November 9, 2017
The Investor Advisory Committee (IAC) met on November 9, 2017. At the meeting, the FASB staff delivered updates and IAC members provided input on the following FASB topics:
- On the project on improving the accounting for asset acquisitions and business combinations: The IAC members agreed that the accounting for similar transactions—whether they are defined as asset acquisitions or business combinations—should be similar. IAC members specifically discussed the treatment of transaction costs, contingent consideration, and in process research and development, and various views were expressed on which existing model of accounting would be preferable for each of those.
- On the project on disaggregation of performance information: The IAC members emphasized that they viewed this project as extremely important because of the current lack of disaggregation and comparability of line items such as cost of goods sold. IAC members offered their views on different approaches to disaggregate line items that would make the information more helpful for investor analysis and discussed the interaction between this project and the segment reporting project.
- On the project on a customer’s accounting for a cloud computing arrangement (CCA) that is considered a service contract: The IAC members discussed the recent tentative conclusion reached by the Emerging Issues Task Force (EITF) on the issue. The majority of IAC members agreed that the accounting should be aligned for the implementation costs for CCAs and software license arrangements because of how economically similar they can be. IAC members noted the preference for an expense approach instead of an approach that would capitalize the software element of a CCA because the economics of the CCA arrangements are more akin to a service.
- In discussing IAC emerging issues and trends: The IAC discussed various topics with the FASB including developments related to tax reform, and separately, a company’s change in business model and the potential interaction with presentation and disclosures under current GAAP.