No t e s t o Co n s o l i d a t e d F i n a n c i a l S t a t eme n t s J u n e 3 0 , 2 0 2 3 a n d 2 0 2 2 Accounting for Uncertainty in Income Taxes The university follows the guidance contained in ASC 740, Income Taxes. ASC 740 addresses the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a threshold of more-likelythan-not for recognition and de-recognition of tax positions taken or expected to be taken in a tax return. There were no uncertain tax positions recorded in the consolidated financial statements for fiscal years 2023 or 2022. Recent Accounting Pronouncements In March 2023, the FASB issued ASU 2023-02, Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (a consensus of the Emerging Issues Task Force), which allows an entity to elect to use the proportional amortization method to account for qualifying equity investments in tax credit structures that meet specified criteria, without regard to the underlying tax credit program. Previously, this method of accounting was only available for qualifying equity investments in lowincome housing tax credit (LIHTC) structures. ASU 2023-02 is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted. The university does not expect the new guidance to have a material impact on its consolidated financial statements. In March 2023, the FASB issued ASU 2023-01, Leases (Topic 842): Common Control Arrangements. The ASU offers private companies and not-for-profit entities that are not conduit bond obligors, a practical expedient with the option of using the written terms and conditions of a common-control arrangement when determining whether a lease exists, its classification, and the applicable accounting for that lease. This ASU also amends, for all entities, the accounting for leasehold improvements in common-control lease arrangements. ASU 2023-01 is effective for fiscal years beginning after December 15, 2023, including interim periods. Early adoption is permitted. The university does not expect the new guidance to have a material impact on its consolidated financial statements. In March 2022, the FASB issued ASU 2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. ASU 2022-02 eliminates the accounting guidance on troubled debt restructurings for creditors and amends the guidance on “vintage disclosures” to require disclosure of current-period gross write-offs by year of origination. The updated guidance is effective concurrently with the adoption of ASC 201613 (see below), no later than the fiscal year beginning after December 15, 2022. The university does not expect the new guidance to have a material impact on its consolidated financial statements. In November 2021, the FASB issued ASU 2021-09, Leases (Topic 842): Discount Rates for Lessees That Are Not Public Entities. ASU 2021-09 allows lessees that are not public business entities (PBEs) to make an accounting policy election by class of underlying asset, rather than on an entity-wide basis, to use a risk-free rate as the discount rate for measuring and classifying leases, when the rate in the lease is not readily determinable. The amendments in this ASU affect lessees that are not PBEs, including all not-for-profit entities (whether or not they are conduit bond obligors). The new guidance is effective for entities that have adopted Topic 842 as of November 11, 2021, for fiscal years beginning after December 15, 2021, though earlier application is permitted. Entities are required to apply the amendments on a modified retrospective basis to leases that exist at the beginning of the fiscal year of adoption. The university adopted ASU 2021-09 in fiscal 2023, resulting in no material impact to the consolidated financial statements. In July 2021, the FASB issued ASU 2021-05, Leases (Topic 842): Lessors-Certain Leases with Variable Lease Payments. ASU 2021-05 impacts lessors with lease contracts that (1) have variable lease payments that do not depend on a reference index or a rate and (2) would have resulted in the recognition of a selling loss at lease commencement if classified as sales-type or direct financing. The new guidance is effective for all entities with fiscal years beginning 22
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