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 7, 2018 FASB Board Meeting

Leases—targeted improvements to Topic 842. The Board discussed feedback received on proposed Accounting Standards Update, Leases (Topic 842): Targeted Improvements, specific to the proposed additional and optional transition method to adopt the new lease requirements of Update 2016-02, Leases (Topic 842).

The Board decided to affirm the proposed transition method and to clarify that if an entity elects this new transition method, the comparative periods should include the disclosures required under Topic 840, Leases, including the operating lease obligations disclosure in paragraph 840-20-50-2.

Next Steps

The proposed Update reflected the Board's other decisions for a practical expedient related to the separation and allocation requirements for lessors. Feedback on the proposed lessor separation and allocation practical expedient will be discussed separately at a forthcoming Board meeting. After the Board finalizes its decisions about the proposed lessor practical expedient, the staff will ask the Board for permission to proceed with drafting a final Update for vote by written ballot that will include the new transition method and the lessor separation and allocation practical expedient.

Disclosure framework disclosure review—fair value measurement. The Board completed redeliberations of proposed Accounting Standards Update, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.

The Board made the following decisions:
 
Industry-Specific Disclosures
 
The Board decided not to pursue industry-specific fair value measurement disclosures.

Nonpublic Entity Disclosure Exemptions
 
The Board decided to exempt nonpublic entities from the following disclosure requirements: In lieu of the Level 3 rollforward disclosure requirement, nonpublic entities will be required to disclose separately changes during the period attributable to the following:
  1. The changes in unrealized gains and losses for the period included in earnings (or changes in net assets) and other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period
  2. The range and weighted average used to develop significant unobservable inputs for fair value measurements categorized within Level 3 of the fair value hierarchy
  3. A reconciliation of the opening balances to the closing balances of recurring Level 3 fair value measurements.
In lieu of the Level 3 rollforward disclosure requirement, nonpublic entities will be required to disclose separately changes during the period attributable to the following:
  1. Purchases and issues
  2. The amounts of any transfers into or out of Level 3 of the fair value hierarchy and the reasons for those transfers. Transfers into Level 3 shall be disclosed and discussed separately from transfers out of Level 3.
Disclosure Objective
 
The Board confirmed the proposed amendment to have a disclosure objective for Section 820-10-50, Fair Value Measurement—Overall—Disclosure.
 
Immaterial Disclosures
 
The Board confirmed the proposed amendment to eliminate "at a minimum" from the phrase "an entity shall disclose at a minimum," which makes it difficult for an entity to justify omitting immaterial disclosures.
 
Transition
 
The Board confirmed the proposed transition guidance that an entity should apply a prospective method of transition for disclosure of the range and weighted average used to develop significant unobservable inputs for fair value measurements categorized within Level 3 of the fair value hierarchy. The Board decided to also require prospective transition for the narrative description of measurement uncertainty. The Board confirmed the proposed transition guidance that all other amendments should be applied retrospectively.
 
Effective Date and Early Adoption
 
The Board decided that the effective date for all entities will be fiscal years, and interim periods within those fiscal years, starting after December 15, 2019.
 
The Board decided to permit early adoption.  
 
Costs and Benefits
 
The Board decided the expected benefits justify the expected costs of the changes and directed the staff to draft an Accounting Standards Update for vote by written ballot.