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, June 2, 2021 FASB Board Meeting

Conceptual framework—elements. The Board discussed the feedback from comment letter respondents on issues related to the liability definition and the term control in the asset definition in the proposed FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting—Chapter 4, Elements of Financial Statements. The Board decided to:

Definition of a Liability
  1. Remove the terms probable and future and the phrase past transactions or events from the current liability definition.
Distinguishing between Liabilities and Equity
  1. Reaffirm the decision that an obligation that requires an entity to transfer or otherwise provide economic benefits to others should meet the definition of a liability.
  2. Improve the discussion of distinguishing between liabilities and equity in the drafting process, but not include examples illustrating the application of the definition to specific instruments and not change the discussion on an obligation to transfer a variable number of shares being a liability.
Business Risks, Constructive Obligations, and Stand-Ready Obligations
  1. Not specifically address executory contracts, but add a paragraph stating that certain arrangements create rights and obligations, but that the circumstances under which the rights and obligations occur are so varied that when they should be recognized is inevitably a standards-level issue because recognition is so dependent upon those varying facts and circumstances.
  2. Not address economic compulsion in the discussion on business risks.
  3. Not add the phrase little to no discretion and remove it from paragraph BC4.26.
  4. Remove the discussion on equitable obligations as well as references to moral and ethical from the explanatory language.
  5. Remove the term stand-ready obligation from the explanatory language.
Definition of an Asset
  1. Remove the term control from the definition of an asset.
Next Steps

The Board will discuss additional feedback from comment letter respondents related to proposed Chapter 4 of Concepts Statement 8 at a future Board meeting.