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November

Highlights from the FASB’s November 23 meeting

Nov 24, 2015

At its November 23, 2015, meeting, the FASB discussed (1) its proposal on improvements to the accounting for share-based payment, (2) its 2012 proposal on impairment, and (3) clarifications to the definition of a business.

Improvements to the accounting for employee share-based payments

The FASB dis­cussed feed­back re­ceived on its pro­posed Ac­count­ing Stan­dards Update (ASU) Improvements to Employee Share-Based Payment Accounting. As indicated in the tentative Board decisions, the FASB affirmed its proposed amendments related to:

  1. “Accounting for income taxes upon vesting or settlement of awards.
  2. Presentation of excess tax benefits on the statement of cash flows.
  3. Accounting for forfeitures.
  4. Minimum statutory withholding requirements.
  5. Presentation of employee taxes paid on the statement of cash flows when an employer withholds shares to meet minimum statutory withholding requirements.
  6. Private company practical expedients.
    1. Expected term
    2. Intrinsic value.”

In ad­di­tion, the FASB made tentative decisions related to the transition method, disclosures in the adoption period, disclosures about accounting for forfeitures, and the effective date of the final standard. The FASB di­rected its staff to draft an ASU for vote by written ballot.

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

Financial instruments — impairment

The FASB discussed feedback related to purchased financial assets with credit deterioration. No decisions were made.

Clarifying the definition of a business (phase 2)

The FASB discussed the scope of its guidance on gains and losses from the derecognition of nonfinancial assets, in-substance nonfinancial assets, and the accounting for partial sales. No decisions were made.

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

FASB proposes to clarify the definition of a business

Nov 23, 2015

The FASB has issued a proposed Accounting Standards Update, “Clarifying the Definition of a Business,” which is intended to help entities evaluate whether to account for transactions as acquisitions (or disposals) of assets or as businesses. As stated in the FASB’s press release, the proposal would provide a “more robust framework for determining when a set of assets and activities is a business. The framework would provide more consistency in the application of the guidance, reduce the costs of its application, and make the definition of a business more operable.”

Comments on the proposal are due by January 22, 2016, For more information, see Deloitte's Heads Up newsletter as well as the press release, FASB in Focus newsletter, and the proposed ASU on the FASB’s Web site.

FASB issues ASU simplifying balance sheet classification of deferred taxes

Nov 20, 2015

The FASB has issued Accounting Standards Update (ASU) No. 2015-17, “Balance Sheet Classification of Deferred Taxes,” as part of its simplification initiative (i.e., the Board’s effort to reduce the cost and complexity of certain aspects of U.S. GAAP). Under the ASU, organizations that present a classified balance sheet are required to classify all deferred taxes as noncurrent assets or noncurrent liabilities.

For public business entities, the ASU is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. For all other entities, the ASU is effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018.

For more information, see the media advisory and the ASU on the FASB’s Web site.

FASB publishes new issue of "FASB Outlook"

Nov 20, 2015

The FASB has published the latest issue of its quarterly e-newsletter, "FASB Outlook," which contains high-level information about the Board’s projects and key activities.

This issue fea­tures:

  • Chair­man Russ Golden’s dis­cus­sion of the improvements made to the PCC’s operating procedures.
  • A look at financial reporting implications in a volatile market by FASB member Marc Siegel.
  • A video in which EITF members discuss their experiences, important consensuses, and future outlook.
  • A look at up­com­ing guid­ance on leases, recognition and measurement of financial instruments, and credit losses as well as a reminder about upcoming comment deadlines for proposals related to the FASB’s projects on the disclosure framework and government assistance arrangements.
  • The FASB’s upcoming proposal that would simplify its guidance on debt classification.

 The "FASB Outlook" e-newslet­ter is avail­able on the FASB’s Web site.

Highlights from the FASB’s November 19 meeting

Nov 20, 2015

At its November 19, 2015, meeting, the FASB discussed the equity method and long-duration insurance contracts.

Equity method

The FASB discussed feedback received on its proposed Accounting Standards Update (ASU) Simplifying the Equity Method of Accounting and made tentative decisions related to (1) the elimination of basis differences, (2) retrospective application of the equity method, (3) transition and transition-related disclosures, and (4) the standard’s effective date and early application. In addition, the Board directed its staff to draft a final ASU that will eliminate the requirement for an entity to retrospectively adopt the equity method if an investment qualifies for the equity method as a result of an increase in the level of ownership interest.

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

Insurance — targeted improvements to the accounting for long-duration contracts

The FASB tentatively decided to clarify and revise certain requirements related to its proposed accounting model for certain types of long-duration contracts.

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

FAF trustees announce new and reappointed FASAC and GASAC members

Nov 20, 2015

The FAF trustees have appointed 16 new members to the Financial Accounting Standards Advisory Council (FASAC) and 3 new members to the Governmental Accounting Standards Advisory Council (GASAC). The trustees have also announced the reappointments of 12 GASAC members.

In addition, Andrew G. McMaster Jr., retired deputy chief executive officer and vice chairman of Deloitte & Touche LLP, has been appointed chairman of the FASAC. His term, along with the terms of the 15 other new members, will begin on January 1, 2016.

