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.

June 18, 2014 FASB Board Meeting

Conceptual Framework. The Board discussed whether and how to proceed with the conceptual framework project and decided to begin with presentation and measurement followed by the liability-equity distinction.


The Board decided the following two presentation concepts should be further developed:
  1. Information should be grouped into reasonably homogeneous groups. Line items or subtotals that include items that have similar characteristics in more than one respect are likely to provide more information about prospects for future cash flows than if their characteristics are dissimilar.
  2. The association between changes in assets, liabilities, and equity instruments and the assets, liabilities, and equity instruments that changed should be made apparent in the financial statements (or in the financial statements and notes).

The Board discussed how to proceed with developing concepts related to measurement, including:
  1. Agreeing on the meanings of key terms and what the objectives and qualitative characteristics imply for measurement
  2. Identifying appropriate types of measurements
  3. Determining which measurements to use in specific circumstances.

Customer’s Accounting for Fees in a Cloud Computing Arrangement.The Board began its deliberations of accounting for a customer’s accounting for fees paid in a cloud computing arrangement.

Proposed Clarifications to the Codification

The Board decided to incorporate the guidance that is now in paragraphs 985-605-55-121 through 55-123 into the scope Section of Subtopic 350-40, Intangibles—Goodwill and Other—Internal Use Software. That guidance would be applied to a cloud computing arrangement to determine whether the contract includes a license to software or is, instead, a service contract.

Transition, Effective Date, and Early Adoption

The Board decided that a reporting entity may elect retrospective or prospective transition. Under the prospective transition, an entity would apply the guidance in the proposed Update to all cloud computing arrangements entered into, or materially modified, after the effective date.

The Board decided that the effective date of the proposed Update would be as follows:
  1. For public business entities, for annual periods, including interim periods within those annual periods, beginning after December 15, 2015.
  2. For all other entities (that is, entities other than public business entities), the first annual period beginning after December 15, 2015, and interim periods thereafter.
In addition, the Board decided that an entity may early adopt the proposed guidance.

Transition Disclosures

The Board decided that if an entity elects the prospective transition method, then the entity should disclose the change in accounting principle and a qualitative description of the financial statement line items affected by the change.

If an entity elects the retrospective transition method, then the entity should provide additional quantitative disclosures, such as those required by Subtopic 250-10, Accounting Changes and Error Corrections—Overall.

Authorization to Proceed to a Ballot Draft and Comment Period

The Board directed the staff to draft a proposed Accounting Standards Update for vote by written ballot. In addition, the Board decided on a 90-day comment period for the proposed Update.

Financial Statements of Not-for-Profit Entities.

Investment Expenses

The Board continued its deliberations on the presentation and disclosure of investment expenses. The Board reaffirmed its tentative decision to require external and direct internal investment expenses to be netted against the investment return. However, the Board reconsidered the current disclosure requirement for netted investment expenses. Paragraph 958-225-50-1 currently requires a not-for-profit (NFP) entity to disclose the amount of investment-related expenses netted against investment revenues if that amount is not disclosed on the face of the statement of activities. After further consideration, the Board decided to remove the disclosure requirement existing in current GAAP about netted investment expenses for all NFP entities.

Capital-Like Transactions

The Board discussed how an entity would classify and present capital-like transactions and events in the statement of activities and the statement of cash flows. The Board directed the staff to further develop examples of how capital-like transactions would be presented over time in the statement of activities.

Note Disclosures

The Board considered the staff plans for improving note disclosures of NFP entities and:
  1. Directed the staff, as planned, to prepare examples illustrating a more cohesive presentation of current disclosure requirements for investment, endowment net assets, and fair value level disclosures.
  2. Decided to require that the so-called underwater amounts should be reported within the proposed with donor restrictions class of net assets (rather than as unrestricted class of net assets as currently required). The underwater amount is the amount by which the fair value of an individual donor restricted endowment fund is less than the original gift amount or level required by donor stipulations or law. An NFP entity also would be required to disclose the following information about underwater endowment funds in the aggregate:
    1. The board’s policy or decision on whether to reduce or not spend from the endowment fund
    2. Original gift amount (or level required by donor stipulations or law)
    3. Fair value.
  3. Directed the staff to continue conducting outreach and developing examples related to the potential disclosure of significant allocations of expenses.