FASB Holds August 5 Meeting

August 10, 2026

At its August 5, 2026, meeting, the FASB (1) added to its technical agenda a project (based on an EITF Issue) on applying the normal purchases and normal sales (NPNS) scope exception to retail electricity contracts and (2) discussed its project on investment companies with equity securities subject to contractual sale restrictions.

NPNS Exception

Tentative decisions made by the Board at this meeting included:

For retail electricity power purchase agreements, the “probable physical settlement criterion” would be amended “to require that . . . at least 70 percent of the contractual quantities be physically settled.”
A cumulative method would be used “to evaluate whether the physical settlement threshold is met.”
Certain additional disclosures would be required annually for contracts to which the “probable physical settlement criterion” amendments are applied.
The amendments would be applied “by using a cumulative-effect adjustment to the opening balance of current annual period retained earnings,” and “early adoption would be permitted in an interim or annual reporting period.”

The Board has directed its staff to draft a proposed Accounting Standards Update (ASU) related to this project for a vote by written ballot.

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

Equity Securities Subject to Contractual Sale Restrictions

The Board discussed feedback received on its proposed ASU on this topic. Tentative decisions were made regarding which assets and entities were within the scope of the project, the incorporation of contractual sale restrictions into an equity security’s fair value measurement, the definition of “contractual sale restriction,” equity securities pledged as collateral, transition and disclosures, effective date, and early adoption.

The Board has directed its staff to draft a final ASU related to this topic for a vote by written ballot.

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