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, February 10, 2021 FASB Board Meeting

Goodwill—triggering event assessment alternative for private companies and not-for-profits. The Board discussed the feedback received on the proposed Accounting Standards Update, Intangibles—Goodwill and Other (Topic 350): Accounting Alternative for Evaluating Triggering Events.

The Board affirmed the following decisions:
  1. The scope of the amendments will be limited to private companies and not-for-profit entities that account for goodwill under Subtopic 350-20, Intangibles—Goodwill and Other—Goodwill.
  2. Entities will not be required to provide incremental disclosures as a result of the forthcoming final amendments, as the disclosures required by Topic 235, Notes to Financial Statements, and Subtopic 350-20 are sufficient.
  3. An entity will be allowed to apply a one-time transition election to adopt the amendments prospectively after its effective date without applying the guidance on preferability in Topic 250, Accounting Changes and Error Corrections.
  4. The amendments will be available on an ongoing basis and will not be limited to a specified time period.
The scope of the proposed amendments included private companies or not-for-profit entities if they only report goodwill (or report accounts that would be affected by a goodwill impairment such as retained earnings and net income) on an annual basis. The Board decided to expand the scope of the accounting alternative to allow private companies and not-for-profit entities to perform the goodwill impairment triggering event assessment at the reporting date any time that they report financial information, including interim reports.
Next Steps
The Board directed the staff to draft a final Accounting Standards Update for vote by written ballot.

Leases—targeted improvements. The Board discussed the comment letter feedback on the three issues in the proposed Accounting Standards Update, Leases (Topic 842): Targeted Improvements, and reached the following decisions: 

Issue 1: Sales-type leases with variable lease payments—lessor only. The Board decided to consider amendments to lessors’ accounting only (rather than both lessees’ and lessors’ accounting) to resolve this issue. The Board directed the staff to further research an alternative raised in the comment letters to address this issue. That alternative would require lessors to classify and account for a lease as an operating lease if a lessor (a) meets any of the criteria for sales-type lease classification (in paragraph 842-10-25-2) and (b) would recognize a selling loss at lease commencement as a direct result of variable lease payments that do not depend on an index or a rate. The Board directed the staff to perform outreach on whether that alternative is operable and would result in conclusions that are consistent with those reached when applying the lease classification guidance under Topic 840, Leases. 

Issue 2: Option to remeasure lease liability—lessee only. The Board removed this issue from its technical agenda.   

Issue 3: Modifications reducing the scope of a lease contract. The Board decided not to finalize the proposed amendments related to this issue without considering the other potential improvements to the lease modification model that were raised in the comment letters and at the September 2020 roundtable meeting. The Board directed the staff to identify those other potential improvements and potential solutions for the Board’s consideration at a future meeting.