New accounting pronouncements

3 Months Ended

Mar. 31, 2023

Accounting Changes And Error Corrections [Abstract]

New accounting pronouncements

Note 2. New accounting pronouncements

We adopted Accounting Standards Update 2018-12 “Targeted Improvements to the Accounting for Long Duration Contracts” (“ASU 2018-12”) as of January 1, 2023, which modifies the accounting, reporting and disclosures related to long duration insurance contracts and most significantly the measurement of our long duration life, annuity and health benefit liabilities. ASU 2018-12 was applied retrospectively to contracts in-force beginning as of January 1, 2021 (the “transition date”). The Consolidated Financial Statements for 2022 and 2021 were revised to reflect the effects of the adoption of ASU 2018-12. As of the transition date, the after-tax impact of changes in cash flow assumptions were recorded in retained earnings and the after-tax effect of changes in discount rates assumptions were recorded in accumulated other comprehensive income. The effects of the adoption of ASU 2018-12 on our Consolidated Financial Statements as of January 1, 2021 and for the years ending December 31, 2022 and 2021 are included in Part II, Item 5 of this Report.

Beginning as of January 1, 2021, the cash flow assumptions used in measuring benefit liabilities are reviewed at least annually, with the effects of assumption changes recorded in earnings. Further, the discount rate assumptions used in measuring benefit liabilities are revised each quarterly reporting period based on the prevailing observable upper-medium grade (generally considered to be single A-rated credit ratings) corporate bond yields that reflect the duration characteristics and currency attributes of the liabilities, using interpolation for durations between the observable yields. Changes to benefits liabilities arising from changes in discount rate assumptions are recorded in other comprehensive income. In measuring benefit liabilities and amortizing capitalized acquisition costs under long duration insurance contracts, we generally aggregate contracts by issuance year. ASU 2018-12 also requires certain disclosures for long duration insurance liabilities. See Note 16.

Notes to Consolidated Financial Statements (Continued)

Note 2. New accounting pronouncements (Continued)

The effects from adopting ASU 2018-12 on affected line items from our Consolidated Statement of Earnings and Comprehensive Income for the quarter ended March 31, 2022 follows in millions, except per share amounts.

	First Quarter 2022
	Previously reported			Increase (decrease)			As revised
Revenues:
Insurance premiums earned	$	17,492		$	(4	)	$	17,488
Costs and expenses:
Life, annuity and health insurance benefits		1,323			14			1,337
Insurance underwriting expenses		2,767			(163	)		2,604
Earnings before income taxes		6,812			145			6,957
Income tax expense		1,227			25			1,252
Net earnings		5,585			120			5,705
Net earnings attributable to Berkshire Hathaway shareholders	$	5,460		$	120		$	5,580
Other comprehensive income:
Foreign currency translation		(316	)		1			(315	)
Long duration insurance contracts		—			2,419			2,419
Other comprehensive income, net		(404	)		2,420			2,016
Comprehensive income attributable to Berkshire Hathaway shareholders	$	5,059		$	2,540		$	7,599
Net earnings per average equivalent Class A share	$	3,702		$	82		$	3,784
Net earnings per average equivalent Class B share	$	2.47		$	0.05		$	2.52