The new GASAC members will begin their two-year terms on January 1, 2016, as well.

For more information, see the FASAC and GASAC press releases on the FAF’s Web site.

SEC proposes enhancements to disclosure requirements for alternative trading systems

Nov 19, 2015

The SEC has issued a proposed rule that would amend the requirements for alternative trading systems (ATSs) under the Securities Exchange Act of 1934.

Specifically, the proposal would require ATSs that “trade stocks listed on a national securities exchange (NMS stocks), including ‘dark pools,’ to publicly disclose detailed information about the operations and activities of a broker-dealer operator and its affiliates.”

Com­ments on the pro­posed rule are due by February 26, 2016.

For more in­for­ma­tion, see the press release and pro­posed rule on the SEC’s Web site.

IASB proposes amendments to IFRSs as part of annual improvements project

Nov 19, 2015

The IASB has published an exposure draft (ED), “Annual Improvements to IFRSs 2014–2016 Cycle,” which would amend three IFRSs as part of the IASB’s annual improvements project (i.e., a project to make necessary, but nonurgent, amendments to IFRSs that will not be made in another major project).

The table below summarizes the proposed amend­ments.
IFRS Proposed Amendment

IFRS 1, First-time Adoption of International Financial
Reporting Standards

The short-term ex­emp­tions in para­graphs E3–E7 of IFRS 1 would be deleted “because they have now served their intended purpose.”

IFRS 12, Disclosure of Interests in Other Entities

The proposal would clarify the standard’s scope “by spec­i­fy­ing that the dis­clo­sure re­quire­ments in the [s]tandard, except for those in para­graphs B10–B16, apply to an entity’s interests listed in paragraph 5 that are clas­si­fied as held for sale, as held for dis­tri­b­u­tion . . . or as dis­con­tin­ued op­er­a­tions in ac­cor­dance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.”

IAS 28, Investments in Associates and Joint Ventures

The proposal would clarify that the election to measure at fair value through profit or loss an in­vest­ment in an associate or a joint venture that is held by a venture capital organization or another qual­i­fy­ing entity “is available for each in­vest­ment in an associate or joint venture on an in­vest­ment-by-in­vest­ment basis, upon initial recog­ni­tion.”

Comments on the ED are due by February 17, 2016. For more information, see the press release and ED on the IASB’s Web site. In addition, see Deloitte's IFRS in Focus and the IAS Plus project page on the 2014–2016 annual improvements cycle.

IASB proposes amendments to IAS 40 on transfers of investment property

Nov 19, 2015

The IASB has published an exposure draft (ED) that would amend IAS 40, “Investment Property,” to clarify its guidance on transfers of investment property.

Specifically, the proposed amendments would:

  • Revise paragraph 57 of IAS 40 to indicate that a property should be transferred to or from in­vest­ment property when there is evidence of a change in use that would cause the property to meet, or cease to meet, the de­f­i­n­i­tion of in­vest­ment property.
  • Present the examples of evidence in paragraph 57(a)–(d) as a nonex­haus­tive, rather than an exhaustive, list.

Although the ED does not propose an effective date, it indicates that the amendments would be applied ret­ro­spec­tively and that early ap­pli­ca­tion would be permitted.

Comments on the ED are due by March 18, 2016. For more information, see the press release and ED on the IASB’s Web site. In addition, see Deloitte's IFRS in Focus newsletter and the IAS Plus project page on transfers of investment property under IAS 40.

SEC commissioner discusses option of using IFRSs in United States

Nov 18, 2015

In a speech at the 34th Annual Current Financial Reporting Issues Conference in New York, SEC Commissioner Michael S. Piwowar commented on the potential option of allowing domestic issuers in the United States to provide IFRS-based information as a supplement to U.S. GAAP financial statements without requiring reconciliation.

The option was first suggested by SEC Chief Accountant Jim Schnurr at a financial reporting con­fer­ence in early December 2014. Mr. Schnurr and SEC Deputy Chief Accountant Julie Erhardt further discussed it at the annual AICPA Con­fer­ence on Current SEC and PCAOB De­vel­op­ments a week later.

In his speech, Com­mis­sioner Piwowar further described the option as follows:

It is difficult to gauge investor demand for financial reporting under IFRS by U.S. domestic issuers. How does one predict investor demand for IFRS reporting when it is largely not available in the domestic context? For instance, twenty years ago, it was difficult to predict the demand for “smart phones” when the product was not available to the general public. . . . Our chief ac­coun­tant has raised an in­ter­est­ing and in­cre­men­tal approach that should provide further insight as to whether there is investor demand for IFRS reporting. His idea — to allow, but not mandate, IFRS financial reporting as a sup­ple­ment without rec­on­cil­i­a­tion to GAAP — is worthy of serious con­sid­er­a­tion. . . . It would provide useful data on investor demand for us to analyze. Of course, the specific details would still need to be worked out, but I think — eleven months after the idea was first broached — that the Com­mis­sion should take this ad­di­tional step forward.

The full transcript of the speech is available on the SEC's Web site.

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