Tentative 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.

February 26, 2014 FASB Board Meeting

Accounting for Financial Instruments—Classification and Measurement. The Board continued redeliberating the proposed Accounting Standards Update, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, specifically discussing (1) the need for a contractual cash flow characteristics assessment and (2) a fair value option for hybrid financial assets.

Cash Flow Characteristics Assessment

The Board decided not to incorporate a test to assess the cash flow characteristics of financial assets. In addition, the Board decided to require equity investments to be measured at fair value with changes in the fair value recognized in net income (FV-NI), except for certain investments that are accounted for under the equity method of accounting and those that qualify for the practicability exception to fair value measurement.

The Board asked the staff to identify any financial assets that, because of their complexity or risk profile, should be measured at FV-NI. The Board would consider the classification and measurement for those instruments at a future meeting.

Fair Value Option for Hybrid Financial Instruments

The Board decided to allow a fair value option for hybrid financial instruments (both assets and liabilities) only when the entity has determined that the instruments contain embedded derivative features requiring bifurcation and separate accounting.


Development Stage Entities. The Board redeliberated the November 2013 Exposure Draft, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. The Board affirmed the changes in the Exposure Draft, in which it proposed to:

1. Eliminate the requirement for a development stage entity (DSE) to present inception-to-date information on the statements of income, cash flows, and shareholder’s equity.
2. Eliminate the remaining presentation and disclosure requirements in Topic 915 and amend Topic 275, Risk and Uncertainties, clarifying that the risk and uncertainty disclosure requirements should apply to entities that have not begun operations.
3. Eliminate the guidance on variable interest entities for DSEs in paragraph 810-10-15-16.
4. Because the effect of those decisions is to eliminate from U.S. GAAP any special reporting by DSEs, to remove the definition of development stage entity from the Codification.

Transition and Effective Date

1. For inception-to-date information and the remaining disclosure requirements of Topic 915—The changes should be applied retrospectively, with the benefit of hindsight for any new disclosure requirements that are a result of clarifying Topic 275. For public business entities, the changes will be effective for interim and annual reporting periods beginning after December 15, 2014. For other entities, the changes will be effective for annual periods beginning after December 15, 2014, and interim and annual periods thereafter. Entities will be allowed to early apply the changes as of the first annual or interim period following the issuance of a final Accounting Standards Update.
2. For the elimination of paragraph 810-10-15-16—Public business entities should apply the amended guidance retrospectively for interim and annual reporting periods beginning after December 15, 2015. For other entities, the amended guidance should be applied retrospectively for annual periods beginning after December 15, 2016, and interim and annual periods thereafter. Early application will be permitted for any annual or interim period for which the entity’s financial statements have not yet been issued or made available for issuance.

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


Not-for-Profit Financial Reporting—Financial Statements. The Board continued deliberations, making the following decisions.

Presentation of Revenue, Expenses, and Other Changes in Net Assets

1. A not-for-profit (NFP) entity would continue to be allowed to present revenues, expenses, and other changes in net assets using a one- or two-statement approach.
2. An NFP entity (other than a business-oriented healthcare entity that is required by paragraph 954-225-45-4 to present a performance indicator) would be required to present the intermediate measure of current operations. The Board directed the staff to undertake additional outreach with stakeholders from the healthcare industry.
3. An NFP entity that reports an intermediate measure of operations would no longer be required to report that measure in a statement that also reports the change in unrestricted net assets for the period.
4. An NFP entity would not be required to report a specific subtotal before the intermediate measure of current operations.

Presentation and Disclosure of Investment Expenses

An NFP entity would be required to include a net presentation of investment expenses against investment return on the face of the statement of activities, with the types and amounts of investment expenses disclosed in the notes to the financial statements.

The Board directed the staff to conduct additional research on what types of investment-related fees and other investment expenses would be required to be disclosed as investment expense.