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, January 18, 2018 FASB Board Meeting
Codification improvements to recent financial instruments standard. The Board discussed comments received and redeliberated issues related to the proposed Accounting Standards Update, Technical Corrections and Improvements to Recently Issued Standards: Accounting Standards Update No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The Board decided to:
- Finalize and issue the final Update on technical corrections and improvements to financial instruments separately from an Update on technical corrections and improvements to leases as jointly published in the proposed Update.
- Maintain the prospective transition guidance for equity securities measured under the measurement alternative in paragraph 321-10-35-2 (“the measurement alternative”) as described in the proposed Update.
- Maintain the prospective transition guidance for insurance companies subject to the guidance in Topic 944, Financial Services—Insurance, with equity securities measured under the measurement alternative, implicitly allowing insurance companies to determine an appropriate way to prospectively recognize amounts currently recorded in accumulated other comprehensive income related to those equity securities.
Require insurance companies subject to the guidance in Topic 944 to apply the prospective method chosen for transition to the entire population of equity securities measured under the measurement alternative.
- Remove the phrase all equity securities of the same type proposed in paragraph 321-10-35-2 and replace it with all identical or similar investments of the same issuer.
- Make an entity’s election to measure an equity security and all identical or similar investments of the same issuer at fair value in paragraph 321-10-35-2 irrevocable and applicable to all future purchases of identical or similar investments of the same issuer.
- Not provide additional implementation guidance for the application of the measurement alternative.
- Clarify the inconsistency in paragraph 815-15-25-4 to acknowledge that when the fair value option is elected for a financial liability that is also a hybrid financial instrument, some changes in fair value shall be presented separately in other comprehensive income according to paragraph 825-10-45-5.
Effective Date and TransitionThe Board decided that the amendments in the final Update will be effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years beginning after June 15, 2018. Public business entities with fiscal years beginning in the period between December 15, 2017 and June 15, 2018 would not be required to adopt the amendments until the interim period beginning after June 15, 2018. For all other entities, the Board decided that the amendments in the final Update will have the same effective date and transition requirements as the requirements for all other entities in Update 2016-01, which are detailed in paragraph 825-10-65-2. Early adoption is permitted so long as Update 2016-01 has been adopted.
Analysis of Costs and BenefitsThe Board concluded that it has received sufficient information and analysis to make an informed decision on the issues presented and that the expected benefits of the ammendments justify the expected costs.
Next StepsThe Board directed the staff to draft a final Accounting Standards Update for a vote by written ballot.