programs and renewable-energy credits. Companies obtain certain environmental credits for producing or selling products aimed at removing or reducing pollution or generating energy from renewable sources. Businesses are also granted emissions allowances and cap-and-trade credits from regulators.
Companies will have to recognize an environmental credit when the credit likely will be used to settle an obligation or be sold to a customer. They will need to record the value of the credit at its cost. If they don’t expect to settle the liability, they also have to test whether to reduce the value of the credits on the balance sheet.
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Content from our sponsor: Deloitte
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Health Care CFOs Treating New External Pain Points: Survey
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As external forces reshape health care, industry finance leaders say they are pursuing growth in an increasingly complex environment. Read More
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📆 Earnings
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Applied Materials
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Deere
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JD.com
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NetEase
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Nu Holdings
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Tapestry
📈 Economic Indicators
The BLS releases the producer price index for July.
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FASB to Explore Crypto Accounting Following Trump Group Recommendation
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The Financial Accounting Standards Board will evaluate whether to set new rules around certain cryptocurrency issues following a recommendation from a working group President Trump set up to support the industry.
The standard setter will seek public feedback on what crypto assets may qualify as cash equivalents, as well as accounting for transfers of crypto, Chair Rich Jones said Wednesday.
"These are all ways of getting more information for our board to consider in the future to see if there's a project there for us," Jones said.
The FASB in 2023 set a new requirement for businesses to use fair-value accounting for bitcoin and other crypto assets. That rule excluded nonfungible tokens, or NFTs, and certain stablecoins.
The FASB recently faced scrutiny from lawmakers as House Republicans proposed holding up its funding unless it pulls forthcoming tax-disclosure requirements. —Mark Maurer
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Companies' Pension Funding Increased in July
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The estimated funding level of pension plans sponsored by S&P 1500 companies increased 1 percentage point in July to 108% as a result of an increase in discount rates and domestic equities, according to consulting firm Mercer LLC. As of the end of July, the plans' estimated aggregate surplus increased by $2 billion, to $116 billion, compared with a $114 billion surplus at the end of June, Mercer says.
"Interest rates ended the month slightly increased, as the market awaits the Fed's next potential rate cut," says Mercer partner Matt McDaniel. —Jennifer Williams
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What Else Matters to CFOs
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The travel industry is gearing up for a more positive backdrop for the rest of the year as higher-income Americans increasingly hit the road. PHOTO: SHANNON STAPLETON/REUTERS
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The travel industry is gearing up for a more positive backdrop for the rest of the year as higher-income Americans increasingly hit the road, analysts said.
Airlines and hotels said trends improved throughout the second quarter, while booking websites noted an uptick in travel demand since the start of July.
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$2.2 Billion
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The amount Gildan Activewear is paying to buy Hanesbrands. The deal combines two makers of basic apparel with the aim of selling more T-shirts, socks and underwear across the retail landscape.
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The Wall Street Journal's CFO Journal offers corporate leaders and professionals CFO analysis, advice and commentary to make informed decisions. We cover topics including corporate tax, accounting, regulation, capital markets, management and strategy.
Follow us on X @WSJCFO. The WSJ CFO Journal Team comprises reporters Kristin Broughton, Mark Maurer and Jennifer Williams, and Bureau Chief Walden Siew.
You can reach us by replying to any newsletter, or email Walden at walden.siew@wsj.com.
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