Project Update

Clarifying Certain Existing Principles on Statement of Cash Flows

Last updated on January 21, 2015. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.

(Updated sections are indicated with an asterisk *)

The staff has prepared this summary of Board decisions for information purposes only. Those Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.

Project Objective
Decisions Reached at Last Meeting
Summary of Decisions Reached to Date
Next Steps
Board/Other Public Meeting Dates
Background Information
*Contact Information

Project Objective

The project is intended to reduce diversity in practice in financial reporting by clarifying certain existing principles in Topic 230, Statement of Cash Flows, including providing additional guidance on how and what an entity should consider in determining the classification of certain cash flows. As part of the project, the staff will research potential additional disclosures that could result in increased relevance for users.

Decisions Reached at Last Meeting (April 28, 2014)

The Board voted to add to its technical agenda a project on the statement of cash flows that will clarify the guidance on the application of Topic 230.

Summary of Decisions Reached to Date

See Decisions Reach at Last Meeting.

Next Steps

The staff is currently performing additional research and outreach about what would comprise the clarifying guidance and how it would provide useful information in the application of the principles within Topic 230. The staff plans to discuss its findings with the Board at a future meeting.

Board/Other Public Meeting Dates

The Board meeting minutes are provided for the information and convenience of constituents who want to follow the Boards' deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.

April 28, 2014 Board Meeting—Agenda prioritization meeting about whether to add a project to the Board’s agenda
*April 23, 2014 Education Session—Preliminary research and findings on specific cash flow classification issues within the statement of cash flows

Background Information

In November 1987, FASB issued FASB Statement No. 95, Statement of Cash Flows. Statement 95 was later codified in Topic 230, Statement of Cash Flows. The Board has received feedback from constituents indicating that there is diversity in practice regarding the application of Topic 230. Specifically, constituents mentioned the following issues:
  • Insurance proceeds
  • Debt prepayment or extinguishment costs
  • Classification of changes in restricted cash
  • Zero coupon bonds
  • Classification of dividends from equity method investees
  • Determination of the predominance of cash flows
  • Insurance proceeds from company-owned life insurance
  • Classification of cash flows from securitizations accounted for under Topic 860, Transfers and Servicing.
The staff’s research indicated that there was diversity in practice with respect to the classification of certain cash receipts and payments. The staff’s research also indicated that the primary reasons for the diversity in classification is the result of lack of specific accounting guidance and inconsistent application of the existing principles within Topic 230. This project will include clarifying existing principles in Topic 230 on how to classify cash receipts and cash payments.

At its April 28, 2014 meeting, the Board voted to add the project to its agenda.

*Contact Information

Jenifer Wyss
Project Manager

Jane Rizzuto
Postgraduate Technical Assistant