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.
November 14, 2012 FASB Board MeetingPresentation
of comprehensive income: reclassification out of accumulated other comprehensive
income. The Board discussed feedback received from stakeholders on
the August 2012 FASB Exposure Draft, Comprehensive Income (Topic 220):
Presentation of Items Reclassified Out of Accumulated Other Comprehensive
Income. The Board redeliberated issues that arose from stakeholder
cost-benefit concerns, effective date, and transition and decided the following:
The Board directed
the staff to draft a final Accounting Standards Update for vote by written
ballot, reflecting the decisions summarized above.
- An entity is required to provide enhanced disclosures to present
separately by component reclassifications out of accumulated other
- An entity is required to disclose the effect of significant items
reclassified out of accumulated other comprehensive income on the respective
line items of net income but only if the item reclassified is required under
U.S. GAAP to be reclassified to net income in its entirety. For other
reclassification items that are not required under U.S. GAAP to be
reclassified directly to net income in their entirety, an entity would be
required to provide a cross-reference to other disclosures currently required
under U.S. GAAP for those items.
- When presenting the requirements of items 1 and 2 above in the notes to
the financial statements, an entity is not required to present the information
in a tabular format provided all the required information is in a single
- An entity may present the required information of item 2 above in the
notes or parenthetically on the face of the financial statements provided that
all the information is presented in one place. However, an entity may
voluntarily provide duplicate information in the notes and on the face of the
- Items 1 and 2 above are required for interim reporting periods for public
entities subject to SEC condensed interim financial statement reporting
- A nonpublic entity is not required to provide the information in item 2
above for interim reporting periods.
- The guidance will be effective for reporting periods beginning after
December 15, 2012, for public entities and for reporting periods beginning
after December 15, 2013, for nonpublic entities.
corrections—next phase. The Board discussed the scope of the amendments to
the FASB Accounting Standards Codification® for technical corrections,
including Master Glossary amendments, benefit plan illustrative guidance
amendments, and other amendments. The Board decided to issue a separate Exposure
Draft for amendments related to Master Glossary items. These amendments relate
to corrections to unlinked terms and duplicate terms in the Master Glossary. The
staff plans to bring the other items (that is, benefit plan illustrative
guidance and other amendments) to the Board at a later date for one or more
separate Exposure Drafts.
For unlinked terms in the Master Glossary, the
Board decided to propose adding links for certain unlinked terms already used in
the Codification and deleting other terms not used.
For duplicate terms
in the Master Glossary, the Board decided not to address as part of the
Technical Corrections project any duplicate terms related to other active
projects (they will be addressed in those other projects).
Glossary contains several terms related to defined benefit plans and defined
contribution plans that also result in redundancy. To resolve this redundancy,
the Board decided to propose combining the five related defined benefit plan
definitions into a single definition of defined benefit plan and the
three related defined contribution plan definitions into a single definition of
defined contribution plan.
The Master Glossary also contains
two definitions for the term fair value. These definitions are derived
from FASB Statements No. 157, Fair Value Measurements, and No. 123(R),
Share-Based Payment. To distinguish between the two definitions and
clarify that the one derived from Statement 123(R) is a fair value-based
measure, the Board decided to propose renaming the Statement 123(R) definition
as share-based payment value.
For other duplicative terms in the
project scope, the Board decided to propose various solutions for resolving the
The Board does not expect any change in practice as a result
of these proposed amendments.
The Board directed the staff to draft an
Exposure Draft of Master Glossary amendments for vote by written ballot. The
Board decided on a 90-day comment period.
contracts. The FASB continued its discussion on the accounting for
insurance contracts, focusing on how an entity would account for ceding
commissions, contracts acquired through business combinations and portfolio
transfers, and discretionary payments to policyholders of a mutual insurer as a
result of a contractual participation feature.
The Board tentatively decided that the cedant should
treat ceding commissions that are not contingent on claims or benefits
experience that it receives from the reinsurer as a reduction of the premium
ceded to the reinsurer.
Business Combinations and Portfolio
The Board tentatively decided that:
Discretionary Payments to Policyholders of a Mutual Insurer as a
Result of a Contractual Participation Feature
- An insurer should, at the acquisition date, measure at fair value the
insurance liabilities assumed and insurance assets acquired in a business
combination, the components of which should be measured as follows:
- Expected net cash flows measured in accordance with the insurer's
accounting policies for insurance contracts that it issues using current
assumptions. The discount rate determined at the acquisition date should be
deemed the locked-in rate at which interest expense is accreted and
presented in the statement of comprehensive income.
- Single margin measured as the difference between the fair value of the
insurance contract liability (that is, the hypothetical premium) and the
expected net cash flows determined in (a) above.
- An insurer should measure a portfolio of insurance contracts acquired in a
portfolio transfer that does not meet the definition of a business combination
in accordance with the insurance contracts standard.
- Insurance contracts that are acquired through a combination of entities or
businesses under common control should apply the guidance in Topic 805,
- For business combinations prior to the effective date of the insurance
contracts standard, applying the transition guidance will require insurers to
reallocate the purchase price attributed to the insurance contracts liability
to the components in accordance with decisions reached in 1 – 3 as of the
acquisition date, using the fair value guidance in effect at that date.
The Board tentatively
decided to clarify that on measuring the insurance contracts liability,
discretionary payments as a result of a contractual participation feature should
be based on the insurer's expectation of payments to policyholders (considering
the entity is a going concern), thus resulting in equity (deficits) for mutual
The Board will continue its
discussion on the insurance contracts project at a joint meeting with the IASB
on November 20, 2012, on the determination of the discount rate and the rate at
which interest is accreted for contracts whose cash flows are affected by
expected asset returns but for which "mirroring" does not apply. Also on
November 20, 2012, the FASB will discuss when an entity should apply the
insurance contracts standard for guarantee contracts that meet the definition of