New FASB Standards to Adopt in 2027 and Beyond Looking Ahead: Accounting Standards on the Horizon for Public Companies

Key Takeaways

• A wave of new accounting guidance is set to hit public companies starting in 2027. As calendar-year public companies complete their second-quarter financial reporting, cycle, management, audit committees and finance organizations should begin evaluating Accounting Standards Updates (ASUs) that will become effective in 2027 and later.
• Several of these standards will require changes to disclosures, accounting policies, systems, and controls. The standards expected to require the greatest implementation effort are those that either apply broadly to public companies or require companies to revisit how they capture data, apply accounting policies and design controls.
• Companies should use the complexity ranking below to identify which standards require immediate scoping, and which can be monitored through the normal adoption process.

As calendar-year public companies complete their second-quarter financial reporting, cycle, management, audit committees and finance organizations should begin evaluating Accounting Standards Updates (ASUs) that will become effective in 2027 and later. Several of these standards will require changes to disclosures, accounting policies, systems, and controls.

A wave of new accounting guidance is set to hit public companies starting in 2027.  CFOs and CAOs that aren’t prepared may find catching up during 2027 difficult. The biggest change affecting all public companies is Disaggregation of Income Statement Expenses (DISE) which requires careful planning prior to 2027 to determine if any data catching systems need to be enhanced or implemented.

The discussion below summarizes the principal standards that are effective for calendar-year public business entities beginning in 2027 and beyond and highlights the effective dates and transition requirements.

ASU 2024-03

Disaggregation of Income Statement Expenses

Overview of New Guidance

The standard requires public companies to disclose additional information in footnotes about specified categories of expenses included in income statement captions. Required disaggregated amounts include employee compensation, depreciation, amortization, inventory purchases, and certain depletion-related expenses. In addition, disclosure of selling expenses is required. The objective is to provide investors with greater transparency into significant expense categories.

Complexity: High

Why it matters: This is likely the most broadly impactful near-term standard because it applies to public companies and may require companies to capture, reconcile and disclose expense information at a level of detail not currently available from existing reporting systems.

Companies most likely to be impacted: All public companies, especially those with complex cost structures, multiple segments, decentralized finance processes, limited expense-level data tagging, or significant selling, compensation, depreciation, amortization or inventory-related costs.

Effective date: Effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027.

Transition: Entities may apply the standard either prospectively or retrospectively. Early adoption is permitted.

ASU 2025-03

Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity

Overview of New Guidance

The amendment revises the guidance used to identify the accounting acquirer when a transaction involves a variable interest entity (VIE). The objective is to improve the consistency of accounting outcomes in acquisitions involving VIEs.

Complexity: Targeted, but potentially significant

Why it matters: The impact is transaction-specific, but the accounting conclusion can be significant because identifying the accounting acquirer drives purchase accounting, financial statement presentation and predecessor/successor considerations.

Companies most likely to be impacted: Companies involved in acquisitions, restructurings, SPAC or reverse-merger transactions, private equity structures, or transactions involving legal entities that may be VIEs.

Effective date: Annual periods beginning after December 15, 2026, including interim periods within those years.

Transition: Entities will apply the guidance prospectively to acquisitions that occur on or after the effective date. Early adoption is permitted.

ASU 2025-04

Clarifications to Share-Based Consideration Payable to a Customer

Overview of New Guidance

The ASU clarifies the interaction between the stock compensation guidance in ASC 718 and the revenue guidance in ASC 606 when an entity grants share-based awards to customers. The amendments are intended to improve consistency in practice.

Complexity: Targeted

Why it matters: The amendments may affect how companies account for equity or equity-linked consideration granted to customers and may require reassessment of arrangements that blend revenue, customer incentives and share-based payment concepts.

Companies most likely to be impacted: Software, biotechnology, emerging growth and other companies that grant shares, warrants, options or other share-based awards to customers as part of commercial arrangements.

Effective date: Annual periods beginning after December 15, 2026, including interim periods within those years.

Transition: Entities may apply the guidance either on a modified retrospective or retrospective basis. Early adoption is permitted.

