As we settle into the new year, it is crucial for finance teams at nonpublic companies to recognize the accounting standards shifting from "future considerations" to "current reality." For calendar year-end entities, 2025 brought a mix of niche industry updates and broader operational changes.
Below is a summary of the key FASB standards that became effective during 2025 (for fiscal years beginning after December 15, 2024), helping to ensure your team is prepared for the road ahead.
1. Crypto Assets: Moving to Fair Value
Standard: ASU 2023-08, Intangibles — Goodwill and Other — Crypto Assets (Subtopic 350-60)
- What it does: This update establishes specific guidance related to the accounting for and disclosure of crypto assets, addressing a lack of explicit rules in previous GAAP. By formalizing these requirements, the standard aims to provide more consistent information regarding the holdings and value of digital assets on the balance sheet.
- Effective date: For calendar year-end companies, this is effective starting January 1, 2025.
- Who it impacts: This is critical for any company holding digital assets like Bitcoin or Ethereum on their balance sheet.
>> Our Take: Companies will need robust processes to obtain and document fair value pricing for crypto assets. Volatility can create challenges in determining the valuation and may require enhanced controls around data sourcing and validation.
Read more in “ASU 2023-08 Eases Burden for Crypto Asset Accounting”
2. Joint Ventures: A New Basis of Accounting
Standard: ASU 2023-05, Business Combinations — Joint Venture Formations (Subtopic 805-60)
- What it does: This standard addresses the accounting for joint venture formations, specifically focusing on the recognition and initial measurement of net assets. It clarifies how a joint venture should establish its opening balance sheet, ensuring the formation is accounted for consistently across different entities.
- Effective date: This applies prospectively to all joint venture formations with a formation date on or after January 1, 2025.
- Who it impacts: Companies entering into new joint venture arrangements in which a separate legal entity is created.
>> Our Take: Since the joint venture must recognize contributed assets and liabilities at fair value, companies may need valuation specialists and good documentation. This could be challenging when partners contribute non cash assets that are hard to value.
Read more in “3 Q&As to Help Clarify How ASU 2023-05 Addresses Accounting for Joint Ventures”
3. Tax Credit Investments: Expanded Options
Standard: ASU 2023-02, Investments — Equity Method and Joint Ventures (Topic 323)
- What it does: This update permits reporting entities to account for investments in tax credit structures using the proportional amortization method, a choice previously limited to low-income housing tax credits. This expansion allows for a broader application of a method that aligns the investment cost with the resulting tax benefits.
- Effective date: For calendar year-end companies, this is effective starting January 1, 2025.
- Who it impacts: Entities investing in tax credit programs such as renewable energy, historic rehabilitation or New Markets Tax Credits.
>> Our Take: These investments are very much tax driven. Accounting teams must stay aligned with tax to understand credit generation schedules, carryforward limitations, recapture risks and tax return timing. Misalignment can create mismatches between book amortization and actual tax outcomes.
4. Restricted Equity Securities: Fair Value Clarification
Standard: ASU 2022-03, Fair Value Measurement (Topic 820)
- What it does: This guidance clarifies the fair value measurement of equity securities that are subject to contractual sale restrictions. It specifically addresses how market participants should view these restrictions when pricing the asset, distinguishing between restrictions on the holder versus the instrument itself.
- Effective date: For calendar year-end companies, this is effective starting January 1, 2025.
- Who it impacts: Investment funds and corporate entities holding equity securities subject to "lock-up" agreements or similar contractual sale restrictions.
>> Our Take: Companies may need to realign their valuation models with the new guidance. This may require consulting with valuation specialists and updating internal methodologies, memos and price testing procedures.
Read more on ASU 2022-03
5. Long-Duration Insurance Contracts: Targeted Improvements
Standard: ASU 2018-12, 2019-09, 2020-11 and 2022-05 Financial Services Insurance (Topic 944)
- What it does: This suite of standards delivers targeted improvements to the accounting for long-duration contracts, including specific updates for the transition of sold contracts. The amendments also address effective dates and early application provisions to ensure insurers have sufficient time to implement these complex measurement changes.
- Effective date: For calendar year-end companies, this is effective starting January 1, 2025.
- Who it impacts: Insurance companies that issue long-duration contracts, such as life insurance, disability income and annuities.
>> Our Take: The standard may require updated key projections and input into calculations related to these contracts. Many insurers may need to update or revise their current process, systems and procedures so they can handle the new requirements.
6. SEC Paragraph Amendments
Standard: ASU 2025-02, Liabilities (Topic 405)
- What it does: This ASU updates the codification to include amendments to SEC paragraphs pursuant to SEC Staff Accounting Bulletin No. 122. It ensures the FASB Accounting Standards Codification accurately reflects the latest SEC staff views regarding liability recognition.
- Effective date: Effective upon issuance in March 2025.
- Who it impacts: While primarily technical, this impacts entities that monitor SEC guidance for compliance or reference.
>> Our Take: Even though the amendment is technical, companies that reference SEC guidance may need to refresh internal process and controls to align with updated SEC interpretations.
Next Steps
Whether you hold crypto, are forming a JV or invest in tax credits, if your company falls into one of these categories, now is the time to finalize your adoption policies.
Contact Gino Scipione or a member of your service team to discuss this topic further.
In this blog Cohen & Co is not rendering legal, accounting, investment, tax or other professional advice. Rather, the information contained in this blog is for general informational purposes only. Any decisions or actions based on the general information contained in this blog should be made or taken only after a detailed review of the specific facts, circumstances and current law with your professional advisers.