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, February 22, 2017 FASB Board Meeting

Scope of modification accounting in Topic 718. The Board discussed comments received on the November 17, 2016 proposed Accounting Standards Update, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting. The Board made the following decisions.

An entity should apply modification accounting in Topic 718 if a change to an award affects the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used), vesting conditions, or classification of the award.

The guidance should not explicitly state that an entity is permitted to apply judgment to evaluate whether a change to the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of an award is insignificant.

The unit of account for the fair value test under the guidance should be consistent with the current notion in Topic 718.

Recurring Disclosures

The current disclosure requirements for modifications should be applicable regardless of whether modification accounting is required. No disclosure requirements should be added.


The guidance should be applied prospectively to awards modified on or after the effective date of the forthcoming final standard. No transition disclosures are required.

Effective Date and Early Adoption

The forthcoming guidance should be effective for fiscal years beginning after December 15, 2017, and interim periods within those annual periods, for all entities. Early adoption is permitted for all entities at any time (including any interim period) after the guidance is issued.

Costs and Benefits

The Board concluded that the expected benefits of its decisions reached justify the costs.

Next Steps

The staff will draft a final Accounting Standards Update for vote by written ballot.

Revenue recognition of grants and contracts by not-for-profit entities. The Board discussed ways to improve the existing guidance for distinguishing between conditional and unconditional contributions.

The Board decided to clarify and refine existing guidance in Subtopic 958-605, Not-for-Profit Entities—Revenue Recognition, by indicating that the definition of a donor-imposed condition would include the following:
  1. A right of return, entailing either a return of assets transferred or a release of a promisor from its obligation to transfer assets
  2. A barrier that must be overcome before the recipient is entitled to the assets transferred or promised.
A barrier would be described through the use of indicators and illustrative examples.