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 19, 2017 FASB Board Meeting

Liabilities and equity—targeted improvements. The Board discussed the project direction for accounting for instruments with down round features.

The Board decided that the existence of a down round feature in a financial instrument would not preclude equity classification of that instrument and that an entity would not need to recognize the effect of the trigger of the down round feature in the balance sheet or income statement. Instead, the Board decided that a public business entity should reflect the effect of the trigger of a down round feature as an adjustment to earnings per share (EPS). The Board asked the staff to perform additional research to develop this EPS adjustment as well as any related disclosures.

Revenue recognition of grants and contracts by not-for-profit entities. The Board continued its deliberations focusing on right of return or a release of the promisor from its obligation to transfer assets, accounting from the resource provider's perspective, disclosures, transition, and effective date and early adoption.

The Board decided that the proposed clarifying guidance about distinguishing between conditional and unconditional contributions would apply to a resource provider and a recipient.

The Board decided that in order to meet the definition of a donor-imposed condition, the notion of either a right of return or a release of the promisor from its obligation to transfer assets must be present in the agreement (or another document referenced in the agreement). The agreement must indicate that a recipient is entitled to the transferred assets (or a future transfer of assets) only if it has met the stipulations in the agreement.

Recurring Disclosures

The Board decided that no additional recurring disclosures would be required for a recipient or a resource provider.

Transition and Transition Disclosures

The Board decided that an entity would apply the forthcoming guidance on a modified transition approach to revenue or expense that has not yet been recognized prior to the year of adoption in accordance the forthcoming guidance. Under this modified approach, an entity would be required to disclose:
  1. The nature of and reason for the change in accounting principle
  2. An explanation of the reasons for significant changes in each financial statement line item in the current reporting period resulting from the application of the forthcoming guidance compared with the guidance that was in effect before the change.
Retrospective application would be permitted.

Effective Date and Early Adoption

The Board decided that the effective date of the proposed Update would be the same as the effective date of Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606). Early adoption would be permitted. Accounting Standards Update No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, defers the effective date of Update 2014-09 by one year.