Last updated on September 30, 2021. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.
(Sections updated on the date above are indicated with an asterisk *)
Project Objective and Background
Objective:The objective of this project is to reduce diversity in practice on measuring the fair value of equity securities that are subject to contractual sale restrictions. The project was previously limited to the effect of underwriter restrictions on fair value measurement.
Background:The Board received an agenda request to address diversity in practice on how to measure the fair value of equity securities that are subject to an underwriter lockup restriction.
On July 29, 2020, the Board decided to add this project to its technical agenda to address the effect of underwriter restrictions on fair value measurements. The Board also decided to add a project to its research agenda to evaluate the effects of other types of sale restrictions on fair value measurements.
On September 15, 2021, the Board issued a proposed Accounting Standards Update, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to
Contractual Sale Restrictions. The due date for comment letters is November 14, 2021.
There are no media releases or educational materials at this time.
Media Releases and Educational Materials
Decisions Reached at Last Meeting (May 26, 2021)
The Board began its initial deliberations on the effect of sale restrictions on fair value measurement.
The Board expanded the scope of the project to all equity securities subject to contractual sale restrictions. The project was previously limited to the effect of underwriter restrictions on fair value measurement.
The Board decided to amend Topic 820, Fair Value Measurement, to clarify that lock-up agreements are entity specific and not a part of the unit of account in the measurement of fair value of equity securities.
The Board decided that all entities, except for investment companies under Topic 946, Financial Services—Investment Companies, would apply the proposed amendments on a prospective basis with any adjustment recognized in earnings on the date of adoption. An entity that qualifies as an investment company under Topic 946 would only apply the proposed amendments to investments in equity securities in which the lock-up agreement is executed on or after the adoption date. Equity securities in which a lock-up agreement was executed before the adoption date would be accounted for in the same manner until the expiration of the lock up.
The Board concluded that it has received sufficient information and analysis to make an informed decision 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 concluded that it has received sufficient information and analysis to make an informed decision on the issues presented.
The Board directed the staff to draft a proposed Accounting Standards Update for vote by written ballot. The Board decided on a 60-day comment period for the proposed Update.
Tentative Board Decisions Reached to Date (as of July 29, 2020)
The Board decided to add a project to its technical agenda to address the effect of underwriter restrictions on fair value measurements. The Board also decided to add a project to its research agenda to evaluate the effects of other types of sale restrictions on fair value measurements.
The Board meeting minutes, handouts, and videos are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.
Board Meeting Materials and Information
The following are links to the minutes for each meeting. To view Board meetings and handouts from the past 90 days, click here.
|May 26, 2021||Board Meeting—The Board begin initial deliberations of this project. Decisions were reached on scope, transition, permission to draft a proposed Accounting Standards Update, and the comment period.|
|July 29, 2020||Board Meeting—The Board added the project to the technical agenda.|