Project Update

Disclosure Framework—Disclosure Review: Fair Value Measurement

Last updated on February 12, 2018. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.

(Updated sections are indicated with an asterisk *)

The staff has prepared this summary of Board decisions for information purposes only. Those Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.

Project Objective and Overview
Due Process Documents
*Decisions Reached at Last Meeting
*Tentative Board Decisions Reached to Date
*Next Steps
*Board/Other Public Meeting Dates
*Contact Information
 

Project Objective and Overview

The objective and primary focus of the disclosure framework project is to improve the effectiveness of disclosures in notes to financial statements by clearly communicating the information that is most important to users of each entity’s financial statements. Achieving the objective of improving effectiveness will require development of a framework that promotes consistent decisions about disclosure requirements by the Board and the appropriate exercise of discretion by reporting entities.To achieve this objective, the disclosure framework project comprises two components: the Board’s Decision Process and the Entity’s Decision Process.

Currently, four disclosure areas are being evaluated as part of the disclosure framework project. Each review will include (1) evaluation of existing disclosure requirements within the Topic after applying the concepts in the Board’s decision process and (2) promotion of the appropriate use of discretion by entities specifically within the Topic.

This page provides updates on the disclosure review of fair value measurement (Section 820-10-50). For information on the other three disclosure reviews, see the following:
  1. Inventory (Section 330-10-50)
  2. Defined Benefit Plans (Section 715-20-50)
  3. Income Taxes (Section 740-10-50)
Additionally, disclosure requirements for interim reporting are being evaluated for modifications.

The FASB staff has developed a “Q&A: FASB’s Disclosure Framework Project” fact sheet, which can be viewed here.

Due Process Documents

On December 3, 2015, the Board issued a proposed Accounting Standards Update, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The due date for comment letters was February 29, 2016.

*Decisions Reached at Last Meeting (February 7, 2018)

The Board redeliberated the amendments in the proposed Accounting Standards Update, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The Board made the following decisions:

Level 3 Rollforward
 
The Board confirmed its decision to retain the Level 3 rollforward and not require a rollforward of Level 1 and Level 2 of the fair value hierarchy.
 
Change in Unrealized Gains and Losses
 
The Board confirmed the proposed amendment to require an entity to disclose the changes in unrealized gains and losses included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period.
 
The Board did not confirm the proposed amendment to require an entity to disclose the changes in unrealized gains and losses included in other comprehensive income and earnings (or changes in net assets) for recurring Level 1 and Level 2 fair value measurements held at the end of the reporting period, disaggregated by level of the fair value hierarchy.
 
Measurement Uncertainty
 
The Board confirmed the proposed amendment to clarify that the narrative description should communicate information about the uncertainty in fair value measurements at the reporting date.
 
The Board confirmed the proposed amendment to require an entity to disclose the range and weighted average used to develop significant unobservable inputs for fair value measurements categorized within Level 3 of the fair value hierarchy. The Board decided to require that an entity disclose how it calculated the weighted average. The Board also decided that if, for certain assets and liabilities (for example, derivative instruments), an entity determined that other quantitative information (such as, the median and arithmetic average) would be a more reasonable and rationale method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements, the entity may disclose such quantitative information in lieu of the range and weighted average. The Board decided that if an entity decides to disclose other quantitative information, the entity would not have to disclose its reason for omitting the range and weighted average.
 
The Board did not confirm the proposed amendment to require an entity to disclose the time period used to develop significant unobservable inputs for fair value measurements categorized within Level 3 of the fair value hierarchy.
 
Other Disclosures
 
The Board confirmed the proposed amendments to remove the following disclosures:
  1. The amounts of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy
  2. The policy for timing of transfers between levels of the fair value hierarchy
  3. The valuation policies and procedures for Level 3 fair value measurements. 
For investments in certain entities that calculate net asset value, the Board confirmed the proposed amendment to require disclosure of the timing of liquidation of an investee’s assets and the date when restrictions from redemption will lapse only if the investee has communicated the timing to the entity or announced the timing publicly.

A copy of the Board meeting handout can be found here.

*Tentative Board Decisions Reached to Date (As of February 7, 2018)

A list of the tentative Board decisions to date can be found here.

*Next Steps

The Board will complete redeliberations at a future meeting.

*Board/Other Public Meeting Dates


The Board meeting minutes 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 become final only after a formal written ballot to issue a final standard.
 
*February 7, 2018 Board Meeting—Fair Value Measurement Disclosures
June 1, 2016 Board Meeting—Fair Value Measurement Disclosures
November 11, 2015 Board Meeting—Fair Value Measurement Disclosures
October 21, 2015 Board Meeting—Fair Value Measurement Disclosures
October 7,2015 Board Meeting—Fair Value Measurement Disclosures
July 9, 2015 Board Meeting—Fair Value Measurement Disclosures
March 4, 2015 Board Meeting—Fair Value Measurement Disclosures
February 18, 2015 Board Meeting—Flexible Disclosure Requirements
September 3, 2014 Board Meeting— Fair Value Measurement Disclosures and Potential Changes on the Basis of the Proposed Concepts Statement
April 4, 2014 Board Meeting—Field Study Results and Next Steps

*Contact Information

Aarika Friend
Assistant Project Manager
afriend@fasb.org

Kelly Coyne
Postgraduate Technical Assistant
kcoyne@fasb.org

Francesca Roberts
Postgraduate Technical Assistant
froberts@fasb.org