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, July 25, 2018 FASB Board Meeting

Lessor narrow scope improvements. The Board discussed proposed amendments to Topic 842, Leases, for the following three issues related to lessor accounting in Topic 842:
  1. Sales taxes and other similar taxes collected from lessees
  2. Certain lessor costs paid directly by lessees
  3. Recognition of variable payments for contracts with lease and nonlease components.
The Board decided:
  1. To require lessors to provide certain disclosures when electing an accounting policy to exclude from the consideration in a lease contract and from variable payments certain sales taxes and other similar taxes collected from lessees
  2. To amend paragraph 842-10-15-40 to clarify the Board’s intent related to the allocation and recognition requirements for variable lease payments that have both lease and nonlease components. For this issue, the Board instructed the staff to include questions in a proposed Accounting Standards Update to determine whether the proposed amendments would be operable and whether other clarifications would make the guidance easier to apply.

Transition and Effective Date

The Board decided that the amendments should have the same effective date and transition requirements as those in Topic 842, for entities that have not adopted Topic 842.  For entities that have already adopted Topic 842, the Board will request stakeholder input in the proposed Accounting Standards Update to determine the most appropriate transition and effective date.


Analysis of Costs and Benefits

The Board concluded that it has received sufficient information and analysis to make an informed decision on the issues presented and that the expected benefits of the proposed amendments justify the expected costs.


Next Steps

The Board directed the staff to draft a proposed Accounting Standards Update for vote by written ballot with a comment period of 30 days.


Financial instruments—credit losses implementation. The Board discussed two proposed amendments to the guidance in the amendments in Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The proposed amendments would clarify the Board’s original intent to:
  1. Provide separate and staggered effective date requirements for SEC filer public business entities (PBEs), non-SEC filer PBEs, and all other entities (non-PBEs) by amending paragraph 326-10-65-1 to require that non-PBEs adopt the amendments in Update 2016-13 for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years.
  2. Exclude operating lease receivables from the scope of Subtopic 326-20. 
Analysis of Costs and Benefits
 
The Board concluded that it has received sufficient information and analysis to make an informed decision on the issues presented and that the expected benefits of the proposed amendments justify the expected costs.
 
Next Steps
 
The Board directed the staff to draft a proposed Accounting Standards Update for vote by written ballot with a 30-day comment period.


Collaborative arrangements—targeted improvements. The Board discussed feedback received on its proposed Accounting Standards Update, Collaborative Arrangements (Topic 808): Targeted Improvements, and completed redeliberations.

Scope

The Board reaffirmed the scope and objective of the project, which are to clarify whether Topic 606, Revenue from Contracts with Customers, could be applied to certain transactions in collaborative arrangements that are within the scope of Topic 808. Consistent with the proposed Update, the Board reaffirmed that the forthcoming amendments resulting from this project would not change the current accounting for (1) transactions directly related to sales to third parties or (2) nonrevenue transactions between collaborative participants.

Unit of Account

The Board reaffirmed its intent on the unit of account guidance for collaborative arrangements. That guidance would require an entity to use the distinct good or service unit-of-account guidance in Topic 606 to determine whether a separate unit of account in a collaborative arrangement should be accounted for under Topic 606. The Board also clarified the application of that guidance to collaborative arrangements where a part of the collaborative arrangement is potentially with a customer. In those circumstances, for each distinct good or service identified, if the entire unit of account is with a customer, an entity would be required to account for that unit under Topic 606.

Transactions Directly Related to Third-Party Sales

The Board decided to move the examples of transactions directly related to third-party sales from the basis for conclusions of the proposed Update into the amendments and to clarify that the examples are not an all-inclusive list.

Presentation

The Board clarified its intent that transactions outside the scope of Topic 606 would be precluded from being presented together with revenue recognized from contracts with customers.

Illustrative Examples

The Board reaffirmed the proposed changes to the Topic 808 examples and decided not to provide additional examples or to make further changes to those examples.

Other Topics

The Board clarified that the definition of collaborative arrangements that are not complete in paragraph 808-10-65-2(c) would be arrangements that have one or more unperformed units of account.

The Board reaffirmed its decision not to provide other substantive amendments or additional guidance for the Topic 606 concept of customer in the context of collaborative arrangements, nonrevenue transactions between collaborative participants, and disclosures.

Transition and Effective Date

The Board reaffirmed the transition described in the proposed Update, which would require an entity to apply a modified retrospective transition.

The Board decided that the amendments will be effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The amendments will be effective for nonpublic business entities for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021.

The Board also decided to permit early adoption of the amendments as of the later of (1) the date of issuance of the final Update and (2) the date of an entity’s adoption of Topic 606.

Next Steps

The Board concluded that the expected benefits justify the expected costs of the changes and directed the staff to draft an Accounting Standards Update for vote by written ballot.