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, February 14, 2018 FASB Board Meeting
Financial instruments—hedging implementation. The Board discussed the status of and issues arising from implementation activities related to Update No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The Board discussed the staff’s response to:
- General technical inquiries received that affect many stakeholders. No decisions were made.
- Technical inquiries received related to prepayable financial instruments. Specifically, the staff presented its interpretation of which financial instruments meet the definition of the term prepayable in the FASB Accounting Standards Codification Master Glossary. Financial instruments that meet the definition of prepayable include the following:
- Instruments that are currently exercisable and prepayable at any time
- Instruments with certain contingent prepayment features (that is, based on the passage of time, the occurrence of a specified event other than the passage of time, and the movement in a specified interest rate)
- Instruments with conversion features.
- Technical inquiries received on net investment hedges under the spot method as amended by Update 2017-12. The staff presented its interpretation of the guidance related to amortization of excluded components when the hedging instrument is a cross-currency interest-rate swap that is off-market (that is, does not have a fair value of zero) at hedge inception. Specifically, an amortization method should be used that would not violate the guidance in paragraphs 815-35-35-6 through 35-7. That is, at the end of the hedging relationship, only amounts of the swap related to spot changes on the notional amount of the net investment should remain in currency translation adjustment. Therefore, any systematic and rational approach that results in the off-market nature of the swap equaling zero at the end of the hedging relationship is acceptable. However, structuring of cross-currency interest-rate swaps designated in net investment hedges to achieve a specific accounting result is not considered rational in the context of a systematic and rational approach. The Board agreed with the staff’s conclusions.
The Board directed the staff to research a potential technical correction related to the use of the term prepayable.
Revenue recognition of grants and contracts by not-for-profit entities. The Board redeliberated the amendments in the proposed Accounting Standards Update, Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made, and made the following decisions:
Conditional Contributions—Indicators to Describe a Barrier
The Board decided to clarify and refine the indicators to describe a barrier, including removing the additional actions indicator in the proposed Update.
Contributions Made by a Resource Provider
The Board affirmed that the guidance for distinguishing between conditional contributions and unconditional contributions should be similar for both a recipient and a resource provider.
Recurring Disclosures by Recipients about Conditional Promises to Give
The Board affirmed the existing disclosure requirements about conditional promises to give.
Simultaneous Release of a Condition and a Restriction
The Board decided that the simultaneous release accounting option for restricted contributions could be elected for conditional restricted contributions separately from unconditional restricted contributions.
The Board affirmed that the final amendments should be applied on a modified prospective basis following the effective date to agreements that are either (1) incomplete as of the effective date or (2) entered into after the effective date.
The Board affirmed that for recipients, the effective date of the amendments will align with Topic 606, Revenue from Contracts with Customers. The Board decided that for resource providers, the effective date will be delayed by one year.
The Board affirmed that early adoption will be permitted.
Disclosure framework: disclosure review—defined benefit plans. The Board redeliberated the proposed Accounting Standards Update, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework: Changes to the Disclosure Requirements for Defined Benefit Plans.
The Board decided to confirm the proposed amendments to remove the following disclosures:
- The amount and timing of plan assets expected to be returned to the employer
- The disclosures related to the June 2001 amendments to the Japanese Welfare Pension Insurance Law
- The related party disclosures about the amount of future annual benefits covered by insurance and annuity contracts and significant transactions between the employers or related parties and the plan
- The amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year
- For nonpublic entities, the reconciliation of the opening balances to the closing balances of plan assets measured on a recurring basis in Level 3 of the fair value hierarchy.
The Board decided to:
- Add a disclosure of the weighted-average interest crediting rate for cash balance plans and other plans with a promised interest crediting rate, as proposed
- Revise the proposed disclosure about the reasons for significant gains and losses by requiring only a narrative description of the reasons for significant gains and losses affecting the benefit obligation.
- The amount of the accumulated benefit obligation (ABO) for pension plans.
- The aggregate ABO and the aggregate fair value of plan assets with ABOs in excess of plan assets. The Board requested further research on the ways to disclose the aggregate information for underfunded (including unfunded) pension plans based on both the projected benefit obligation (PBO) and ABO benchmarks.
- The organization of disclosures under the current guidance in Subtopic 715-20.
- For plan assets, quantitative and qualitative disclosures from Topic 820 on fair value measurement about assets measured at net asset value (NAV) using a practical expedient
- A description of the nature of the benefits provided, the employee groups covered, and the type of benefit plan formula.
The Board decided not to consider removing, adding, or amending other disclosure requirements.
The Board also decided to require a retrospective transition method for these disclosure amendments.
The Board will complete redeliberations at a future meeting.