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.
Wednesday, May 17, 2023 FASB Board Meeting
Disclosure improvements in response to the SEC’s release on disclosure update and simplification. The Board redeliberated the proposed Accounting Standards Update, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, and made the following decisions:
Referred Disclosures Incorporated into the Codification
*Disclosure numbers refer to the disclosure numbers from the Board Memo Handout dated May 17, 2023.
Referred Disclosures Not Incorporated into the Codification
The Board decided not to incorporate into the Codification the following disclosures that were previously included in the proposed Update: 6. Products or Services, 10. Common Control Transactions in Interim Periods, 11. Consolidation, 13. Foreign Currency, and 14. Intra-Entity Profits and Losses.
The Board affirmed its decision not to incorporate into the Codification the following referred disclosures that were not previously included in the proposed Update: 23. Equity Compensation Plans, 24. Discounts on Shares, 25. Major Customers, 26. Authorized Amount of Debt, and 27. Financial Statement Presentation of Related Party Transactions.
Debt in Default Disclosure Not Addressed in Project
The Board decided not to address as part of this project the referred debt in default disclosure that was originally included the project on simplifying the balance sheet classification of debt, which was removed from the Board’s technical agenda in 2021.
Transition
The Board affirmed its decision that an entity should apply the amendments prospectively.
Effective Date
The Board decided that the effective date for each amendment will be the same as the SEC’s effective date to remove that related disclosure from Regulations S-X and S-K for all entities subject to the existing SEC disclosure requirements, with early adoption prohibited. The Board decided that each amendment will be effective for all other entities two years later.
The Board decided that if by June 30, 2027, the SEC has not issued amendments to remove the applicable requirements from Regulation S-X or Regulation S-K, any final amendments that have not been addressed by SEC rulemaking will be removed from the Codification as pending content.
Analysis of Costs and Benefits
The Board concluded that it has received sufficient information and analysis to make an informed decision on the expected costs and expected benefits of the amendments and that the expected benefits of those amendments would justify the expected costs.
Permission to Ballot
The Board directed the staff to draft a final Accounting Standards Update for vote by written ballot.
Conceptual framework: measurement. The Board continued initial deliberations on FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting—Chapter 6, Measurement. The Board decided on the following underlying concepts as the foundation for the chapter:
The Board directed the staff to incorporate Board members’ feedback in the draft chapter, develop the basis for conclusions for the chapter, and consider whether elements of FASB Concepts Statement No. 7, Using Cash Flow Information and Present Value in Accounting Measurements, should be incorporated in the forthcoming measurement chapter. The Board will continue deliberations at a future Board meeting.
Conceptual framework: recognition and derecognition. The Board deliberated substantive issues that were identified by comment letter respondents to the Exposure Draft. The Board made the following decisions:
Recognition Criteria
The Board affirmed its decision that all of the following are fundamental recognition criteria:
The Board affirmed its decision that the qualitative characteristic of relevance is appropriately captured in the recognition criteria.
Derecognition
The Board affirmed its decision that derecognition occurs when an item fails to meet any of the recognition criteria.
Permission to Ballot
The Board directed the staff to draft final Chapter 5, Recognition and Derecognition, of Concepts Statement 8 for vote by written ballot.
Wednesday, May 17, 2023 FASB Board Meeting
Disclosure improvements in response to the SEC’s release on disclosure update and simplification. The Board redeliberated the proposed Accounting Standards Update, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, and made the following decisions:
Referred Disclosures Incorporated into the Codification
| Referred Disclosure* | Summary Description of Referred Disclosure | Board Decision |
| 4. Interim—Changes in Reporting Entity | Disclose in interim financial statements any material retroactive prior-period adjustment and the effect of the adjustment on net income and retained earnings. | Affirmed decision to incorporate with minor clarifying edits. |
| 5. Interim—Earnings per Share (EPS) | Disclose the basis of the EPS computation together with the number of shares used in the computation. | Affirmed decision to incorporate with minor clarifying edits. |
| 7. Assets Subject to Liens | Disclose assets mortgaged, pledged, or otherwise subject to lien and the obligations collateralized. | Affirmed decision to incorporate with minor clarifying edits. |
| 8. Debt | Disclose amount and terms of unused lines of credit for short-term financing and the weighted-average interest rate associated with outstanding short-term borrowings. | Affirmed decision to incorporate with minor clarifying edits and provided an exemption to entities other than public business entities for the weighted-average interest rate disclosure. |
| 9. Preferred Shares | Present preferences on involuntary liquidation, if other than par or stated value, parenthetically in the equity section of the balance sheet. | Affirmed decision to incorporate with minor clarifying edits. |
| 12. Derivative Accounting Policies | Disclose where and when derivative instruments and their related gains and losses are reported in the statement of cash flows. | Affirmed decision to incorporate with minor clarifying edits and only require the disclosure in annual periods, unless there is a change in accounting policy during an interim period. |
| 15. Repurchase Agreements (Accrued Interest Payable)
(1 of 3) |
Include amounts for accrued interest payable in the disclosure of the repurchase liability. | Affirmed decision to incorporate with minor clarifying edits. |
