Recap of FASB’s June 15 Meeting
At its Board meeting on June 15, the Financial Accounting Standards Board (“FASB”) reached tentative decisions on the following topics:
- Accounting for income taxes—intra-entity asset transfers. The FASB will require entities to disclose the income tax consequences of an intra-entity asset transfer, excluding an intra-entity asset transfer of inventory, when the transfer takes place. Current GAAP will also be retained for intra-entity asset transfers of inventory, which requires the disclosure of income tax consequences when an outside party purchases the inventory. Public entities will have to apply the amendments during annual periods, and interim periods within, starting after December 15, 2017. All other entities must apply the amendments during annual periods starting after December 15, 2018, and to interim periods within annual periods starting after December 15, 2019. All entities will have the option to apply the amendments retroactively. FASB staff members were ordered to draft a final Accounting Standards Update (“ASU”).
- Nonemployee share-based payment accounting improvements. The FASB will require a modified retrospective approach to be applied to outstanding awards, with a cumulative-effect change to the opening balance of retained earnings as of the adoption date for certain situations. Entities should provide all transition disclosures as required under Topic 250, Accounting Changes and Error Corrections, with the exception of the income statement impact of the change in accounting principle in the adoption year. FASB staff members will gather feedback on a staff draft of the proposed ASU, followed by a discussion on stakeholder feedback, any outstanding technical decisions, and the benefits and costs. Staff members will then request permission to vote on the proposed ASU.
- Revenue recognition of grants and contracts by not-for-profit entities. The FASB ordered staff members to conduct further research on a potential approach that requires a nonprofit to consider a grant as a reciprocal transaction if a resource provider either receives goods or services of commensurate value directly or satisfies a stated obligation to provide goods or services. Staff members were also asked to explore how to amend the table of indicators under paragraph 958-605-55-8.