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.

December 17, 2014 FASB Board Meeting

Employee Share-Based Payment Accounting Improvements. The Board discussed potential practical expedients to simplify the accounting primarily for private companies.

Expected Term

The Board decided to provide private companies with an alternative for estimating the expected term of an award. If an award only includes a service condition, an entity would estimate the expected term as the midpoint between the vesting date and contractual term. If an award includes a performance condition, an entity would first assess whether the performance condition is probable to occur. If the performance condition is probable to occur, an entity would estimate the expected term as the midpoint between the requisite service period and the contractual term. If the performance condition is not probable to occur, an entity would estimate the expected term as the contractual term.

Classification of Awards with Repurchase Features

The Board decided to align the classification guidance for put and call rights embedded in a share that are contingent on an event within the employee’s control for both public and private companies. When determining classification, an entity would consider whether the contingent event is probable of occurring regardless of whether the employee controls the contingent event.

Intrinsic Value

The Board decided to provide private companies with a one-time election to switch from measuring liability-classified awards at fair value to measuring liability-classified awards at intrinsic value.

The Board added a separate project to the research agenda to evaluate an alternative that would permit a private company to classify all share-based-payment awards as liabilities and to measure those awards at their intrinsic value.

Entities Permitted to Apply Private Company Practical Expedients

The Board decided to retain the scope of the existing public entity definition in Topic 718 on stock compensation in determining which entities can apply the existing practical expedients in Topic 718 and the practical expedients that were discussed at this meeting.


The Board decided to perform additional research regarding disclosures within Topic 718 as part of the Disclosure Framework project.

Simplifying the Subsequent Measurement of Inventory. The Board discussed the feedback received on the proposed Accounting Standards Update, Inventory (Topic 330): Simplifying the Measurement of Inventory, issued on July 15, 2014. The Board directed the staff to perform additional research and outreach to learn more about the concerns raised by some stakeholders regarding how the proposed change would be applied by entities that measure inventory using the last-in, first-out (LIFO) and the retail inventory methods.

Clarifying the Definition of a Business. The Board discussed ways to resolve practice issues associated with applying the definition of a business.

The Phrase “Capable of”

The Board decided to retain the concept of capable of in the definition of a business.


The Board decided to clarify that to be a business the set of activities and assets must include inputs and one or more substantive processes that together contribute to the ability to create outputs. The Board instructed the staff to develop factors that indicate when a process is substantive.

De Minimis or Other Similar Threshold

The Board decided that the staff should explore a threshold to be used in the definition of a business similar to the de minimis threshold in EITF Issue No. 98-3, Determining Whether a Nonmonetary Transaction Involves Receipt of Productive Assets or of a Business. Issue 98-3 said that if all but a de minimis amount of the fair value of the transferred set of activities and assets was represented by a single tangible or identifiable, intangible asset, that was an indicator that the transferred set was an asset rather than a business.


The Board decided to revise the definition of outputs to focus on goods and services to customers.

Market Participant

The Board decided not to explore changes to the concept of a market participant in the definition of a business.


The Board may explore adding examples to help in the interpretation of what is a business.

Disclosures by Business Entities about Government Assistance. The Board continued deliberations, focusing on the types of arrangements to which the newly developed disclosures would apply.
  1. The disclosures would be required for arrangements that are the result of a contract in which the entity receives value or benefit from the government. 
  2. The disclosures would not apply to the following: 
    1. Assistance received from a government as the result of law entitling an entity to receive value or benefits simply by meeting eligibility requirements; or 
    2. Transactions between an entity and a government in which the government is a customer. If a contract has multiple components, only components of the contract in which the government is a customer would be exempt from disclosure requirements. 
  3. The Board tentatively decided not to exclude a transaction in which the government participates in the ownership of an entity if it meets the criterion in (1) above. 
  4. The term government, as used in the scope of this project, refers to domestic and foreign local, regional, and national governments, related governmental entities, and intergovernmental organizations.