| 16. Repurchase Agreements (Interest Rate)
(2 of 3) |
Disclose interest rates associated with repurchase liabilities. | Affirmed decision to incorporate with minor clarifying edits and provided an exemption to entities other than public business entities. |
| 17. Repurchase Agreements (Counterparty Risk)
(3 of 3) |
Disclose amounts at risk with an individual counterparty if that amount exceeds more than 10 percent of stockholders’ equity. | Affirmed decision to incorporate with minor clarifying edits. |
| 18. Reverse Repurchase Agreements (Separate Balance Sheet Presentation)
(1 of 2) |
Present reverse repurchase agreements on the face of the balance sheet if the carrying amount exceeds 10 percent of total assets. | Affirmed decision to incorporate with minor clarifying edits. |
| 19. Reverse Repurchase Agreements (Provisions to Protect against Decrease in Market Value)
(2 of 2) |
Disclose whether there are any provisions in a reverse repurchase agreement to ensure that the market value of the underlying assets remains sufficient to protect against counterparty default. | Affirmed decision to incorporate with minor clarifying edits. |
| 20. Oil- and Gas-Producing Activities | Specify that compliance with Subtopic 932-235 is required for each annual period presented in the applicable financial statements. | Affirmed decision to incorporate with minor clarifying edits. |
| 21. Technical Correction for Investment Companies | Clarify requirements for investment companies to disclose components of capital on the balance sheet. | Affirmed decision to incorporate with minor clarifying edits. |
| 22. Real Estate Investment Trusts (REITs) | Disclose tax status of distributions per unit (for example, ordinary income, capital gain) for REITs. | Affirmed decision to incorporate with minor clarifying edits. |
*Disclosure numbers refer to the disclosure numbers from the Board Memo Handout dated May 17, 2023.
Referred Disclosures Not Incorporated into the Codification
The Board decided not to incorporate into the Codification the following disclosures that were previously included in the proposed Update: 6. Products or Services, 10. Common Control Transactions in Interim Periods, 11. Consolidation, 13. Foreign Currency, and 14. Intra-Entity Profits and Losses.
The Board affirmed its decision not to incorporate into the Codification the following referred disclosures that were not previously included in the proposed Update: 23. Equity Compensation Plans, 24. Discounts on Shares, 25. Major Customers, 26. Authorized Amount of Debt, and 27. Financial Statement Presentation of Related Party Transactions.
Debt in Default Disclosure Not Addressed in Project
The Board decided not to address as part of this project the referred debt in default disclosure that was originally included the project on simplifying the balance sheet classification of debt, which was removed from the Board’s technical agenda in 2021.
Transition
The Board affirmed its decision that an entity should apply the amendments prospectively.
Effective Date
The Board decided that the effective date for each amendment will be the same as the SEC’s effective date to remove that related disclosure from Regulations S-X and S-K for all entities subject to the existing SEC disclosure requirements, with early adoption prohibited. The Board decided that each amendment will be effective for all other entities two years later.
The Board decided that if by June 30, 2027, the SEC has not issued amendments to remove the applicable requirements from Regulation S-X or Regulation S-K, any final amendments that have not been addressed by SEC rulemaking will be removed from the Codification as pending content.
Analysis of Costs and Benefits
The Board concluded that it has received sufficient information and analysis to make an informed decision on the expected costs and expected benefits of the amendments and that the expected benefits of those amendments would justify the expected costs.
Permission to Ballot
The Board directed the staff to draft a final Accounting Standards Update for vote by written ballot.
Conceptual framework: measurement. The Board continued initial deliberations on FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting—Chapter 6, Measurement. The Board decided on the following underlying concepts as the foundation for the chapter:
- Reported amounts of assets and liabilities should be recoverable or settleable, respectively.
- Measurement should be anchored in prices, and transactions and other events and circumstances affecting the entity should ultimately be measured in prices.
- Entry and exit price systems are the only relevant measurement systems.
- Cash flow estimations may be relevant measures when approximating an entry or exit price.
- Systematic allocations of accumulated cost do not necessarily result in an entry or exit price.
The Board directed the staff to incorporate Board members’ feedback in the draft chapter, develop the basis for conclusions for the chapter, and consider whether elements of FASB Concepts Statement No. 7, Using Cash Flow Information and Present Value in Accounting Measurements, should be incorporated in the forthcoming measurement chapter. The Board will continue deliberations at a future Board meeting.
Conceptual framework: recognition and derecognition. The Board deliberated substantive issues that were identified by comment letter respondents to the Exposure Draft. The Board made the following decisions:
Recognition Criteria
The Board affirmed its decision that all of the following are fundamental recognition criteria:
- Definitions—The item meets the definition of an element of financial statements.
- Measurability—The item is measurable and has a relevant measurement attribute.
- Faithful Representation—The item can be depicted and measured with faithful representation.
The Board affirmed its decision that the qualitative characteristic of relevance is appropriately captured in the recognition criteria.
Derecognition
The Board affirmed its decision that derecognition occurs when an item fails to meet any of the recognition criteria.
Permission to Ballot
The Board directed the staff to draft final Chapter 5, Recognition and Derecognition, of Concepts Statement 8 for vote by written ballot.