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, December 11, 2019 FASB Board Meeting

Distinguishing liabilities from equity (including convertible debt). The Board discussed comment letter feedback on the July 2019 proposed Accounting Standards Update, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, and began redeliberations. 

The Board affirmed the following decisions:
  1. To account for convertible instruments as a single unit of account, except in circumstances in which the conversion features are required to be bifurcated under Topic 815, Derivatives and Hedging
  2. To remove an entity’s ability to overcome the presumption about share settlement when calculating diluted earnings per share (EPS) for a contract that may be settled in either cash or shares
  3. To remove the following settlement criteria from Section 815-40-25, Derivatives and Hedging—Contracts in Entity’s Own Equity—Recognition:
    1. Condition regarding settlement in unregistered shares in paragraph 815-40-25-10(a)
    2. Collateral condition in paragraph 815-40-25-10(g)
    3. Shareholder rights condition in paragraph 815-40-25-10(f).
The Board directed the staff not to conduct any further research on the following:
  1. Fair value disclosures for all equity-classified instruments
  2. The effect of antidilutive instruments on the diluted EPS calculation
  3. EPS improvements included in comment letter responses that are beyond the scope of the amendments included in the proposed Update.
Next Steps

The Board directed the staff to continue developing a remote likelihood threshold for purposes of determining the classification of a contract in an entity’s own equity when applying the derivatives scope exception.

The Board plans to continue redeliberations in the first quarter of 2020.


Segment reporting. The Board discussed the preparer feedback received during the 2019 disclosure study. Based on the preparer feedback, the Board directed the staff to perform outreach with investors on certain potential segment disclosure improvements.

The Board also directed the staff to accelerate work on one specific issue that would potentially clarify the requirements in Topic 280, Segment Reporting, to encourage greater reporting of total assets by reportable segment for public entities.

Next Steps

The staff will undertake investor outreach and will present that feedback at a future meeting. The staff will also separately analyze potential ways to clarify the requirements in Topic 280 on the disclosure of total assets by reportable segment and will discuss that analysis at a future meeting.


Financial performance reporting—disaggregation of performance information. The Board discussed the feedback received from preparer outreach conducted on an internal view approach to disaggregating income statement expense information. The staff identified and explained the main themes that resulted from that outreach, as well as feedback from FASB advisory groups. Based on the issues identified, the staff developed several alternatives for the project’s path forward and next steps. The staff also identified multiple areas of interaction between the financial performance reporting project and the segment reporting project, which is currently exploring additional disclosure requirements by reportable segment.

Next Steps

The Board directed the staff to pause research on the project to monitor the progression of the segment reporting project and the IASB’s primary financial statements project. The project will remain on the Board’s active technical agenda, and the project team plans to coordinate its next steps based on developments in the segment reporting project and learnings from the IASB’s primary financial statements project.