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, March 29, 2017 FASB Board Meeting

IASB update. The staff of the International Accounting Standards Board updated the FASB on tentative decisions made on its projects on the conceptual framework and financial instruments with characteristics of equity. The meeting was educational and no decisions were made.

Ratification of an EITF consensus. The Board ratified the consensus reached at the March 16, 2017 Emerging Issues Task Force meeting on the following EITF Issue. The Board directed the staff to draft an Accounting Standards Update reflecting the consensus for vote by written ballot.

Issue No. 16-C, "Determining the Customer of the Operation Services in a Service Concession Arrangement"

The Task Force reached a consensus that the grantor is the customer of the operation services in all cases for transactions within the scope of Topic 853, Service Concession Arrangements, considering the specific scope criteria and related accounting requirements of Topic 853.

The Task Force also reached a consensus not to require additional disclosures about how an operating entity determines the customer of the operation services because the disclosures would not result in any incremental information for financial statement users.

Effective Date and Transition for Entities That Do Not Adopt Topic 606 before Finalization of the Amendments in the Update

For an entity that has not adopted Topic 606, Revenue from Contracts with Customers, by the time the amendments in the Update are finalized, the Task Force reached a consensus to align the effective date and transition requirements of the amendments in the Update with the effective date and transition requirements of Topic 606.

However, the Task Force also decided to permit early adoption of the amendments in the Update before an entity adopts Topic 606, including early adoption within an interim period. If an entity early adopts the amendments in the Update in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The Task Force decided that an entity that early adopts the amendments in the Update should apply the amendments in the Update using either (1) a retrospective approach or (2) a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption. In addition, the Task Force decided that the entity should apply the relevant transition disclosures included in the Update.

The Task Force also decided that when an entity adopts the amendments in the Update at the same time that it adopts Topic 606, the entity must apply the same practical expedients elected in Topic 606, to the extent applicable. In contrast, when an entity early adopts the amendments in the Update before adopting Topic 606, the entity is precluded from the use of practical expedients in applying the amendments in the Update.

Effective Date and Transition for Entities That Early Adopt Topic 606 before the Finalization of the Amendments in the Update

For an entity that already adopted Topic 606 before the finalization of the amendments in the Update, the Task Force decided that the amendments in the Update would be effective as follows:
  1. For a public business entity, a not-for-profit entity that has issued, or that is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market, and an employee benefit plan that files financial statements with or furnishes them to the Securities and Exchange Commission, for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years
  2. For all other entities, for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019.
The Task Force also decided to permit earlier adoption of the amendments in the Update for all entities, including within an interim period. If an entity early adopts the Update in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.

The Task Force reached a consensus that an entity that has adopted Topic 606 before the amendments in the Update are finalized should apply the amendments in the Update using either (1) a retrospective approach or (2) a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption, irrespective of the transition method that the entity used when it initially adopted Topic 606. In addition, the Task Force decided that the entity should apply the relevant transition disclosures included in the Update.

The Task Force also decided that an entity must use the same practical expedients the entity elected to use when it initially adopted Topic 606, to the extent applicable, when applying the amendments in the Update.

The minutes of the March 16, 2017 EITF meeting, which will be posted to the FASB website by the end of April 2017, describe the consensus on Issue 16-C.