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.
August 24, 2011 FASB Board MeetingDisclosure
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
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
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:
Other matters that the Board will discuss in future meetings include:
- 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
- A decision process for general information about the reporting entity.
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.
- 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
- How to judge whether the benefits of specific disclosures would justify
- How to identify information that could be harmful to the entity if
- How to apply the decision processes to not-for-profit entities
- Characteristics of nonpublic entities that might require disclosure
decisions different from those of public entities.
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.
properties and investment
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.
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
The Board decided that an investment
property entity would initially measure its investment properties at transaction
price, including transaction costs.
The Board decided that rental revenue from investment
properties would be recognized on a contractual basis.
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.
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
The Board decided that rental
revenue from real estate properties would be recognized on a contractual