Tentative Board Decisions

Tentative 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.

January 29, 2014 FASB Board Meeting

Consolidation—Principal versus Agent Analysis. The Board discussed how to further integrate rights held by other parties, one of the principal versus agent factors included in the proposed FASB Accounting Standards Update, Consolidation (Topic 810): Principal versus Agent Analysis, within the existing guidance in Topic 810, Consolidation. The Board decided that paragraph 810-10-15-14(b)(1) should be amended to incorporate concepts included in Subtopic 810-20, Consolidation—Control of Partnerships and Similar Entities, specifically for limited partnerships and similar legal entities. In regards to the evaluation of “voting rights or similar rights” in this paragraph, as applied only to limited partnerships and similar legal entities, the exercise of kick-out rights (including liquidation rights) or participating rights would require either a unilateral partner or a simple majority (or lower threshold) of partners (including the general partner) to meet the condition in that paragraph. Kick-out rights (including liquidation rights) or participating rights would be defined as they are in the proposed Update. No changes were made to paragraph 810-10-15-14(b)(1) for all other types of entities.

The Board also considered but decided not to change existing GAAP requirements for evaluating kick-out rights (including liquidation rights) or participating rights, as defined in the proposed Update, within the measurement Section of Subtopic 810-10 (related to variable interest entities). Such rights would continue to affect the analysis of paragraph 810-10-25-38A(a) only when held by a single enterprise (including its related parties and de facto agents) and when exercisable on a unilateral basis as specified in paragraph 810-10-25-38C.

Accounting for Financial Instruments—Classification and Measurement. The Board discussed alternatives to the business model portion of the overall classification and measurement model and decided not to continue to pursue the business model assessment in the proposed Accounting Standards Update, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, as clarified by the Board at the November 2013 Joint Board meeting with the IASB. The Board also decided not to pursue an approach that focuses on the business activities that an entity uses in acquiring and managing the financial assets.

The Board directed the staff to conduct further analysis of targeted improvements that can be made to the current U.S. GAAP guidance for classification and measurement for loans and securities. After considering those targeted improvements to the respective models for loans and securities, the Board will consider whether it should align the models or retain two separate models to account for loans and securities.

FASB Agenda Prioritization. The Board discussed the FASB’s agenda prioritization and voted to add or remove certain projects from its or the Emerging Issues Task Force’s (EITF) agenda.

The Board voted to add to its technical agenda Accounting for Government Assistance, a project to develop disclosure requirements about government assistance.

The FASB voted not to add to its or the EITF’s technical agenda the following projects:
  1. Operating Segments
  2. Pensions and Other Postretirement Benefit Plans
  3. Troubled Debt Restructuring.
The Board voted to remove the following projects from its agenda:
  1. Emissions Trading
  2. Earnings per Share
  3. Income Taxes (short-term convergence project)
  4. Not-for-Profit Financial Reporting: Other Financial Communications
  5. Investment Property Entities
  6. Investment Companies: Real Estate Property Investments.
The Board voted to remove the following projects from the EITF’s agenda:
  1. Application of the AICPA Audit and Accounting Guide, Investment Companies, by Real Estate Investment Companies (EITF 09-D)
  2. Commodity Inventories of Brokers and Dealers (EITF 06-12)
  3. Interpretation of Constraining Conditions of a Transferee in a CBO Structure (EITF 03-15)
  4. Multiple Foreign Exchange Rates (EITF 10-B)
  5. Potential EITF Issue on Application of EITF 99-20 When a Special-Purpose Entity Holds Equity Securities.
The Chairman decided, in consultation with the other Board members, that the FASB would perform research on the following projects:
  1. Accounting Issues in Employee Benefit Plan Financial Statements
  2. Accounting for Financial Instruments—Hedging
  3. Accounting for Financial Instruments—Interest Rate Disclosures
  4. Conceptual Framework
  5. Financial Statement Presentation
  6. Liabilities & Equity: Short-Term Improvements
  7. Pensions—Cash Balance Plans
  8. Simplifications Initiative.