SUMMARY OF BOARD DECISIONS

Summary of Board decisions are provided for the information and convenience of constituents who want to follow the Board´s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions are included in an Exposure Draft for formal comment only after a formal written ballot. Decisions in an Exposure Draft may be (and often are) changed in redeliberations based on information provided to the Board in comment letters, at public roundtable discussions, and through other communication channels. Decisions become final only after a formal written ballot to issue an Accounting Standards Update.

August 10, 2011 FASB Board Meeting

Balance sheet—offsetting. The Board discussed the guidance for offsetting of nonderivative instruments as well as effective date and transition for the disclosures and decided:
  1. To retain the existing U.S. GAAP offsetting guidance for nonderivative instruments.
     
  2. That entities would be required to provide the disclosure requirements, for all periods presented, in annual and interim reporting periods beginning on or after January 1, 2013.
The Board directed the staff to draft a final Accounting Standards Update for vote by written ballot. The Board noted, however, that the IASB would be discussing these same effective date and transition matters at a future meeting. The Board decided that it would reconsider its decisions if the IASB reached different conclusions.


Consolidation: investment companies.The Board decided that an investment company that is regulated under the Investment Company Act of 1940 would be within the scope of Topic 946 for investment companies regardless of whether an entity meets the criteria of an investment company.

The Board reversed its previous decision that an investment company should account for controlling interests in another investment company at fair value. The Board decided that such interests should be accounted for in accordance with Topic 810 on consolidation. In addition, the Board affirmed its decision that an investment company should account for a controlling interest in an investment property entity in accordance with Topic 810. The Board also decided that all other interests in investment companies and investment properties entities should be accounted for at fair value, including those in which the investment company has significant influence.

The Board affirmed its decision that if an entity´s status changes to an investment company after the initial adoption of the amendments in the proposed Update, the effect of the change to investment company status would be recorded as a cumulative-effect adjustment to retained earnings at the date of change in status.


Goodwill impairment assessments. The Board discussed the input received during the July 28, 2011 workshops regarding implementation issues and concerns raised by large public accounting firms in their comment letter responses to the Exposure Draft.

Based on the input received during the workshops, the Board decided not to redeliberate its previous decisions reached about the proposed amendments. The Board directed the staff to address some of the concerns raised during the workshops through educational efforts.

The Board affirmed that the proposed amendments will be effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted.

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


Accounting for financial instruments: classification and measurement. The Board discussed the following three topics related to classification and measurement of financial instruments:
  1. Financial statement presentation
     
  2. Clarifications of the criteria for equity method investments
     
  3. Presentation of changes in fair value attributable to "own credit."
Financial Statement Presentation

The Board affirmed its decision in the proposed Accounting Standards Update that an entity would be required to separately present financial assets and financial liabilities on the balance sheet by classification and measurement category. Certain presentation requirements decided by the Board apply only to public entities. The Board will discuss at a future meeting those presentation or disclosure requirements for nonpublic entities. The Board decided on the following presentation requirements.

Balance Sheet Presentation

Financial Assets Measured at Amortized Cost
  1. A public entity would be required to parenthetically present fair value, consistent with the measurement requirements in Topic 820, on the face of the balance sheet. All entities would be required to separately present cumulative credit losses on the face of the balance sheet.
Financial Liabilities Measured at Fair Value
  1. All entities would be required to parenthetically present amortized cost on the face of the balance sheet for an entity´s own debt.
Financial Liabilities Measured at Amortized Cost
  1. A public entity would be required to parenthetically present fair value, consistent with the measurement requirement in Topic 820, on the face of the balance sheet for all financial liabilities measured at amortized cost, except demand deposit liabilities.
     
  2. A public entity would be required to disclose in the notes to the financial statements a present value amount for demand deposit liabilities. The Board will discuss the measurement technique for this disclosure at a future meeting.
Short-Term Receivables and Payables
  1. Short-term (less than one year) receivables and payables would not be subject to the parenthetical fair value presentation requirements.
Income Statement Presentation—Applicable to All Entities

Financial Assets
  1. An entity would be required to present in net income an aggregate amount for realized and unrealized gains or losses for financial assets measured at fair value with all changes in fair value recognized in net income.
     
  2. An entity would be required to separately present the following items in net income for financial assets measured at fair value with changes recognized in other comprehensive income and amortized cost:
     
    1. Current-period interest income
       
    2. Current-period credit losses
       
    3. Realized gains and losses.
Financial Liabilities
  1. An entity would be required to present in net income an aggregate amount for realized and unrealized gains or losses for financial liabilities measured at fair value with all changes in fair value recognized in net income.
     
  2. An entity would be required to separately present the following items in net income for financial liabilities measured at amortized cost:
     
    1. Current-period interest expense
       
    2. Realized gains and losses.
Clarifications of the Criteria for Equity Method Investments—Applicable to All Entities

The Board decided that an entity would be required to classify and measure equity investments, which would otherwise qualify for the equity method of accounting, at fair value with changes in fair value measured through net income if the investment is held for sale. The Board clarified that an entity would perform a "held for sale" evaluation upon the investment´s initial qualification for the equity method of accounting. The Board also noted that an entity may not subsequently change its "held for sale" evaluation for the investment. The Board acknowledged that the following indicators would be determinative that an investment is held for sale:
  1. The entity has specifically identified potential exit strategies even though it may not yet have determined the specific method of exiting the investment.
     
  2. The entity has defined the time at which it expects to exit the investment, which may be either an expected date or range of dates; a time defined by specific facts and circumstances, such as achieving certain milestones; or the investment objectives of the entity.
Presentation of Changes in Fair Value Attributable to "Own Credit"—Applicable to All Entities

The Board decided that an entity would not be required to separately present the changes in the fair value of financial liabilities attributable to changes in "own credit" risk from other changes in fair value in the income statement. The Board acknowledged that it may revisit this decision if the population of financial liabilities subsequently measured at fair value significantly changes due to future redeliberations on the fair value option for financial liabilities.


Codification technical corrections. The Board decided to propose various amendments to the FASB Accounting Standards Codification® for technical corrections, including conforming amendments for fair value measurement. These amendments largely relate to minor corrections associated with:
  1. A move to the Codification
     
  2. Consequential amendments associated with conforming changes for fair value measurement
     
  3. Other miscellaneous corrections.
The Board does not expect any change in practice as a result of these amendments. The Board agreed that the transitional guidance for the proposed amendments should be a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The Board decided on a 60-day comment period for the Exposure Draft. The Board directed the staff to draft the Exposure Draft of a proposed Accounting Standards Update for vote by written ballot.


Agenda decision announcement. The FASB chairman added a project to the Emerging Issues Task Force´s agenda on parent´s accounting for the cumulative translation adjustment (CTA) upon the sale or transfer of a group of assets within a foreign subsidiary that meets the definition of a business.