RECENT ACCOUNTING DEVELOPMENTS
Compensation – Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards — In March 2024, the FASB issued an accounting standard update that provides guidance in determining whether profits interest and similar awards should be accounted for as share-based arrangements within the scope of Topic 718. The amendments are effective for annual and interim periods beginning after December 15, 2024, and shall be applied either retrospectively or prospectively. The Company has adopted the new guidance as of January 1, 2025 with prospective application to any profits interest and similar awards granted or modified on or after the date of adoption. The adoption of the amendments did not have a material impact to the Company’s financial statements.
Income Taxes (Topic 740): Improvements to Income Tax Disclosures —In December 2023, the FASB issued an accounting standard update to enhance the transparency and decision usefulness of income tax disclosures. The amendments include new annual disclosure requirements related to the rate reconciliation, information about income taxes paid, and disaggregated information on pre-tax income or loss and income tax expense from continuing operations. The amendments also eliminated certain disclosure requirements. The new guidance is effective for annual periods beginning after December 15, 2024, and shall be applied on a prospective basis. The Company has adopted the new guidance prospectively and updated its income tax disclosures in Note 19.
Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses — In November 2024, the FASB issued an accounting standard update to require additional information about the types of expenses in commonly presented expense captions. The amendments are effective for annual periods beginning after December 15, 2026, and the subsequent interim periods, with early adoption permitted. The amendments shall be applied either prospectively or retrospectively. The Company is currently evaluating the new guidance.
Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets — In July 2025, the FASB issued an accounting standard update that provides a practical expedient related to the estimation of expected credit losses on accounts receivables, which permits entities to assume that the current
conditions as of the balance sheet date do not change for the remaining life of the asset. The amendments are effective for annual periods beginning after December 15, 2025 and interim periods within those annual periods, with early adoption permitted. The amendments shall be applied either prospectively or retrospectively. The Company intends to elect the practical expedient with a prospective application as of January 1, 2026. The Company does not expect the election of the practical expedient to have a material impact on its financial statements upon adoption.
Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software — In September 2025, the FASB issued an accounting standard update to eliminate accounting consideration of software project development stages and enhance the guidance related to when an entity would begin capitalizing software costs. The amendments are effective for annual periods beginning after December 15, 2027, and the interim periods within those annual periods, with early adoption permitted. The amendments can be applied prospectively, retrospectively, or using a modified transition approach. The Company is currently evaluating the new guidance.