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FASB issues two proposals in response to EITF consensuses-for-exposure

  • FASB document Image

Apr 24, 2015

The FASB has issued two proposed ASUs in response to the EITF consensuses-for-exposure on Issues 15A, 15C-I, 15C-II, and 15C-III. One of the proposals provides guidance on certain electricity contracts within nodal energy markets, and the other would simplify the accounting and disclosure requirements for employee benefit plans.

Application of the Normal Purchases and Normal Sales Scope Exception to Certain Electricity Contracts Within Nodal Energy Markets

This proposal specifies that a forward purchase or sale of electricity in which electricity must be physically delivered through a nodal energy market operated by an independent system operator, and in which an entity incurs transmission costs on the basis of locational marginal pricing charges, would meet the physical-delivery requirement under the normal purchases and normal sales scope exception.

Employee Benefit Plan Simplifications

The provisions of this proposal, which is divided into three sub-proposals, include the following:

  • Fully benefit-responsive investment contracts would be measured at contract value and the requirement to reconcile contract value to fair value (if different) would be removed.
  • Plan assets would be disclosed by general type in a manner consistent with current plan accounting and would not need to be disaggregated in accordance with ASC 820. Participant self-directed brokerage accounts would be disclosed as one general type. Further, plan assets would be disclosed by general type on either the face of the financial statements or in the footnotes.
  • Entities would be required to provide ASC 820 disclosures on the basis of the general type of plan assets. However, entities that file Form 5500 as direct filing entities would not be required to disclose the investment strategies for investments measured at net asset value. Plan assets that account for 5 percent or more of net assets would not be listed individually.
  • The requirement to provide plan asset disclosures about net appreciation or depreciation would be removed. However, entities would be required to provide the ASC 820 rollforward disclosure about realized and unrealized gains and losses as well as sales, purchases, and transfers of Level 3 investments during the reporting period.
  • An employee benefit plan could use an alternative measurement date consisting of the closest month-end date to its fiscal year-end. However, contributions, distributions, and other significant events between the alternative measurement date and the fiscal year-end would be disclosed rather than adjusted for within the financial statements.

Comments on both proposed ASUs are due by May 18, 2015. For more in­for­ma­tion, see Deloitte’s March 2015 EITF Snapshot as well as proposed ASUs EITF 15-A and EITF 15-C on the FASB’s Web site.

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