November 30, 2017
The Small Business Advisory Committee (SBAC) met on November 30, 2017. At the meeting, the FASB staff delivered updates and SBAC members provided input on the following topics:
- Accounting for Certain Identifiable Intangible Assets in a Business Combination and Subsequent Accounting for Goodwill for Public Business Entities: SBAC members discussed the prevalence of merger and acquisition activity among small public companies. Members shared their views on the usefulness and accounting implications of the following treatments of goodwill: impairment, amortization, and direct write-off.
- Customer's Accounting for Implementation, Setup, and Other Upfront Costs (Implementation Costs) Incurred in a Cloud Computing Arrangement (CCA) That Is Considered a Service Contract: Some SBAC members questioned the capitalization of the software element of a CCA, while others supported it because they view CCAs as similar to leases. Those that supported capitalization of the software element also supported the capitalization of expected renewals.
- Financial Performance Reporting: SBAC members discussed approaches (based on standardized grouping or management’s perspective) to disaggregate functional lines on the income statement and the potential impact on the scope of audit work.
- Improving the Accounting for Asset Acquisitions and Business Combinations: SBAC members supported the objective of the project and had different views on the accounting for contingent consideration at the acquisition date and in subsequent periods. Members also provided their views on the accounting for transaction costs and in process research and development.
- Simplifying the Balance Sheet Classification of Debt: To ease transition and collectively educate and improve stakeholders’ readiness for the forthcoming standard, SBAC members suggested that the FASB provide a web training or podcast, make education materials available to accounting firms, and assist in educating the construction industry and lender community.
- Implementing Recent Standards and Identifying Emerging Issues and Trends: SBAC members remarked favorably on the FASB’s efforts to educate stakeholders on the implementation of recent standards. SBAC members also raised various topics including developments related to income tax reform, the accounting and disclosures related to fixed-rate loan portfolios, and the benefits of a one-year deferred effective date for small public companies.