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 2 a n d 2 0 2 1 Recent Accounting Pronouncements 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 does not expect the new guidance to have a material impact on its 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 after December 15, 2021, though earlier application is permitted. The university adopted ASU 2021-05 in fiscal 2022, resulting in no material impact to the consolidated financial statements. In October 2020, the FASB issued ASU 2020-10, Codification Improvements, which improves consistency by amending the ASC to include all disclosure guidance in the appropriate disclosure sections and clarify application of various provisions in the ASC by amending and adding new headings, cross referencing to other guidance, and refining or correcting terminology. The university adopted ASU 2020-10 in fiscal 2021, resulting in no material impact to the consolidated financial statements. In September 2020, the FASB issued ASU 2020-07, Not-for-Profit Entities (NFP) (Topic 958): Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets, to increase the transparency about the measurement of contributed nonfinancial assets as well as the amount of those contributions used in an NFP’s programs and other activities. The guidance requires NFP’s to present contributed nonfinancial assets as a separate line item in the statement of activities, apart from cash and other financial contributions, as well as disclosure of the type of asset, whether the asset was monetized or utilized in the reporting period, donorimposed restrictions, valuation techniques and the principal market used to determine fair value. ASU 2020-07 is to be applied on a retrospective basis for annual periods beginning after June 15, 2021. The university adopted ASU 2020-07 in fiscal 2022, resulting in no material impact to the consolidated financial statements (see Contributions section of this Note 2). In March 2019, the FASB issued ASU 2019-03, Not-for-Profit Entities (Topic 958): Updating the Definition of Collections. The amendments in this ASU modify the definition of the term collections, allowing the proceeds from the sale of collection items to be used to support the direct care of existing collections in addition to the current requirement that proceeds from sales of collection items be used to acquire other items for collections. The university adopted ASU 2019-03 in fiscal 2021, resulting in no material impact to the consolidated financial statements. 22
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