SUMMARY OF BOARD DECISIONS
Summary of Board decisions are provided for the information and
convenience of constituents who want to follow the Board’s deliberations. All of
the conclusions reported are tentative and may be changed at future Board
meetings. Decisions are included in an Exposure Draft for formal comment only
after a formal written ballot. Decisions in an Exposure Draft may be (and often
are) changed in redeliberations based on information provided to the Board in
comment letters, at public roundtable discussions, and through other
communication channels. Decisions become final only after a formal written
ballot to issue an Accounting Standards Update.
February 1, 2011 FASB/IASB Joint Videoconference Board
recognition. The FASB and the IASB continued their redeliberations
of the Exposure Draft, Revenue from Contracts with Customers, by
discussing the accounting for warranties.
The Boards decided that an
entity should account for some warranties as a warranty obligation (that is, as
a cost accrual) in accordance with IAS 37, Provisions, Contingent
Liabilities and Contingent Assets, or FASB Accounting Standards
Codification® Topic 450, Contingencies. To determine which
warranties an entity would account for as a cost accrual, the Boards decided
The Boards also decided to develop
implementation guidance to help an entity determine when a warranty provides a
service to the customer in addition to assurance that the entity’s past
performance was as specified in the contract.
- If a customer has the option to purchase a warranty separately from the
entity, the entity should account for the warranty as a separate performance
obligation. Hence, the entity would allocate revenue to the warranty
- If a customer does not have the option to purchase a warranty separately
from the entity, the entity should account for the warranty as a cost accrual
unless the warranty provides a service to the customer in addition to
assurance that the entity’s past performance was as specified in the contract
(in which case the entity would account for the warranty service as a separate
of a lease
The IASB and the FASB discussed the definition of a
lease and how to distinguish between a lease contract and a service contract.
Using some examples, the Boards discussed the application of the following
principles to identify a lease:
The Boards will continue their discussions at
a future joint meeting.
- Fulfilment of the contract depends on the supplier (lessor) providing a
- The contract conveys to the customer (lessee) the right to control the use
of the specified asset.
This session was for education only, and thus
the Boards did not make any technical decisions.
2011 FASB/IASB Joint Videoconference Board Meeting