SUMMARY OF BOARD DECISIONS
Summary of Board decisions are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions are included in an Exposure Draft for formal comment only after a formal written ballot. Decisions in an Exposure Draft may be (and often are) changed in redeliberations based on information provided to the Board in comment letters, at public roundtable discussions, and through other communication channels. Decisions become final only after a formal written ballot to issue an Accounting Standards Update.
February 2, 2010 FASB/IASB Joint Videoconference Board Meeting
- Presentation of the sections of the statement of comprehensive income
- The timeline for the issuance of an exposure draft.
The Boards tentatively decided that:
An entity must display total comprehensive income and its components in a continuous statement of comprehensive income.
The continuous statement of comprehensive income must be displayed with two sections: profit or loss or net income and other comprehensive income. An entity reporting comprehensive income is permitted to use different titles for these sections as long as the meaning is clear.
The components of each section of the statement must be reported consistently.
The Boards affirmed the existing requirements that provide the option to display components of other comprehensive income net of related income tax expense or before related income tax effects with one amount shown for the aggregate income tax effects on the face of the continuous statement of comprehensive income.
The Board also affirmed that the income tax effect related to each component of other comprehensive income, including reclassification adjustments, may be displayed on the face of the statement together with each component. Alternatively, the income tax effect of each component of other comprehensive income may be displayed in the notes to the financial statements.
The Boards also affirmed not to change the guidance on determining the items that must be presented in other comprehensive income. That guidance is contained in other standards that are not being amended by these new standards.
The FASB affirmed that reclassifications between other comprehensive income and net income should be displayed in the same level of detail that the items were originally reported.
The IASB affirmed that the components of other comprehensive income that are not reclassified upon derecognition should be presented together and that the components of other comprehensive income that are reclassified upon derecognition should be presented together.
Timeline for issuing an exposure draft
The Boards directed the staff to draft an exposure draft for vote by written ballot.
The Boards tentatively decided that the exposure draft should be issued simultaneously with the FASB’s proposed Update on financial instruments and the IASB’s exposure draft on postemployment benefits.
Leases. At this meeting, the Boards tentatively decided that:
- The definition of a lease should not be limited to property, plant, and equipment. However, the proposed new leases requirements do not apply to assets other than property, plant, and equipment.
- A lease is defined as a type of contract.
- A lease must convey the right to use an asset.
- The right to use an asset is conveyed if:
- The contract conveys the right to use a specified asset. The proposed new leases requirements will provide additional guidance about what constitutes a specified asset.
- The contract conveys the right to control the use of the underlying asset. The current leases guidance on when a lease conveys the right to control the use of the underlying asset would be included in the proposed new leases requirements. However this guidance would be rewritten to help clarify its meaning.
- A lease is for a period of time.
- The definition of a lease should explicitly state that the right to use an asset is conveyed in exchange for consideration.
Financial instruments with the characteristics of equity. [This topic was not discussed as previously announced. It will be rescheduled to another date.]
Accounting for financial instruments: hedge accounting. The Boards discussed possible objectives for hedge accounting and whether hedging risk components (bifurcation-by-risk) should be permitted. No decision was made on the objective.
The IASB tentatively decided to permit bifurcation-by-risk for financial items and indicated a leaning toward permitting bifurcation-by-risk for nonfinancial items. Furthermore, the IASB requested that the staff explore a possible approach that the hedged item must be both separately identifiable and measurable for the purpose of determining hedge effectiveness for consideration at a future meeting.
The FASB decided to explore bifurcation-by-risk for financial items and requested the staff to develop possible approaches for consideration at a future meeting.