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, November 29, 2017 FASB Board Meeting
Land easement practical expedient for transition to Topic 842. The Board discussed the feedback received on its proposed Accounting Standards Update, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842. The Board decided to:
- Change the language of the land easement transition practical
expedient to clarify that the expedient applies for all expired or
existing land easements that were not accounted for under Topic 840, Leases.
- Proceed with the issuance of a final Accounting Standards Update.
The Board directed the staff to draft a final Update for vote by written ballot.
Leases implementation. The Board discussed issues and requests presented by stakeholders as a result of the implementation of Topic 842.
The Board decided to amend Topic 842 to provide entities with an
additional transition method with which to adopt Topic 842. The proposed
transition method would enable entities to apply the transition
requirements in Topic 842 at the effective date of that Topic (rather
than at the beginning of the earliest comparative period presented as
currently required) with the effects of initially applying Topic 842
recognized as a cumulative-effect adjustment to retained earnings in the
period of adoption. Consequently, an entity's reporting for the
comparative periods presented in the year of adoption would continue to
be in accordance with Topic 840, including the disclosure requirements
of that Topic.
Separating Components of a Contract
The Board decided to amend Topic 842 to provide lessors with a practical
expedient, by class of underlying assets, to not separate nonlease
components from the related lease components and, instead, to account
for those components as a single lease component if both of the
following conditions are met: (1) the timing and pattern of revenue
recognition for the lease component and nonlease component(s) are the
same, and (2) the combined lease component is classified as an operating
lease. In addition, this practical expedient would require an entity to
disclose the entity's policy election, the class or classes of
underlying assets to which the option has been applied, and the nature
of the nonlease components included within the single lease component.
The Board decided not to make amendments to the following areas of Topic 842:
Analysis of Costs and Benefits
- Leases with 100 percent variable payments
- Short-term leases
- Foreign currency
- Land leases
- The definition of incremental borrowing rate
- Certain private company disclosures.
The Board concluded that the expected benefits of the above proposed amendments would justify the expected costs of the changes.
The Board directed the staff to draft a proposed Accounting Standards
Update for the amendments to be made to Topic 842 for vote by written
ballot, with a comment period of 30 days.
Revenue recognition implementation. The Board discussed the status of implementation activities related to its May 2014 Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (and other revenue-related Updates).
The meeting was informational and no technical decisions were made.