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.

February 4, 2015 FASB Board Meeting

Employee Share-Based Payment Accounting Improvements. The Board continued its deliberations, primarily discussing methods of transition and disclosure related to previous Board decisions.

Transition Method

The Board decided to provide different methods of transition for the proposed changes.

The Board decided that a modified retrospective transition method, with a cumulative-effect adjustment recognized in equity, would be used for the adoption of following proposed changes:

Minimum Statutory Withholding Requirements (Applicable to All Entities)

The proposed change to the exception for liability classification when an employer uses a net-settlement feature to withhold shares to meet an employee’s minimum statutory withholding requirements. Under the modified retrospective transition method, the changes would be applied to outstanding liability awards at the date of adoption.

Accounting for Forfeitures (Applicable to All Entities)

The proposed change allowing an entity an accounting policy election to either estimate the number of forfeitures or recognize forfeitures as they occur.

Classification of Awards with Repurchase Features (Applicable to All Entities)

The proposal to align the classification guidance for put and call rights embedded in a share that are contingent on an event within the employee’s control. Under the modified retrospective transition method, modification accounting would be applied to outstanding liability awards at the date of adoption.

Intrinsic Value Election for All Liability-Classified Awards (Applicable to Nonpublic Entities Only)

The proposal to provide nonpublic entities with a one-time election to change the measurement of liability-classified awards from fair value to intrinsic value.

Accounting for Income Taxes upon Settlement of an Award (Applicable to All Entities)

The proposal to remove the requirement to delay recognition of an excess tax benefit until the tax benefit is realized.

The Board decided to require a retrospective transition method for the following two proposed changes:
 
Presentation of Employee Taxes Paid on the Statement of Cash Flows When an Employer Withholds Shares to Meet Minimum Statutory Withholding Requirements (Applicable to All Entities)

The proposal to classify cash paid when directly withholding shares to meet minimum statutory withholding requirements as a financing activity in the statement of cash flows.

Presentation of Excess Tax Benefits on the Statement of Cash Flows (Applicable to All Entities)

The proposal to remove the requirement that employers present excess tax benefits as a cash inflow from financing activities and a cash outflow from operating activities.

The Board decided to require a prospective transition method for the following two proposed changes:

Accounting for Income Taxes upon Settlement of an Award (Applicable to All Entities)

The proposal that all excess tax benefits and tax deficiencies should be recognized in the income statement.

Expected Term (Applicable to Nonpublic Entities Only)

The proposal to provide nonpublic entities with a practical expedient for estimating the expected term of an award.
 
Disclosures in the Period of Adoption

The Board decided that the disclosures about a change in accounting principle in paragraphs 250-10-50-1 through 50-3 would be required with one exception; entities would not be required to quantify the income statement effect of a change (direct and indirect) in the period of adoption.

Disclosures about Accounting for Forfeitures (Applicable to All Entities)

The Board decided to amend the disclosure requirements in paragraph 718-10-50-2(e) to include information about unvested awards rather than awards expected to vest. This amendment would only apply to entities that elect to account for forfeitures as they occur.

Other Issues and Next Steps

Effective Date for Proposed Accounting Standards Update

The Board decided not to include a proposed effective date in the Exposure Draft. The Board will instead seek feedback from stakeholders about the amount of time they will need to implement the proposed changes.

Eliminating the Indefinite Deferral in Topic 718—Stock Compensation

To improve usability of the FASB Accounting Standards Codification®, the Board decided to eliminate the indefinite deferral of certain requirements in Topic 718. This amendment would result in no change to current GAAP requirements; it would only remove guidance in the Codification that is not applied in practice because it is indefinitely deferred.

Next Steps

The Board directed the staff to draft a proposed Accounting Standards Update for vote by written ballot. The Board decided that the comment period will be 60 days.