ASU 2025-07

Derivatives Scope Refinements and Clarification for Share-Based Non-Cash Consideration

Overview of New Guidance

The ASU expands certain derivatives' scope exceptions and clarifies the accounting for share-based non-cash consideration received from customers in revenue contracts.

Complexity: Targeted

Why it matters: The amendments may change whether certain contracts or instruments are evaluated under derivatives' guidance and may affect accounting for non-cash consideration received from customers.

Companies most likely to be impacted: Companies with customer arrangements involving warrants, tokens, equity-linked instruments or other share-based non-cash considerations, including software, digital assets, biotechnology and emerging growth companies.

Effective date: Annual periods beginning after December 15, 2026, including interim periods within those years.

Transition Entities may apply the guidance either on a modified retrospective or prospective basis. Early adoption is permitted.

ASU 2025-08

Purchased Loans

Overview of New Guidance

The standard expands use of the "gross-up" approach under ASC 326 to certain acquired loans, referred to as purchased seasoned loans. The amendment is intended to improve comparability and eliminate certain day-one credit loss expense recognition outcomes that stakeholders viewed as inconsistent with acquisition economics.

Complexity: Medium for financial institutions; lower for most other companies

Why it matters: The standard may affect acquisition accounting for certain loan portfolios and day-one credit loss recognition under ASC 326.

Companies most likely to be impacted: Banks, specialty finance companies, credit funds and other entities that acquire seasoned loan portfolios.

Effective date: Annual periods beginning after December 15, 2026, including interim periods within those years.

Transition: The standard is applied prospectively. Early adoption is permitted.

ASU 2025-09

Hedge Accounting Improvements

Overview of New Guidance

The ASU makes targeted improvements to hedge accounting, including:

• Similar-risk assessments for groups of forecasted transactions
• Hedging of interest payments on certain "choose-your-rate" debt instruments
• Improvements relating to non-financial forecasted transactions
• Certain updates involving written options and foreign currency hedging relationships

The amendments are intended to better align hedge accounting with entities' risk-management activities.

Complexity: Medium-to-high for companies that apply hedge accounting

Why it matters: The amendments are targeted but may be important for companies with formal hedge programs because they can affect designation, documentation and ongoing hedge accounting assessments.

Companies most likely to be impacted: Companies hedging interest rate, foreign currency, commodity or forecasted transaction risks, particularly entities with sophisticated treasury operations.

Effective date: Annual periods beginning after December 15, 2026, including interim periods within those years.

Transition; The standard generally uses a prospective transition approach, and the FASB included transition provisions to facilitate migration of existing hedge relationships. Early adoption is permitted.

ASU 2025-12

Codification Improvements

Overview of New Guidance

The ASU contains various technical corrections, clarifications, and improvements to the Codification. While the amendments are generally not expected to fundamentally change accounting models, entities should evaluate their applicability. Attention should be applied to the changes in ASC 260 Earnings per Share (EPS).

Complexity: Lower / monitoring, except for affected EPS matters

Why it matters: The amendments are generally technical, but companies should confirm whether any changes affect EPS calculations, disclosures or existing accounting policies.

Companies most likely to be impacted: Public companies with EPS calculations and companies operating in Codification areas addressed by technical corrections.

Effective date: Annual periods beginning after December 15, 2026, including interim periods within those years.

Transition: Entities are required to apply the amendments to ASC 260 retrospectively. All other amendments may be applied prospectively or retrospectively. Early adoption is permitted.

ASU 2025-06

Targeted Improvements to the Accounting for Internal-Use Software

Overview of New Guidance

The ASU modernizes accounting for internal-use software by eliminating references to project-development stages and introducing a revised capitalization threshold centered on management authorization, funding commitment and a probable-to-complete assessment. The amendments are designed to better accommodate agile software development methodologies.

Complexity: High for technology-intensive companies

Why it matters: The standard may require companies to revisit capitalization policies, project tracking, controls and judgments around internally developed software costs, particularly in agile development environments.

