March 11, 2021
The Emerging Issues Task Force (EITF) met on March 11, 2021, and deliberated the following topics:
- Issue No. 19-B, “Revenue Recognition—Contract Modifications of Licenses of Intellectual Property”—The Task Force agreed to refer this Issue back to the Board for its consideration. This Issue relates to the accounting for (a) contract modifications under which the contract term for existing rights is extended, while also adding rights, and (b) the revocation of licensing rights (including conversion of term software licenses to software as a service arrangements).
- Issue No. 19-C, “Issuer’s Accounting for Certain Modifications of Freestanding Equity-Classified Forwards and Options”—The Task Force reached a consensus to limit the scope of the amendments in the final Update to the issuer’s accounting for modifications of freestanding equity-classified written call options that remain equity classified after modification. The Task Force also reached a consensus on the following:
- To affirm the proposed recognition framework
- To affirm the proposed measurement approach subject to certain conforming changes to ensure consistency with the existing requirements in Subtopic 470-50, Debt—Modifications and Extinguishments
- To affirm the proposal whereby no specific allocation approach is prescribed for situations in which the substance of the transaction includes multiple elements
- To affirm certain clarifying changes to the amendments in the final Update and to add an example in Subtopic 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, for modifications related to compensation for goods or services and include a related reference in Topic 718, Compensation—Stock Compensation
- To require disclosures about the nature and effect of a modification within the scope of the amendments in the final Update.
The Task Force also reached a consensus on other items, including transition (prospective only), an effective date for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years, and permitting early adoption.
- Agenda Consultation—The Task Force members provided feedback to the FASB on potential projects to be discussed as part of the FASB's upcoming Invitation to Comment.