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, March 23, 2022 FASB Board Meeting

Fair value measurement of equity securities subject to contractual sale restrictions. The Board began its redeliberations on the effect of contractual sale restrictions on fair value measurement that was included in the proposed Accounting Standards Update, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.

scope

The Board affirmed the proposed scope that the clarifying amendments would apply to all equity securities subject to any contractual sale restriction.

Measurement

The Board affirmed the proposal that any contractual sale restriction on the sale of an equity security (1) should not be part of the unit of account and therefore would not be considered a characteristic of the asset and (2) would not be incorporated into measuring the fair value of the equity security. The Board decided that an entity would be prohibited from recognizing and measuring the contractual sale restriction as a separate unit of account.

Disclosure

The Board decided to require the following qualitative and quantitative disclosures for equity securities subject to contractual sale restrictions considering the disaggregation principles established in paragraph 820-10-50-1D(c):
  1. The nature and duration of the restriction
  2. The circumstances that could cause a lapse in the restriction
  3. The fair value of equity securities subject to contractual sale restrictions reflected on the balance sheet.
Transition

The Board affirmed the proposed transition approach that all entities, except for investment companies under Topic 946, Financial Services—Investment Companies, would apply the amendments in a final Accounting Standards Update on a prospective basis with any adjustment recognized in earnings on the date of adoption.

An entity that qualifies as an investment company under Topic 946 only would apply the amendments in a final Update to investments in equity securities in which the lock-up agreement is executed on or after the adoption date. Equity securities in which a lock-up agreement was executed before the adoption date of the amendments in a final Update would be accounted for in the same manner until the expiration of the lock up. The Board decided to add a requirement that investment companies should disclose the amounts subject to historical accounting policies during the transition period.

Effective Date

The Board concluded that public business entities would be required to adopt the amendments in a final Update for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. All other entities would be required to adopt the amendments in a final Update for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years.

Early adoption would be permitted.

Cost-Benefit Analysis

The Board concluded that it has received sufficient information and analyses to make an informed decision on the expected costs of applying the amendments in a final Update and that the expected benefits of those amendments would justify the expected costs.

Permission to Ballot and Next Steps

The Board concluded that it has received sufficient information and analyses to make an informed decision on the issues presented.

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


Targeted improvements to income tax disclosures (formerly the disclosure framework: disclosure review—income taxes project). The Board discussed recent feedback received, including feedback on its June 2021 Invitation to Comment, Agenda Consultation, and the next steps for the project.
The Board decided to:
  1. Revise the project objective, stating that the objective is to improve the transparency and decision usefulness of income tax disclosures
  2. Establish a project scope that primarily focuses on the following income tax information:
    1. Income taxes paid
    2. The rate reconciliation table.


Next Steps

The Board directed the staff to begin research on the income tax information identified in the scope above.
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