FASB Holds April 9 Meeting

At its April 9, 2025, meeting, the FASB continued redeliberating its proposed Accounting Standards Update (ASU) Derivatives Scope Refinements and Scope Clarification for a Share-Based Payment From a Customer in a Revenue Contract. Specifically, the Board made tentative decisions related to the two issues below.

The Board affirmed a number of its scope decisions, including its “proposed amendments on a scope exception for a variable based on operations or activities specific to one of the parties to the contract.” In addition, the Board decided to retain the current predominant characteristics assessment in ASC 815-10-15-60 and affirmed its proposal that entities should apply the amendments prospectively to new contracts but would have the option of using a modified retrospective approach.

The Board made a number of decisions related to the accounting under ASC 606, including that entities should apply the guidance in this Codification topic before that in other topics (e.g., ASC 815, ASC 321). Further, the Board decided to clarify the scope of ASC 610-20 (on gains and losses related to the derecognition of financial assets) with respect to “a share-based payment from a noncustomer that is consideration for the transfer of a nonfinancial asset.”

The Board decided that the amendments will be effective for all entities for annual reporting periods (including interim periods) beginning after December 15, 2026. In addition, the FASB determined that the benefits of the amendments will exceed the costs and has directed the staff to draft a final ASU related to this project for a vote by written ballot.

For more information, see the tentative Board decisions on the FASB’s Web site.