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, June 15, 2022 FASB Board Meeting
Insurance: Transition for Accounting Standards Update No. 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts.
The Board decided to:
- Add a project to its technical agenda to address the application of the amendments in Update 2018-12 to contracts and legal entities sold before the effective date.
- Amend the transition guidance for Update 2018-12 to include an accounting policy election for insurance entities to not apply that guidance to contracts or legal entities sold before the effective date.
- Limit the accounting policy election to contracts or legal entities that are derecognized before the effective date and in which the insurance entity does not have certain forms of continuing involvement.
- Require an entity to disclose if the accounting policy election was made.
The Board decided that the proposed amendments should be adopted concurrently with the adoption of the amendments in Update 2018-12, as amended by Accounting Standards Update No. 2020-11, Financial Services—Insurance (Topic 944): Effective Date and Early Application.
The Board concluded that it has received sufficient information and analysis to make informed decisions on the expected costs of the amendments and that the expected benefits of the amendments would justify the expected costs.
Permission to Ballot and Next Steps
The Board directed the staff to draft a proposed Accounting Standards Update for vote by written ballot.
The Board decided on a 25-day comment period for the proposed Update.
Identifiable Intangible Assets and Subsequent Accounting for Goodwill. The Board discussed the future direction of the project and decided to deprioritize and remove the project from its technical agenda.
Conceptual Framework—The Reporting Entity. The Board decided to begin initial deliberations on the reporting entity phase of the Conceptual Framework project. The Board deliberated substantive issues that were identified by comment letter respondents to the 2010 proposed Concepts Statement, Conceptual Framework for Financial Reporting: The Reporting Entity. The Board made the following decisions:
Parent-Only Financial Statements
The Board decided that parent-only financial statements depicting a circumscribed area of economic activities in which a parent-subsidiary relationship exists do not represent a full set of financial statements as defined in Chapter 7, Presentation, of FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting, and, therefore, are not sufficient to meet the objective of general purpose financial reporting.
Portion of an Entity
The Board decided that a portion of an entity can represent a reporting entity if the portion of the entity is a circumscribed area of economic activities and is able to prepare general purpose financial reports that faithfully represent the economic activities of its circumscribed area.
Combined Financial Statements
The Board decided that combined financial statements depicting common control, including circumstances in which a parent-subsidiary relationship does not exist, can faithfully represent a circumscribed area of economic activities and, therefore, are consistent with the objective of general purpose financial reporting.
Permission to Ballot
The Board directed the staff to draft proposed Chapter 2, The Reporting Entity, of Concepts Statement 8 for vote by written ballot.
Improving the Accounting for Asset Acquisitions and Business Combinations (Phase 3 of the Definition of a Business Project). The Board continued initial deliberations on the initial and subsequent recognition and measurement of contingent consideration arrangements that are classified as assets or liabilities and accounted for under Topic 805, Business Combinations. No consensus was reached. The Board also discussed feedback received on this project in response to the 2021 Invitation to Comment, Agenda Consultation. On the basis of research performed and feedback received to date, the Board decided to deprioritize the project at this time and to remove it from the technical agenda.