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.

August 13, 2014 FASB Board Meeting

1. Presentation of debt issuance costs—The project is expected to simplify the accounting by aligning the presentation of debt discount or premium and issuance costs.
2. Measurement date of defined benefit plan assets—The project is expected to reduce costs by aligning the measurement date of defined benefit plan assets with the date that valuation information and the fair values of plan assets are provided by third-party service providers. An entity with a fiscal year-end that does not fall on the end of a month would be eligible to measure its defined benefit plan assets and liabilities as of the month end that is closest to the employer´s fiscal year-end.
3. Balance sheet classification of debt—The project is expected to reduce cost and complexity by replacing the fact-pattern specific guidance in GAAP with a principle to classify debt as current or noncurrent based on the contractual terms of a debt arrangement and an entity´s current compliance with debt covenants.
4. Accounting for income taxes—The project is expected to simplify accounting for income taxes by:
   1. Eliminating the requirement in GAAP for entities that present a classified statement of financial position to classify deferred tax assets and liabilities as current and noncurrent, and instead requiring that they classify all deferred tax assets and liabilities as noncurrent in the statement of financial position.
   2. Eliminating the prohibition in GAAP on the recognition of income taxes for the intra-entity differences between the tax basis of the assets in a buyer´s tax jurisdiction and their cost as reported in the consolidated financial statements, and instead requiring recognition of the income tax consequences associated with an intra-entity transfer when the transfer occurs.

1. Fair value hierarchy levels for certain investments measured at net asset value (NAV)—The project is expected to reduce diversity in practice related to the categorization of certain investments measured at NAV within the fair value hierarchy.
2. Effects on historical earnings per unit (EPU) of master limited partnership (MLP) dropdown transactions—The project is expected to address how to calculate EPU for periods before the date of a dropdown transaction accounted for as a reorganization of entities under common control that occurs after formation of the MLP.

1. An allowance approach should be used for recognizing impairment losses, which would allow an entity to recognize reversals of credit losses.
2. Subparagraph 320-10-35-33F(a) should be amended to remove the requirement to consider the length of time that the fair value of an available-for-sale debt security has been less than its amortized cost basis when estimating whether a credit loss exists.
3. Subparagraph 320-10-35-33F(g) should be removed. When estimating whether a credit loss exists, an entity would not be required to consider recoveries or additional declines in the fair value of an available-for-sale debt security after the balance sheet date.

1. The Board affirmed the principles of the clarifications to the measurement approach as described in the August 13, 2014 Board meeting handout. Actual wording of the clarifications is subject to change during the drafting of the final standard.
2. The Board decided that the final standard would not explicitly state for which financial assets a zero allowance of expected credit losses would be appropriate.
3. The Board decided to include the following collateral-based practical expedients in the final standard:
   1. For a collateral-dependent financial asset, the allowance for expected credit losses would be measured as the difference between the collateral´s fair value (adjusted for selling costs, when applicable) and the amortized cost basis of the asset.
   2. For a financial asset in which the borrower must continually adjust the amount of collateral securing the financial asset, the allowance for expected credit losses would be limited to the difference between the collateral´s fair value (adjusted for selling costs) and the amortized cost basis of the asset.
4. When developing its estimate of expected credit losses, the Board decided that for periods beyond which the entity is able to make or obtain reasonable and supportable forecasts, an entity is allowed to revert to its historical credit loss experience over (a) the financial asset´s estimated life on a straight-line basis or (b) a period and in a pattern that reflects the entity´s assumptions about expected credit losses over that period. The Board also decided that an entity should disclose the reversion method applied in the notes to the financial statements.