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 9, 2011 FASB Board Meeting

Insurance contracts. The Board discussed how to proceed with this project in light of the feedback it has received from stakeholders through comment letters on the FASB Discussion Paper, Preliminary Views on Insurance Contracts, and related outreach activities.

The Board decided to continue this project, affirming the objective of developing standards of accounting for insurance contracts that would improve existing U.S. GAAP and converge with International Financial Reporting Standards. The Board will pursue those objectives by deliberating the issues in this project jointly with the IASB.

Investment properties. The Board reaffirmed its previous decision that the investment properties guidance would only apply to entities that meet the five criteria the Board has previously developed. The Board decided that the business activities and business purpose criteria should describe the qualifying entities as those that invest in real estate for total return. The revised criteria follow:
  1. Business Activities. The entity’s substantive activities relate to investing in real estate.
  2. Business Purpose. The express business purpose of the entity is to invest in real estate for total return including an objective to realize capital appreciation. The entity has potential strategies for realizing capital appreciation including selling a property to maximize its total return. The entity’s business purpose is not to hold real estate properties for:
    1. Use in the production or supply of goods or services or for administrative purposes;
    2. Rental income only; or
    3. Sale in the ordinary course of business.
  3. Unit Ownership. Ownership in the entity is represented by units of investments, such as shares or partnership interests, to which proportionate shares of net assets can be attributed.
  4. Pooling of Funds. The entity has one or more unrelated investors that hold significant ownership interests in the entity.
  5. Reporting Entity. The entity can be but does not need to be a legal entity.
The Board decided to allow an entity with investments in both property and other types of real estate investments (such as mortgage receivables or mortgage-back securities) to qualify under the investment properties guidance. The Board will continue to discuss whether certain real estate entities owned by a single owner (for example, a pension plan) would qualify under the investment properties guidance.

Goodwill impairment assessments. The Board continued to evaluate alternative ways of identifying potential goodwill impairments that might be more cost-effective than the existing fair value approach (step one of the current two-step impairment assessment process). The Board directed the staff to further assess, through outreach, the cost-effectiveness of an approach that would use qualitative factors to assess whether it is more-likely- than-not that goodwill is impaired. The Board also decided to include public entities within the scope of this project.