Companies most likely to be impacted: Technology, software, fintech, life sciences, ecommerce and other companies with significant internally developed platforms or agile software development processes.

Effective date: Annual periods beginning after December 15, 2027, including interim periods within those years (calendar year 2028 for calendar-year public companies).

Transition: Entities may apply the guidance using a prospective, retrospective, or modified retrospective transition method. Early adoption is permitted.

ASU 2025-11

Interim Reporting: Narrow-Scope Improvements

Overview of New Guidance

The amendments clarify and streamline certain interim disclosure requirements.

Complexity: Lower / monitoring

Why it matters: The amendments are narrow, but public companies should evaluate whether interim disclosure processes, checklists, or quarterly reporting controls need to be updated.

Companies most likely to be impacted: Public companies and other entities that issue interim financial statements and notes in accordance with U.S. GAAP.

Effective date: For public business entities, effective for interim reporting periods within annual reporting periods beginning after December 15, 2027 (calendar year 2028 for calendar year end companies).

Transition: The ASU may be applied prospectively or retrospectively by all entities that provide interim financial statements and notes in accordance with U.S. GAAP.

ASU 2026-02

Environmental Credits and Environmental Credit Obligations

Overview of New Guidance

This ASU creates Topic 818 and establishes guidance for recognizing, measuring, presenting and disclosing environmental credits and environmental credit obligations. It is intended to improve consistency in accounting for a rapidly growing area of practice.

Complexity: Medium; potentially high for companies active in environmental credit markets

Why it matters: The standard creates a new accounting model in an area where practice has been developing, with potential recognition, measurement, presentation and disclosure implications.

Companies most likely to be impacted: Energy, utilities, manufacturing, transportation, consumer products and other companies that generate, purchase, hold or settle environmental credits or related obligations.

Effective date: For public business entities, annual reporting periods beginning after December 15, 2027, including interim periods within those annual periods.

Transition: Entities are required to adopt the amendments on a retrospective basis by recognizing a cumulative effect adjustment to retained earnings at the date of initial application (i.e., prior reporting periods will not be recast).

ASU 2025-10

Accounting for Government Grants Received by Business Entities

Overview of New Guidance

The ASU creates a comprehensive model for accounting for government grants received by business entities, an area that previously lacked explicit U.S. GAAP guidance.

Complexity: Medium; higher for companies with material government assistance

Why it matters: The ASU introduces explicit U.S. GAAP guidance in an area historically addressed through analogy, which may require companies to update accounting policies, documentation and disclosures.

Companies most likely to be impacted: Companies receiving material grants, subsidies, tax incentives or government funding, including life sciences, clean energy, manufacturing and defense contractors.

Effective date: Annual periods beginning after December 15, 2028.

Transition: Entities may apply the guidance using a modified prospective, modified retrospective or retrospective approach, and early adoption is permitted.

Top Priorities for Public Companies

The standards expected to require the greatest implementation effort are those that either apply broadly to public companies or require companies to revisit how they capture data, apply accounting policies and design controls. Companies should use the complexity ranking above to identify which standards require immediate scoping, and which can be monitored through the normal adoption process.

1. Highest near-term priority: ASU 2024-03 (Expense Disaggregation Disclosures), because it applies broadly to public companies and may require changes to systems, chart of accounts, reporting packages or manual data aggregation processes.
2. High priority for technology-intensive companies: ASU 2025-06 (Internal-Use Software), particularly for companies using agile development approaches or making significant investments in internally developed platforms.
3. High priority for treasury-driven organizations: ASU 2025-09 (Hedge Accounting Improvements), for entities with active hedge accounting programs or significant exposure to interest rate, foreign currency or commodity risk.
4. Industry-specific priority: ASU 2026-02 (Environmental Credits), for companies that participate in environmental credit markets or have related compliance obligations.
5. Targeted but potentially significant: ASU 2025-10 (Government Grants), ASU 2025-03 (VIE accounting acquirer), and the share-based consideration amendments, because the impact may be significant for affected companies even though the population of affected entities is narrower.