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.

May 14, 2014 FASB Board Meeting

Accounting for Financial Instruments—Classification and Measurement. The Board continued redeliberating the February 2013 proposed Accounting Standards Update, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, specifically discussing the following topics:

  1. Scope of equity investments to be classified in the trading category
  2. Available-for-sale classification for certain equity investments
  3. Clarifications to the practicability exception from classifying all equity investments in the trading category
  4. Impairment assessment of equity investments that are not measured at fair value through net income
  5. Evaluation of the valuation allowance on a deferred tax asset related to debt securities classified in the available-for-sale category
  6. Accounting for pools of similar financial assets
  7. Accounting for loan commitments, revolving lines of credit, and commercial letters of credit
  8. Recognition and measurement of foreign currency gains and losses on debt securities classified as available for sale.
Scope of Equity Investments to Be Classified in the Trading Category

The Board discussed whether it should retain the definition of equity security in current U.S. GAAP or affirm the revised definition of equity investment proposed in the Exposure Draft for determining which financial instruments would be classified in the trading category. The Board did not make a decision. It asked the staff to further analyze two issues:
  1. Implication of using the word investment instead of security
  2. How certain forward contracts to acquire or dispose of an ownership interest should be classified.
Available-for-Sale Classification for Certain Equity Investments

The Board did not make a decision; it asked the staff to explore whether parameters could be developed to define strategic equity investments that would be eligible for available-for-sale classification.

Clarifications to the Practicability Exception from Classifying All Equity Investments in the Trading Category

The Board decided to provide additional implementation guidance to clarify the following:
  1. Level of effort that preparers should exert to identify observable price changes
  2. The concept of a similar investment of the same issuer.
Impairment Assessment of Equity Investments That Are Not Measured at Fair Value through Net Income

The Board did not make a decision on this issue. The Board asked the staff to perform further analysis on the application of the one-step impairment model to equity method investments and equity investments that qualify for the practicability exception.

Evaluation of the Valuation Allowance on a Deferred Tax Asset Related to Debt Securities Classified in the Available-for-Sale Category

The Board decided that the assessment of a valuation allowance for a deferred tax asset related to an available-for-sale debt security should be made in combination with the entity’s other deferred tax assets.

Accounting for Pools of Similar Financial Assets

The Board decided not to provide guidance on the recognition and measurement of pools of similar financial assets.

Accounting for Loan Commitments, Revolving Lines of Credit, and Commercial Letters of Credit

The Board decided to retain current U.S. GAAP on accounting for loan commitments, revolving lines of credit, and commercial letters of credit.

Recognition and Measurement of Foreign Currency Gains and Losses on Debt Securities Classified as Available-for-Sale

The Board decided to retain current U.S. GAAP for recognition and measurement of foreign currency gains and losses on debt securities classified as available for sale.


Financial Statements of Not-for-Profit Entities. The Board continued its deliberations about the presentation and disclosure of investment expenses and an intermediate measure of operations in light of the results of staff outreach with stakeholders of foundations and health care entities. The Board decided that:

  1. All not-for-profit (NFP) entities would be required to disclose identifiable, direct external investment expenses and the amount of direct internal investment expenses incurred during the period.
  2. An NFP business-oriented health care entity would be required to present an intermediate measure of operations as previously defined by the Board in this project. Those entities would have the option of also presenting the performance indicator that is currently required by paragraph 954-225-45-4. As a result of this decision, all NFP entities including health care entities would be required to present the same intermediate measure of operations.