FASB Holds June 3 Meeting

At its June 3, 2026, meeting, the FASB continued deliberating its project on the indexation guidance in ASC 815-40. Specifically, the Board’s decisions included:

• Certain aspects of the “acceptable variables” (i.e., variables that would not preclude an instrument or embedded feature from being considered indexed to an entity’s own stock) would be clarified. Such clarifications would include revisions to the illustrative examples in ASC 815-40-55.
• The down-round feature scope exception in ASC 815-40 would be removed.
• The scope of the guidance in ASC 815-40 would not be clarified, nor would the guidance in 815-40-15-5C on freestanding financial instruments (and embedded features) be changed.
• For “equity-classified contracts in annual reporting periods,” entities would be required to disclose certain “information about variables (or contingent events) that could affect the settlement amount.”
• A modified prospective transition approach would be required for the proposed amendments.

The Board has directed the staff to draft a proposed 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.