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.

Wednesday, August 26, 2020 FASB Board Meeting

Distinguishing liabilities from equity phase 2. The Board began initial deliberations by discussing the project’s direction.

The Board decided that the project objective is to improve and align the two existing indexation models used to evaluate financial instruments with characteristics of equity by developing an indexation principle to reduce inconsistencies across GAAP. The scope of the project includes the indexation guidance in Topic 480, Distinguishing Liabilities from Equity, and Subtopic 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity.

Codification improvements. The Board redeliberated the amendments in the proposed Accounting Standards Update, Codification Improvements, and made the following decisions.

Proposed Amendments
  1. Amendments Excluded from Final Update. The Board decided to exclude proposed issues 37, 38, 40, 42-44, 49, and 50 from the final Update. Because of concerns about the effective date for those issues, the Board issued them in March 2020 in Accounting Standards Update No. 2020-03, Codification Improvements to Financial Instruments.

  2. Section A—Proposed Amendments to Remove References to the Concepts Statements. The Board decided to exclude all issues proposed within Section A from the final Update. The Board also directed the staff to perform additional analysis of those references to Concepts Statements for a separate Accounting Standards Update. The Board also directed the staff to draft a basis for conclusions for those issues within Section A to be included in the separate Update.

    The Board also decided to remove Issue 10, Amendments to Subtopic 805-20, Business Combinations—Identifiable Assets and Liabilities, and Any Noncontrolling Interest, from the Codification Improvements project. The Board will continue its deliberations on this issue in its Recognition and Measurement of Revenue Contracts with Customers under Topic 805 research project.
  3. Section B—Amendments to Disclosure Sections of the Codification. The Board affirmed all other proposed amendments in Section B.
  4. Section C—Other Codification Improvements. The Board affirmed nine other proposed amendments in Section C.
Effective Date and Transition Guidance

The Board decided that all the amendments in the final Update require transition guidance and an effective date, as follows:
  1. For public business entities—annual years beginning after December 15, 2020
  2. For all other entities—annual years beginning after December 15, 2021.
Analysis of Benefits and Costs 
The Board concluded that it has received sufficient information and analysis to make an informed decision on the perceived costs of the changes and that the expected benefits would justify the expected costs of the amendments in the final Update. 
Next Steps

The Board directed the staff to draft a final Accounting Standards Update for vote by written ballot.