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 17, 2021 FASB Board Meeting

Accounting by a joint venture for nonmonetary assets contributed by investors. The Board continued its initial deliberations on the project. The Board discussed disclosures, transition, and sweep issues.

The Board decided to:
  1. Require that a joint venture formed after the effective date of the new guidance apply the measurement and recognition guidance upon formation prospectively. An existing joint venture entity would have an option to apply the new guidance retrospectively.
  2. Require that a joint venture upon formation measure its net assets (including goodwill) using the fair value of the joint venture as a whole. Therefore, a joint venture would measure its total net assets upon formation as the fair value of 100 percent of the joint venture’s equity immediately after formation.
Next Steps

The Board directed the staff to research:
  1. Areas in which equity method basis differences could result from a misalignment between (a) the initial accounting by the venturer for its equity method investment in a joint venture entity and (b) the joint venture entity’s accounting for its formation in applying the Board’s tentative decisions on this project.
  2. Whether a joint venture should be able to apply the measurement period guidance in accordance with Subtopic 805-10, Business Combinations—Overall, which allows an entity to recognize and adjust provisional amounts for items for which the accounting is incomplete.
  3. Disclosure requirements for a joint venture upon formation.

Conceptual framework—elements. The Board discussed comments received on its proposed Statement of Financial Accounting Concepts, Concepts Statement No. 8—Conceptual Framework for Financial Reporting—Chapter 4: Elements of Financial Statements, and its plan for redeliberations. No decisions were made.

Next Steps
The Board will begin redeliberations on proposed Chapter 4 of Concepts Statement 8 at a future Board meeting.