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, July 28, 2021 FASB Board Meeting

Revenue recognition post-implementation. The Board discussed feedback received to date during the post-implementation review (PIR) of Topic 606, Revenue from Contracts with Customers. The staff presented a report of its activities as part of the PIR process and summarized feedback received to date based on its direct outreach with stakeholders and monitoring of publicly available information. While the Board made no decisions, it provided the staff with direction about additional research, outreach, and education.

The staff also will continue to perform research as part of the PIR process and will provide future updates to the Board.



Recognition and measurement of revenue contracts with customers under Topic 805. The Board discussed the feedback received on the proposed Accounting Standards Update, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, and made the following decisions:

Recognition and Measurement
  1. The Board affirmed that the performance obligation concept under Topic 606, Revenue from Contracts with Customers, should be used as the recognition criteria for a contract liability arising from a revenue contract with a customer acquired in a business combination.
  2. The Board affirmed that contract assets and contract liabilities arising from revenue contracts with customers should be accounted for in accordance with Topic 606 at the acquisition date.
  3. The Board decided to clarify how to apply the provisions of Topic 606 at the acquisition date, and to remove the proposed recognition guidance on other intangible assets or liabilities related to acquired contracts with customers that may be recognized in a business combination.
  4. The Board decided to clarify that this project does not address the application of the current expected credit losses allowance to contract assets acquired in a business combination.
  5. The Board decided to provide practical expedients to the recognition and measurement guidance related to the following areas:
    1. Completed contracts with remaining variable consideration
    2. Contracts that have previously been modified
    3. Determination of standalone selling prices.
Scope
  1. The Board affirmed that the scope of this project would include contract assets and contract liabilities arising from contracts with customers and other contracts that are required to apply the recognition and measurement provisions of Topic 606, such as contracts within the scope of Subtopic 610-20, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets.
Disclosures and Transition
  1. The Board affirmed not to provide incremental or transition disclosures.
  2. The Board affirmed that the amendments should be adopted prospectively and that there should be an option for early adoption.
Effective Date
  1. The Board decided that the effective date for public business entities should be for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and the effective date for nonpublic business entities should be for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.
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 final Accounting Standards Update for vote by written ballot.



Conceptual framework—elements. The Board discussed the feedback from comment letter respondents on the proposed FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting—Chapter 4, Elements of Financial Statements. The Board decided to:

Element for Common Control Transactions of Not-for-Profit Entities
  1. Refrain from adding a new element to the proposed chapter to address equity transfers between not-for-profit entities under common control.
Recognized Assets and Liabilities in the Definition of Equity or Net Assets
  1. Refrain from incorporating the notion of recognized in the definition of equity or net assets.
Appendix A, Accrual Accounting and Related Concepts, of Proposed Chapter 4
  1. Relocate the content from what was Appendix A of the proposed chapter to the introduction to the Conceptual Framework.
Permission to Ballot and Next Steps

The Board directed the staff to draft a final chapter for vote by written ballot.