Small Business Advisory Committee Meeting Recap

November 8, 2018

The Small Business Advisory Committee (SBAC) met on November 8, 2018. At the meeting, the SBAC members provided input on the following topics:

• Accounting for Certain Identifiable Intangible Assets in a Business Combination and Subsequent Accounting for Goodwill for Public Business Entities and Not-for-Profits: SBAC members discussed the subsequent accounting for goodwill, the accounting for certain identifiable intangible assets, and the scope of the FASB's projects on those topics. Members supported simplifying the subsequent accounting for goodwill to reduce cost and improve consistency.
• Distinguishing Liabilities from Equity (Including Convertible Debt): The FASB staff provided SBAC members an update on the Board's decision to simplify the accounting for convertible instruments and derivative scope exceptions, and reviewed the existing disclosure requirements for convertible instruments. Some members shared their views on providing or using the convertible debt information.
• Consolidation Reorganization and Targeted Improvements: SBAC members discussed the complexity around the variable interest entity model and commented on the areas where the guidance could be simplified or where additional educational content would be beneficial.
• Implementation Update on Leases (Topic 842): SBAC members discussed the additional (and optional) transition method provided in Accounting Standards Update No. 2018-11, Leases (Topic 842): Targeted Improvements. Some members commented about small public company experiences in the implementation of the leases standard. Some of the areas of focus included the appropriate identification of leases, reviewing lease contracts for retailers, and determining the incremental borrowing rate. One member said that it is important for the FASB to continue to provide implementation support.
• Open Discussion on Small Public Company Considerations: SBAC members discussed potential improvements to income tax disclosures, materiality, and the general effectiveness of disclosures for users.