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Highlights from the FASB’s October 22 meeting

  • FASB meeting Image

Oct 24, 2014

At its October 22, 2014, meeting, the FASB discussed its projects related to (1) classification and measurement and (2) income taxes. In addition, the FASB jointly discussed leases with the IASB.


Financial instruments — classification and measurement

The FASB tentatively decided that (1) investments accounted for under the equity method would be removed from the scope of its project (the current requirements would be retained) and (2) for equity securities for which an entity has elected the practicability exception, an entity would use a one-step method to assess whether the securities are impaired. The assessment would focus on qualitative impairment indicators in the FASB’s 2013 proposed Accounting Standards Update but would not include a threshold for when impairment should be recognized.

For more information, see the meeting minutes on the FASB’s Web site.


Accounting for income taxes

The FASB voted to issue a proposed ASU on the tax effects of intra-entity transfers of assets and the balance sheet classification of deferred taxes. The Board’s tentative decisions included the following:

  • An entity would no longer be required to defer the income tax consequences of intra-entity asset transfers until the assets are ultimately sold to an outside party; tax consequences of such transfers would be recognized in tax expense when the transfers occur.
  • All deferred taxes would be classified as noncurrent; jurisdictional netting would still be required.

For more information, see the related Deloitte Accounting Journal entry and the meeting minutes on the FASB’s Web site.



The FASB and IASB continued redeliberating their revisions to lease accounting and made certain tentative decisions, including the following:

  • When evaluating its right to direct the use of an identified asset, a customer should focus on its ability to direct “how and for what purpose” the asset is used. In performing this evaluation, the customer would consider its ability to control certain key aspects of the identified asset, including the purpose, time frame, and location associated with the asset’s use or deployment.
  • A supplier’s protective right (e.g., a contract that specifies the maximum use of an asset or requires prudent operating practices) would not, in itself, prevent the customer from directing the use of the identified asset.

In addition, the Board decided to defer making a decision on the two different approaches for evaluating whether a customer has obtained, or has the ability to obtain, substantially all of the economic benefits from directing the use of the underlying asset.

For more information, see the related Deloitte Accounting Journal entry and the meeting minutes on the FASB’s Web site.

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