ASU No. 2010-16, Entertainment–Casinos (Topic 924), Accruals for Casino Jackpot Liabilities, a consensus of the FASB Emerging Issues Task Force was issued April 2010 and is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The amendments should be applied by recording a cumulative-effect adjustment which is the difference between the amounts recognized in the statements of financial position before initial application of the amendments in the Update and the amounts recognized in the statement of financial position at initial application of those amendments.
The objective of this ASU is to address diversity in practice in the accounting for casino base jackpot liabilities. It addresses diversity in practice regarding whether an entity accrues liabilities for a base jackpot before it is won, or the entity is not required to award the base jackpot. Some entities do not accrue liabilities for a base jackpot before it is won because they could avoid the payment while other entities accrue liabilities for a base jackpot ratably over the period of play expected to precede payout.
Entities that generate revenue from gaming activities that involve base jackpots are affected by this ASU.
This ASU clarifies that (1) an entity should not accrue jackpot liabilities (or portions thereof) before a jackpot is won, if the entity can avoid paying that jackpot (2) jackpots should be accrued and charged to revenue when an entity has the obligation to pay the jackpot and (3) it applies to both base and progressive jackpots.
The objective of this ASU is to address diversity in practice in the accounting for casino base jackpot liabilities. It addresses diversity in practice regarding whether an entity accrues liabilities for a base jackpot before it is won, or the entity is not required to award the base jackpot. Some entities do not accrue liabilities for a base jackpot before it is won because they could avoid the payment while other entities accrue liabilities for a base jackpot ratably over the period of play expected to precede payout.
Entities that generate revenue from gaming activities that involve base jackpots are affected by this ASU.
This ASU clarifies that (1) an entity should not accrue jackpot liabilities (or portions thereof) before a jackpot is won, if the entity can avoid paying that jackpot (2) jackpots should be accrued and charged to revenue when an entity has the obligation to pay the jackpot and (3) it applies to both base and progressive jackpots.
ASUs are available on the FASB website, http://www.fasb.org/ under Standards.
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