Tentative Board Decisions
Tentative Board decisions are provided for those interested in following the Board’s deliberations. All of the reported decisions are tentative and may be changed at future Board meetings.
Simplifying the Balance Sheet Classification of Debt. The Board began deliberations by discussing alternatives for classifying debt as current or noncurrent within a classified balance sheet.
The Board decided that an entity should classify a debt as noncurrent if one or both of the following criteria are met as of the balance sheet date:
- The liability is contractually due to be settled more than 12 months (or operating cycle, if longer) after the balance sheet date.
- The entity has a contractual right to defer settlement of the liability for at least 12 months (or operating cycle, if longer) after the balance sheet date.
The Board decided that the scope of the guidance should apply to all debt arrangements.
The Board will continue deliberations at a future Board meeting, focusing on disclosures and transition.
Consolidation—Principal versus Agent Analysis. The staff updated the Board on the status of the project and timing of the final Accounting Standards Update.
The staff updated the Board on feedback received from practitioners and preparers on the effect of a Board decision from the December 10, 2014, Board meeting related to series mutual funds. The staff expects that the final Accounting Standards Update should be ready for publication in February 2015.
Simplifying the Measurement Date for Plan Assets. The Board redeliberated the October 14, 2014 proposed Accounting Standards Update, Compensation—Retirement Benefits (Topic 715): Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets, directing the staff to draft a final Accounting Standards Update for a vote by written ballot.
Affirm the Practical Expedient
The Board affirmed the proposed practical expedient that allows an employer with a fiscal year-end other than a month-end date to measure defined benefit plan assets and obligations as of the month-end date that is closest to the employer’s fiscal year-end (alternative measurement date). The Board also decided that an employer choosing this option must apply it consistently to all of its defined benefit plans. The Board clarified that the proposed practical expedient is an accounting policy election.
Adjusting the Funded Status for Transactions That Occur between the Alternative Measurement Date and an Employer’s Fiscal Year-End
The Board affirmed that an employer using the practical expedient should be required to adjust the funded status for contributions and other significant events (as defined in paragraph 715-30-35-66) occurring between the alternative measurement date and its fiscal year-end. Paragraph 715-30-35-66 defines a significant event as a “plan amendment, settlement, or curtailment…that calls for a remeasurement.”
Extend the Practical Expedient to Remeasurements of Significant Events
In response to feedback received on the Exposure Draft, the Board also decided that employers should be allowed the use of the practical expedient in interim remeasurements of significant events.
The Board decided not to include employee benefit plans in the scope of this project. Instead, the Emerging Issues Task Force will be asked to consider the need for a practical expedient as part of its project to make targeted improvements to employee benefit plan accounting and reporting.
The Board affirmed that an employer would be required to disclose the election to use the practical expedient and the date on which defined benefit plan assets and obligations were measured.
Effective Date and Transition
The Board decided that these changes would be effective for public business entities for financial statements for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early application will be permitted. The changes would be effective for entities other than public business entities and employee benefit plans for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. Early application is also permitted for entities other than public business entities. The Board affirmed the proposed prospective transition method for all entities.