November 7, 2019
The Emerging Issues Task Force (EITF) met on November 7, 2019, and deliberated the following topics:
- Issue No. 19-A, “Financial Instruments—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815”—The Task Force reached a consensus that an entity should consider observable transactions that would require the investor to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative under Topic 321 immediately before applying or upon discontinuing the equity method. The Task Force also reached a consensus that for the purpose of applying paragraph 815-10-15-141(a) an entity should not consider whether, upon the settlement of the forward contract or exercise of the purchased option, individually or with existing investments, the underlying securities would be accounted for under the equity method or the fair value option in accordance with Topic 825, Financial Instruments. The Task Force also reached a consensus on other items, including transition, transition disclosures, special consideration for nonpublic entities, effective date, and early adoption.
- Issue No. 19-B, “Issue No. 19-B, “Revenue Recognition—Contract Modifications of Licenses of Intellectual Property”—The Task Force was unable to reach a consensus-for-exposure on (a) the issue related to the accounting for contract modifications under which the contract term for existing rights is extended, while also adding rights, or (b) the issue related to the accounting for the revocation of licensing rights (including conversion of term software licenses to software as a service arrangement). Task Force members requested that the staff perform additional research, which will be discussed at a future EITF meeting.