Summary of Changes to the Accounting Standards and Accounting Standards Updates (ASUs) – Impacting Private Companies with Reporting Periods Ending December 31, 2025

For private companies with a December 31, 2025 year-end, there are a handful of key changes to the accounting standards and Accounting Standards Updates (ASUs) that are effective for the 2025 financial statements. These updates have effective dates for fiscal years beginning after December 15, 2024 or December 15, 2025, and may affect your entity’s 2025 or 2026 year-end reporting as follows:

Effective for 2025 calendar year-end reporting:

• ASU 2022-03 Fair Value Measurements (Topic 820) – Clarifies that contractual sale restrictions should not be considered in measuring the fair value of equity securities.
• ASU 2022-05 Financial Services – Insurance (Topic 944) – Provides transition guidance for insurance entities related to accounting for sold contracts.
• ASU 2023-02 Investments – Equity Method and Joint Ventures (Topic 323) – Expands the proportional amortization method to more tax credit investment structures.
• ASU 2023-05 Business Combinations – Joint Venture Formations (Subtopic 805-60) – Provides guidance on recognition and initial measurement for joint venture formations.
• ASU 2023-08 Intangibles, Goodwill and Other, and Crypto Assets (Subtopic 350-60) – Provides guidance on accounting for and disclosure of crypto assets.

Effective for fiscal years beginning after December 15, 2025 (calendar 2026), with early adoption permitted:

• ASU 2023-09 Income Taxes (Topic 740) Improvements to Income Tax Disclosures – requires enhanced and more detailed disclosures about income tax expense, rate reconciliation, income taxes paid, and disaggregation by jurisdiction.
• ASU 2024-01 Compensation – Stock Compensation (Topic 718) – Clarifies the scope of Topic 718 for profits interest and similar awards.
• ASU 2024-02 Codification Improvements – Removes references to nonauthoritative “Concepts Statements” from the Codification. Primarily a technical cleanup and disclosure about adoption, if material.
• ASU 2025-05 Financial Instruments Credit Losses (Topic 326) Measurement of Credit Losses for Accounts Receivable and Contract Assets – Creates a practical expedient and policy election specifically related to the estimation of current expected credit losses (CECL).

Effective for fiscal years beginning after December 15, 2025 (calendar 2026):

• ASU 2024-04 Debt with Conversions and Other Options (Subtopic 470-20) – clarifies the requirements for induced conversions of convertible debt.

Effective for fiscal years beginning after December 15, 2027 (calendar 2028):

• ASU 2025-06 Targeted Improvements to the Accounting for Internal-Use Software – replaces the “project stage” model with a principles-based framework for cost recognition and capitalization with the majority of entities now using agile or iterative software development methods.

It is important to be aware of the changes to the accounting standards and ASUs that may have an impact on your entity’s 2025 calendar year-end reporting. Please contact your Boyum Barenscheer advisor for assistance with understanding and implementing the changes to the accounting standards and ASUs.