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, October 13, 2021 FASB Board Meeting

Segment reporting. The Board continued its deliberations of a principle-based disclosure requirement to report the significant segment expense categories and amounts that are both (1) regularly provided to the chief operating decision maker (CODM) and (2) included in the reported measure of segment profit or loss.

The Board made the following additional decisions related to the principle.   

Easily Computable Concept

The Board decided to include the easily computable concept as part of the principle. That concept would require public entities to disclose significant segment expense categories and amounts that are easily computable from the management reports that are regularly provided to the CODM.

Mapping of Entity-Wide Amounts to the Income Statement Lines

Under the principle, each significant segment expense category disclosed should be based on the information that is regularly provided to the CODM and reconciled to its corresponding consolidated expense amount on an annual basis. The consolidated expense amount may not have a one-for-one relationship to an income statement line. The Board considered whether to require public entities to map each consolidated expense amount to the income statement lines and decided not to include that as part of the proposed guidance.  

Single Reportable Segment Entities

The Board considered the implications of applying the principle and the existing segment disclosure requirements to single reportable segment entities. The Board decided to specify that single reportable segment entities should apply all disclosure requirements in Topic 280, Segment Reporting, consistent with requirements for multiple reportable segment entities. The Board decided that the proposed guidance would:
  1. Require that the principle and existing segment disclosure and reconciliation requirements apply to single reportable segment entities
  2. Include guidance about the profit measure to which those disclosures apply (for example, an internal measure used by the CODM to manage the business).
Plan to Complete Initial Deliberations

The Board discussed the next steps of the project in order to complete initial deliberations, which would include deliberating the following items:  
  1. Disclosure framework analysis
  2. Transition method
  3. External review and discussion of any sweep issues
  4. Costs and benefits analysis
  5. Comment letter period.


Conceptual framework—measurement. The Board discussed the staff’s approach on developing a proposed Chapter 6 on measurement for FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting. The Board discussed the content and level of specificity contained within the chapter. No decisions were made.

Next Steps
 
The Board will continue deliberations on proposed Chapter 6 at a future Board meeting.



Joint venture formations. The Board continued its initial deliberations and discussed (1) whether a joint venture should be permitted to apply the measurement period guidance in accordance with Subtopic 805-10, Business Combinations—Overall, (2) disclosure requirements for a joint venture upon formation, and (3) valuation considerations.

The Board decided to:
  1. Prohibit a joint venture from applying the measurement period guidance in accordance with Subtopic 805-10 to the amounts recognized upon formation.
  2. Require a joint venture to disclose the following information in the period of formation to enable users of its financial statements to evaluate the nature and financial effect of the joint venture formation:
    1. The formation date
    2. A description of the purpose for which the joint venture was formed (for example, to share risks and rewards in developing a new market, product, or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities)
    3. The formation-date fair value of the joint venture as a whole
    4. A description of the recognized assets and businesses acquired by the joint venture
    5. The amounts recognized by the joint venture for each major class of assets and liabilities as a result of accounting for its formation, either on the face of the financial statements or in notes
    6. A qualitative description of the factors that make up the goodwill recognized, such as expected synergies from combining operations of the contributed assets or businesses, intangible assets that do not qualify for separate recognition, or other factors.
Next Steps

The staff will begin drafting a proposed Accounting Standards Update and complete the external review process. After the external review process is complete, the staff will meet with the Board to discuss a summary of external review comments, present an analysis on comment period and any remaining sweep issues, and ask the Board for permission to ballot a proposed Accounting Standards Update.



Codification improvements—financial instruments—credit losses (vintage disclosure: gross writeoffs and gross recoveries. The Board continued its initial deliberations and discussed whether gross writeoffs and/or gross recoveries should be required to be provided by year of origination in the vintage disclosure required by Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, for public business entities.

The Board decided to require an entity to disclose current-year gross writeoffs, but not recoveries, by year of origination within its vintage disclosure. The Board decided to require a prospective transition approach for the proposed amendments.

Next Steps

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

The Board decided on a 30-day comment for the proposed Update.



Financial instruments—credit losses (Topic 326)—targeted improvements to the accounting for troubled debt restructuring for creditors. The Board discussed the TDR guidance in Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors, for creditors that have adopted the amendments in Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The Board reached the following decisions.

The Board decided that TDR recognition and measurement guidance would be eliminated for creditors that have adopted the amendments in Update 2016-13. The Board also decided to require creditors to enhance their disclosures related to modifications made to borrowers experiencing financial difficulty.

The Board decided to exclude modifications that only represent an insignificant delay in payment from the enhanced disclosure requirements for modifications made to borrowers experiencing financial difficulty.

The Board decided to require a prospective transition for the amendments related to recognition and measurement, with an option to elect a modified retrospective transition approach (a cumulative-effect adjustment to opening retained earnings as of the date of adoption of the forthcoming amendments). The Board decided to require a prospective transition for the disclosure enhancements related to modifications made to borrowers experiencing financial difficulty.

Next Steps

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

The Board decided on a 30-day comment for the proposed Update.