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.

Wednesday, June 8, 2016 FASB Board Meeting

Disclosures by business entities about government assistance. The Board began redeliberations of the proposed Accounting Standards Update, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance, by discussing scope, disclosures, and restrictions. The Board made the following decisions.

Scope

The Board reaffirmed the following decisions about the scope of this project:
  1. The project will require guidance that is limited to disclosures.
  2. The scope will apply to an entity that has entered into a legally enforceable agreement with a government to receive cash, nonmonetary assets, or benefits that reduce or eliminate an entity’s expenditures. The Board directed the staff to perform further analysis about the types of nonmonetary assets that should be included within the scope of this project.
  3. Not-for-profit entities will be excluded from the scope of this project.
The Board decided to exclude from the scope of the project:
  1. Employee benefit plans
  2. Government assistance that is provided to an entity in the form of benefits that are available in determining taxable income or that are determined or limited on the basis of income tax liability, in accordance with Topic 740, Income Taxes.
The Board decided to provide examples in the final Update that describe types of benefits that could or could not be considered government assistance.

Disclosure

The Board decided not to require the proposed disclosure about the amount of government assistance received but not recognized directly in the financial statements.

Restrictions

The Board decided that if an entity omits specific information required by the final Update because the information is legally prohibited from being disclosed, the entity should disclose a description of the general nature of the information omitted and the specific source of the legal prohibition.

Next Steps

The Board will continue its redeliberations at a future meeting.


Disclosure framework: disclosure review—income taxes. The Board completed its initial deliberations on the disclosure requirements for income taxes.

The Board reversed its previous decision and decided not to require an entity to disaggregate the cumulative amount of indefinitely reinvested foreign earnings for any country that represents at least 10 percent of the total cumulative amount. Instead, the Board decided to require disclosure of the aggregate of cash, cash equivalents, and marketable securities held by foreign subsidiaries.

Currently, some disclosure requirements in Topic 740, Income Taxes, are required of public entities and some are required of nonpublic entities. The Board decided to replace the term public entity with the term public business entity as defined in the Master Glossary of the Codification. The result is that some disclosures will be required of public business entities while other disclosures will be required of entities other than public business entities.

The Board decided to require an entity to disclose the terms of any rights or privileges granted by a governmental entity directly to the reporting entity that have reduced, or may reduce, the entity’s income tax burden.

The Board decided to revise the carryforward disclosure requirement in Topic 740 for a public business entity. A public business entity would be required to disclose:
  1. The amounts of federal, state, and foreign carryforwards (not tax effected) by time period of expiration for each of the first five years after the reporting date and a total of the amounts for the remaining years.
  2. The deferred tax asset for carryforwards (tax effected) before valuation allowance disaggregated by federal, state, and foreign. Those amounts should be further disaggregated by time period of expiration for each of the first five years after the reporting date and a total of the amounts for the remaining years.
The Board decided to revise the carryforward disclosure in Topic 740 for entities other than public business entities so that the amounts of federal, state, and foreign carryforwards (not tax effected) should be disclosed.

The Board directed the staff to draft a proposed Accounting Standards Update for vote by written ballot, with a comment period of 60 days or ending on September 30, 2016, whichever is longer.