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Clarifying the definition of a business

The objectives of this project are to clarify the definition of a business and to address whether transactions involving in-substance nonfinancial assets (held directly or in a subsidiary) should be accounted for as acquisitions (or disposals) of nonfinancial assets or as acquisitions (or disposals) of businesses.

Phase 2 of the project clarified the guidance for partial sales or transfers and the corresponding acquisition of partial interests in a nonfinancial asset or assets.

Phase 3 of the project will include discussions on the improvement of the accounting for asset acquisition and business combinations.

 

Meeting minutes

FASB discussions regarding this project are found in the following meeting minutes:

  • May 9, 2018 — The Board discussed improvements to the accounting for asset acquisitions and business combinations.
  • August 2, 2017 — The Board discussed the scope of phase 3 of this project.
  • December 14, 2016 — The Board discussed issues relating to the development of the final ASU.
  • November 9, 2016 — The Board discussed issues arising from the drafting of a final ASU.
  • October 10, 2016 — The Board discussed issues related to the development of a final ASU.
  • August 24, 2016 — The Board redeliberated its November 2015 proposed ASU Clarifying the Definition of a Business.
  • July 27, 2016 — The Board discussed feedback on its proposed ASU.
  • April 20, 2016 — The Board discussed issues related to the development of an Exposure Draft addressing clarification of the scope of ASC 610-20 and the accounting for partial sales of nonfinancial assets.
  • February 17, 2016 — The Board continued to deliberate phase 2 of its project on the definition of a business.
  • January 6, 2016 — The Board discussed (1) the scope of ASC 610-20, (2) the partial sales model, (3) accounting for transactions in which control is not transferred, (4) the seller’s liability, (5) groups of assets or subsidiaries that are not a business, and (6) in-substance nonfinancial assets.
  • November 23, 2015 — The Board discussed issues related to the development of an ED that would clarify the scope of Subtopic 610-20 and the accounting for partial sales of nonfinancial assets.
  • July 9, 2015 — The Board instructed its staff to begin drafting a proposed ASU on clarifying the definition of a business.
  • May 21, 2015 — The Board discussed issues during the development of an exposure draft.
  • April 7, 2015 — The Board made tentative decisions on the accounting for partial sales of nonfinancial assets and retained noncontrolling interests.
  • December 17, 2014 — The Board made tentative decisions related to the development of an exposure draft on the definition of a business.
  • October 8, 2014 — The Board was updated on research related to the definition of a business, in-substance nonfinancial assets, partial sales and retained interests, and other asset versus entity differences.
  • May 29, 2013 — The Board adds Clarifying the Definition of a Business to its standard-setting project agenda.
  • November 30, 2011 — Research project added to the agenda on when a reporting entity should apply asset- or entity-based guidance to nonfinancial assets held in an entity.

 

Current status

The FASB to determine the type and timing of a due process document.

 

Project milestones

Date Developments Comments
November 30, 2011 Added to the FASB's agenda as a research project.
May 29, 2013 Added as a standard-setting project.
November 23, 2015 FASB Proposed Accounting Standards Update, Clarifying the Definition of a Business. Comments due January 22, 2016.
June 6, 2016 FASB Proposed Accounting Standards Update, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. Comments due August 5, 2016.
January 5, 2017 FASB Accounting Standards Update, Clarifying the Definition of a Business. For public business entities, the amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. For all other entities, the amendments are effective for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019.
February 22, 2017 FASB Accounting Standards Update, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. For public business entities, the amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. For all other entities, the amendments are effective for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019.

 

Correction list for hyphenation

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