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.
July 13, 2011 FASB Board MeetingRevenue
recognition. The Board discussed whether to provide nonpublic
entities with an alternative method of applying the transition guidance in the
final revenue recognition standard. The Board decided that a nonpublic entity
should initially apply the guidance in the proposed Update on revenue
recognition on a retrospective basis. The Board acknowledged that nonpublic
entities are not required under U.S. GAAP to include comparable periods in their
financial statements. However, the Board felt that if a nonpublic entity
includes comparable periods in its financial statements, then it is important
that revenue be recognized consistently from period to period. The Board noted
that nonpublic entities would be afforded certain reliefs including (1) not
requiring restatement for contracts that begin and end in the same prior annual
accounting period, (2) allowing the use of hindsight in estimating variable
consideration, and (3) only requiring the onerous test as of the effective date
unless an onerous liability was previously recognized. In addition, the Board
expressed its commitment to consider at a future meeting whether the effective
date for public entities should be deferred for nonpublic entities.
The Board discussed lessor accounting for leveraged lease transactions and
tentatively decided that:
- A lessor would account for leveraged leases under the proposed new leases
guidance. There would not be a different lessor approach for leveraged leases.
- A lessor would apply the same transition guidance to current leveraged
leases as required for all other leases; that is, existing leveraged lease
transactions would not be grandfathered.
investment companies. At the June 8, 2011 Board meeting, the Board
decided that an investment company would be required to consolidate an
investment property entity when it holds a controlling financial interest in the
investment property entity. At today’s meeting, the Board decided that an
investment company should calculate its financial highlights at the consolidated
level if the investment company consolidates another entity. However, the
financial highlights of the consolidated entity should exclude amounts
attributable to the noncontrolling interest holders of the investment property
The Board also decided that an investment company would be
required to calculate an expense ratio that excludes the effects of
consolidating an investment property entity.
The Board also decided that
noncontrolling interests in a consolidated investment property entity should be
presented in accordance with Topic 810 as follows:
decided that the comment period for the proposed Accounting Standard Update
would coincide with the end date of the comment period on the IASB’s Exposure
Draft on investment entities, which is expected to be 120 days.
- The statement of assets and liabilities would reflect the noncontrolling
interest separately from the equity held by the parent entity’s investors.
- The statement of operations would include an allocation of the increase in
net assets from operations (net income) between the parent entity’s investors
and the noncontrolling interest.
- The statement of changes in net assets would separately identify changes
in net assets that are attributed to the parent entity’s investors and those
that are attributed to the noncontrolling interest holders.
ratification of EITF consensuses and tentative conclusions. The
Board ratified the following consensuses reached at the June 23, 2011 EITF
- Issue No. 09-H, "Health Care Entities: Presentation and Disclosure
of Patient Service Revenue, Provision for Bad Debts, and the Allowance for
Doubtful Accounts for Certain Health Care Entities"
of this consensus is limited to health care entities that recognize patient
service revenue at the time the services are rendered even though the entity
does not assess the patient’s ability to pay.
A health care entity
within the scope of this consensus should present the provision for bad debts
related to patient service revenue as a deduction from patient service revenue
(net of contractual allowances and discounts) in the statement of operations
and should disclose all of the following:
An entity should identify its major payor sources of revenue
consistent with how the entity manages its business (for example, how it
assesses credit risk).
- By major payor sources of revenue:
- Its policy for assessing the timing and amount of uncollectible
revenue recognized as bad debts
- Its policy for assessing collectability in determining the timing and
amount of revenue (net of contractual allowances and discounts) to be
- Its patient service revenue (net of contractual allowances and
discounts) before any provision for bad debts.
- Quantitative and qualitative information about significant changes in
the allowance for doubtful accounts related to patient accounts receivable.
The consensus will be effective for public
entities for fiscal years and interim periods within those years beginning
after December 15, 2011. The consensus will be effective for nonpublic
entities for the first annual period ending after December 15, 2012, and
interim and annual periods thereafter. Early adoption is permitted.
consensus to present (1) patient service revenue (net of contractual
allowances and discounts), (2) the provision for bad debts related to patient
service revenue, and (3) the resulting net patient service revenue less the
related provision for bad debts as separate line items on the face of the
statement of operations should be applied through retrospective application
for all periods presented, while the new disclosure requirements should be
Board also ratified the following consensus-for-exposure reached at the June 23,
2011 EITF meeting. The consensus-for-exposure is expected to be exposed for a
period of 75 days.
- Issue No. 10-H, “Fees Paid to the Federal Government by Health
A health insurer should present the annual fee to be
paid under the Patient Protection and Affordable Care Act and the Health Care
and Education Reconciliation Act as an operating expense. The fee should be
recognized over the calendar year in which it is payable using a straight-line
method of allocation unless another method better allocates the annual fee
over the calendar year that it is payable.
The consensus does not
require any additional recurring disclosures.
The consensus will be
effective for calendar years beginning after December 31, 2013.
- Issue No. 10-E, “Derecognition of in Substance Real
A parent that ceases to have a controlling financial
interest in a subsidiary that is in substance real estate as a result of
default by the subsidiary on its nonrecourse debt would apply the guidance in
Subtopic 360-20, Property, Plant, and Equipment—Real Estate Sales, to
determine whether to derecognize the real estate and the related debt in the
The consensus-for-exposure does not require any additional
The consensus-for-exposure would be applied on a
prospective basis to evaluate whether to derecognize real estate owned by an
in substance real estate subsidiary. Prior periods would not be adjusted even
if the reporting entity has continuing involvement with a previously
deconsolidated in substance real estate subsidiary.