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, July 20, 2022 FASB Board Meeting
Conceptual framework—recognition and derecognition. The Board discussed whether to begin initial deliberations on the recognition and derecognition phase of the Conceptual Framework project. The Board deliberated substantive issues that were identified by staff related to recognition and derecognition concepts in FASB Concepts Statement No. 5, Recognition and Measurement in Financial Statements of Business Enterprises, as amended by Chapter 7, Presentation, of FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting. The Board discussed the comment period for proposed Chapter 2, The Reporting Entity, and proposed Chapter 5, Recognition and Derecognition, of Concepts Statement 8. The Board made the following decisions:
Agenda Decision
The Board decided to begin initial deliberations on the recognition and derecognition phase of the Conceptual Framework project.
Recognition Criteria
The Board decided that all of the following are fundamental recognition criteria:
- Definitions—The item meets the definition of an element of financial statements.
- Measurability—The item is measurable and has a relevant measurement attribute.
- Faithful Representation—The item can be depicted and measured with faithful representation.
The Board decided that an item that no longer meets a recognition criterion should be derecognized from financial statements.
Permission to Ballot
The Board directed the staff to draft proposed Chapter 5, Recognition and Derecognition, of Concepts Statement 8 for vote by written ballot.
Comment Period
The Board decided on a 90-day comment period for proposed Chapter 5 and proposed Chapter 2, The Reporting Entity.
Disclosure of supplier finance program obligations. The Board made the following decisions and completed its redeliberations on the proposed Accounting Standards Update, Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations:
Key Terms
The Board decided that an entity should disclose information about the key terms of a supplier finance program, including a general description of the payment terms (including payment timing and basis for its determination) and the assets pledged as security or other forms of guarantees provided for the committed payment to the finance provider or intermediary.
Nonpublic Entity Considerations
The Board decided that all entities that use supplier finance programs in connection with the purchase of goods and services should apply all of the amendments in the final Update.
Transition and Effective Date
The Board decided that the amendments in the final Update should be applied retrospectively to all periods in which a balance sheet is presented, except for the amendment on rollforward information, which should be applied prospectively.
The Board decided that public business entities should adopt (1) the amendments in the final Update, except for the amendment on rollforward information, for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years and (2) the amendment on rollforward information for fiscal years beginning after December 15, 2023. The Board decided that all other entities should be subject to the same effective dates as those for public business entities. Early adoption will be permitted.
The Board decided that an entity should disclose information about the key terms of the programs and the balance sheet presentation of the program obligations, when the amount of the obligation outstanding is disclosed in the first interim reporting period during the year of adoption.
Cost-Benefit Analysis
The Board concluded that it has received sufficient information and analysis to make an informed decision on the expected costs of applying the amendments in the final Update and that the expected benefits of those amendments would justify the expected costs.
Permission to Ballot
The Board concluded that it has received sufficient information and analysis to make informed decisions and directed the staff to draft a final Accounting Standards Update for vote by written ballot.