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.

August 24, 2011 FASB Board Meeting

Disclosure framework. The Board discussed a first draft of a decision process for use in establishing disclosure requirements for financial statement line items (the decision process). Although its final form has not yet been determined, the decision process would be more closely akin to a Concepts Statement than a reporting requirement.

The goal of the decision process is to improve the efficiency and effectiveness of financial statement disclosures by focusing on matters that are most important to users of a particular entity´s financial statements. The desired result is a net reduction in disclosure volume and a net increase in the utility of the information disclosed.

Achieving that result would require decisions by the Board in standard-setting projects about a range of possible disclosure sets that would be customized by each reporting entity to focus on what is important in its own circumstances. For example, an entity with a pension plan that is barely material would be expected to provide less information about its plan than an entity with a pension plan that requires future payments that are so large that they are extremely important to the future of the entity.

The staff has tested the decision process by applying it to selected Topics of the FASB Accounting Standards Codification® and comparing the indicated disclosures with existing requirements. The results of those limited tests, which indicated some disclosures that could be eliminated and a few that could be added, had been discussed with Board members at an educational meeting. Board members provided some suggested revisions to details of the decision process at that meeting.

Board members stated that the decision process generally is appropriate and workable. The Board directed the staff to evaluate the suggested revisions, change the process as necessary, and test the process further by applying it to additional Codification Topics. After satisfactory completion of those steps, the staff will begin consultation with stakeholders after revising the draft based on Board member comments.

This decision process is one of three parts of the disclosure framework project. The other two parts, which the Board has not yet considered in detail, are:
  1. A decision process for disclosures about other events and conditions that affect prospects for future cash flows but that are not yet recognized in the financial statements (including many matters usually referred to as risks and opportunities)
  2. A decision process for general information about the reporting entity.
Other matters that the Board will discuss in future meetings include:
  1. What guidance to provide to a reporting entity in judging which disclosures are important in its own financial statements and the extent of the information to be disclosed
  2. How to judge whether the benefits of specific disclosures would justify their cost
  3. How to identify information that could be harmful to the entity if disclosed
  4. How to apply the decision processes to not-for-profit entities
  5. Characteristics of nonpublic entities that might require disclosure decisions different from those of public entities.
The Board directed the staff to develop a plan for completing the additional steps necessary to issue an initial due process discussion document early in 2012.

Accounting for financial instruments: hedging. The Board discussed the analysis of comment letters received on the February 9, 2011 FASB Invitation to Comment, Selected Issues about Hedge Accounting, which solicited input on the IASB´s Exposure Draft, Hedge Accounting. The meeting was educational and no decisions were reached.

Investment properties and investment companies.

Investment properties.

The Board decided that an investor in an investment property entity would be permitted to use the net asset value practical expedient in Topic 820, Fair Value Measurement, to estimate the fair value of its investment if investors in the investment property entity would transact at net asset value per share.


The Board decided to remove the reference to "rental income only" from the express business purpose criterion to qualify as an investment property entity. In addition, the Board decided that the proposed Accounting Standards Update should include an example illustrating that an entity investing in real estate properties to collect rental income long term, but does not have an exit strategy for its investments, would not qualify as an investment property entity.

The Board decided to expand the scope of the exemption from the unit ownership and pooling of funds criteria to qualify as an investment property entity from a subsidiary that has a single investor who is required to measure its investments at fair value to a subsidiary whose parent is required to measure its investments at fair value.


The Board decided that an investment property entity would initially measure its investment properties at transaction price, including transaction costs.

Revenue Recognition

The Board decided that rental revenue from investment properties would be recognized on a contractual basis.

Interests in Other Entities

The Board decided that an investment property entity´s investment in either another investment property entity or an investment company, where the investment property entity can exercise significant influence over the investee, would be measured at fair value rather than applying the equity method of accounting. The Board also decided that an investment property entity would account for a controlling financial interest in an investment company under Topic 810, Consolidation.


The Board decided to prohibit early adoption of the guidance in the proposed Update.

Comment Period

The Board decided that the comment period for the proposed Update would coincide with the end date of the comment period for the proposed Update on investment companies.

The Board directed the staff to draft a proposed Accounting Standards Update for vote by written ballot.

Investment companies.

The Board decided that rental revenue from real estate properties would be recognized on a contractual basis.