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FASB discusses three topics at its January 29 meeting

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Jan 30, 2014

At its meeting yesterday, the FASB discussed the following three topics: (1) principal-versus-agent analysis, (2) classification and measurement, and (3) FASB agenda prioritization.


Consolidation: Principal versus agent analysis

The FASB continued its deliberations on the principal-versus-agent analysis related to the consolidation of variable interest entities (VIEs) and non-VIEs. The Board discussed how rights held by other parties should affect whether (1) an entity is a VIE and (2) an entity should consolidate a VIE. The Board decided that ASC 810-10-15-14(b)(1) should be amended to incorporate concepts included in Subtopic ASC 810-20, Consolidation—Control of Partnerships and Similar Entities, specifically for limited partnerships and similar legal entities. The Board also decided that in the primary-beneficiary evaluation for a VIE, rights held by other parties would only be considered when they are unilaterally exercisable.

For more information, see Deloitte's Accounting Journal Entry and the meeting minutes on the FASB's Web site.


Classification and measurement of financial instruments

The FASB tentatively decided not to pursue the converged approach jointly developed by the FASB and IASB for assessing the business model in which a financial asset is managed. The Board discussed alternatives to the business model portion of the overall classification and measurement model and asked the staff to further analyze and bring to a future meeting the following alternatives for deliberations:

  • Retaining existing guidance in U.S. GAAP on classifying and measuring investments in debt securities and loans. 
  • Developing a single classification and measurement model for both loans (including trade receivables) and investments in debt securities.

For more information, see Deloitte's Accounting Journal Entry, Heads Up newsletter, and the meeting minutes on the FASB's Web site.


FASB agenda prioritization

The FASB voted to reorganize its agenda to focus more closely on the issues most important to FASB stakeholders. The Board added eight research projects to its agenda and voted to remove six projects from the FASB agenda:

Research projects added Projects removed
  • Accounting issues in employee benefit plan financial statements
  • Conceptual Framework
  • Financial instruments — Hedging
  • Financial instruments — Liquidity and interest rate disclosures
  • Financial statement presentation
  • Liabilities and equity — Short-term improvements
  • Pensions — Cash balance plans
  • Simplifications initiative
  • Emissions trading
  • Earnings per share
  • Income taxes (short-term convergence project)
  • Not-for-profit financial reporting — Other financial communications
  • Investment property entities
  • Investment companies — Real estate property investments

The Board also voted to remove five projects from the Emerging Issues Task Force (EITF) agenda and decided that the Private Company Council (PCC) should consider doing pre-agenda work on phase two of the “Definition of a Nonpublic Entity” project.

For more information, see the press release on the FASB's Web site.

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