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, April 10, 2019
FASB Board Meeting
private company accounting alternatives on certain identifiable intangible
assets and goodwill to not-for-profit entities. The
Board discussed comment letter and other stakeholder feedback and redeliberated
the proposed Accounting Standards Update, Intangibles—Goodwill and Other
(Topic 350), Business Combinations (Topic 805), and Not-for-Profit Entities
(Topic 958): Extending the Private Company Accounting Alternatives on Goodwill
and Certain Identifiable Intangible Assets to Not-for-Profit Entities.
The Board decided to permit a not-for-profit entity (NFP) to elect the
accounting alternatives described in Accounting Standards Updates No. 2014-02,
Intangibles—Goodwill and Other (Topic 350): Accounting for Goodwill,
and No. 2014-18, Business Combinations (Topic 805): Accounting for
Identifiable Intangible Assets in a Business Combination. The Board
decided to extend the Topic 805 alternative without modifications and decided to
permit an NFP conduit bond obligor to elect the same accounting
Consistent with the current requirement for NFPs to
present expenses by both nature and function, the Board decided that an NFP is
required to functionalize goodwill amortization. The Board also decided the
guidance on functionalizing goodwill amortization is sufficient.
The Board considered comments raised by comment letter respondents concerning
the presentation in health care organization financial statements, the
amortization period, and the application of the alternatives in specific
financial structures. The Board decided the current guidance is sufficient for
The Board also decided that an NFP should apply the
transition guidance in the private company accounting alternatives, which
requires prospective application for new goodwill recognized, prospective
amortization of existing goodwill, and prospective application for newly
acquired eligible identifiable intangible assets. The Board decided NFPs should
not subsume existing customer-related intangible assets and noncompete
agreements into goodwill upon adoption of the accounting alternative.
The Board decided not to specify an effective date; thus, NFPs
electing to adopt these alternatives would not have to demonstrate preferability
and would follow the transition guidance above the first time they elect to
adopt the alternatives.
The Board directed the staff to draft a
final Accounting Standards Update for vote by written ballot.
to accounting for income taxes. The Board
considered whether to add a project to its technical agenda to address simplifications
to the accounting for income taxes.
decided to add a project to its technical
part of that project, the Board decided
to remove the following exceptions in Topic 740, Income Taxes:
- Exception to the incremental approach for
intraperiod tax allocation when there is a loss from continuing
operations and income or a gain from other items (for example, discontinued
operations or other comprehensive income)
- Exception to the requirement to recognize a
deferred tax liability for equity method investments when a foreign subsidiary
becomes an equity method investment
- Exception to the ability not to recognize a
deferred tax liability for a foreign subsidiary when a foreign equity method
investment becomes a subsidiary (therefore, an
entity would have the ability
to assert indefinite reinvestment for
the entire basis difference of a
- Exception to the general methodology for
calculating income taxes in an interim period when a year-to-date loss exceeds
the anticipated loss for the year.
The Board also
- An entity should recognize a franchise tax that is partially based on income in
accordance with Topic 740 and account for
any incremental amount as a non-income-based
- An entity should evaluate
when a step up in the tax basis of goodwill should
be considered part of the initial recognition of book goodwill and when it
should be considered a separate transaction.
- An entity should be permitted to forgo the allocation of
consolidated current and deferred tax
expense to legal entities that are not
subject to tax in their separate financial
- An entity should reflect
the effect of an enacted change in tax laws
or rates in the annual effective tax rate computation in the interim period
that includes the enactment date.
The Board also decided
to make Codification improvements for income taxes related
to employee stock ownership plans and
investments in qualified affordable housing projects accounted for using the
The Board decided to exclude
from the scope of the project an issue
involving the accounting for nondeductible goodwill by private
The Board decided that
an entity should apply the amendments as follows:
- Retrospectively for franchise taxes that are partially based on income
and the election to forgo the allocation of consolidated taxes to legal entities that are
not subject to tax in their separate financial statements
- Using a modified retrospective
approach for ownership
equity method investment or
for all other amendments to Topic
directed the staff to draft a proposed Accounting Standards Update for vote by
written ballot, with
a comment period of 45 days.
instruments—credit losses—targeted transition
relief. The Board discussed the comments received
on the proposed Accounting Standards Update, Targeted Transition Relief for
Topic 326, Financial Instruments—Credit Losses. The Board affirmed its
Transition Method, Transition Disclosures
- Permit an entity to irrevocably elect the fair value option in Subtopic
825-10, Financial Instruments—Overall, for certain instruments within the
scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at
Amortized Cost. An entity would be required to apply the election on an
instrument-by-instrument basis for eligible instruments upon adoption of Topic
- Exclude debt securities classified as held-to-maturity from the scope of
instruments eligible for the transition relief.
- Not provide an option to discontinue fair value measurements for financial
assets measured at fair value through net income and instead apply the
measurement guidance in Subtopic 326-20.
The Board decided:
Analysis of Costs and
- For an entity that has not yet adopted the amendments in Accounting
Standards Update No. 2016-13, Financial Instruments—Credit Losses
(Topic 326): Measurement of Credit Losses on Financial Instruments, the
entity should apply the effective date and transition method for the
amendments in this Update using the same effective date and transition method
of Update 2016-13.
- For an entity that has adopted the amendments in Update 2016-13, the
entity should apply the amendments in this Update for fiscal years beginning
after December 15, 2019, including interim periods within those fiscal years.
Entities should apply the amendments on a modified retrospective basis by
means of a cumulative-effect adjustment to the opening retained earnings
balance as of the beginning of the first reporting period in which Update
2016-13 was adopted. Early adoption will be permitted in any interim period
within the fiscal years beginning after December 15, 2018, provided that an
entity has adopted Update 2016-13.
The Board concluded that it has received sufficient
information and analysis to make an informed decision and that the expected
benefits of the amendments will justify the expected costs.
The Board directed the staff to draft
an Accounting Standards Update for vote by written ballot.
reporting. As part of developing a study on segment
disclosures, the Board discussed options to both expand the list of required
disclosures in Topic 280, Segment Reporting, and require those disclosures in a
The Board directed the staff to study the following:
The Board decided to exclude
from the study further consideration of requiring segment disclosures in a
- Expanding the list of required disclosures in Topic 280 to include cost of
revenue, research and development expense, a measure of cash flow, and
inventory by reportable segment
- Developing principles-based disclosure requirements in addition to the
list of required disclosures
- Requiring an explanation of the reasons why items from the list of
required disclosures are not reported.
The Board will continue
to develop a study on segment disclosures at a future meeting.