FASB Holds February 5 Meeting
February 6, 2025
At its February 5, 2025, meeting, the FASB discussed feedback received on its
proposed Accounting Standards Update (ASU) Clarifications to Share-Based Consideration Payable to a
Customer. The Board affirmed its tentative decisions to:
-
Revise the definition of “performance condition” to (1) “explicitly incorporate conditions that relate to achieving a specified performance target that is defined by reference to the grantee’s purchases of goods or services from the grantor” and (2) “include performance targets based on purchases by parties that purchase the grantor's goods or services from its customer.”
-
Eliminate the “entity-wide policy election permitting an entity to account for forfeitures as they occur . . . for any remaining customer awards that would continue to have service conditions.”
-
Exclude “share-based consideration payable to customers either before or after the grant date” from the scope of the variable consideration constraint in ASC 606.
In addition, the Board made tentative decisions related to (1) the “one-time election
to [the] forfeitures election for nonemployee awards” and (2) the proposed ASU’s
effective date and transition.
The Board has directed the staff to draft a final ASU for a vote by written ballot.
For more information about the topics discussed at the meeting, see the
tentative Board decisions on the FASB’s Web site.