FASB Proposes Changes to Balance Sheet Debt Classification and Inventory Disclosures

January 16, 2017

In a January 10 news release, the Financial Accounting Standards Board (“FASB”) announced the issuance of two proposed Accounting Standards Updates impacting the balance sheet classification of debt and the inventory disclosure requirements under the Disclosure Framework project.

  • Classification of Debt on a Balance Sheet: The FASB proposes simplifying the current debt classification guidance with an all-encompassing, consistent principle that addresses a borrower’s contractual rights and responsibilities. The proposed changes could create a shift in how some debt arrangements among noncurrent liabilities and current liabilities are classified. Comments on the proposal are due Friday, May 5.
  • Disclosure Framework—Inventory: The FASB wants companies to disclose additional information on inventory, such as inventory changes unrelated to the normal process of manufacturing, purchasing, or selling; inventory disaggregated by major components or measurement; and the qualitative description of capitalized costs.

Comments on the proposal are due Monday, March 13, but the FASB will hold a Disclosure Framework public roundtable on Friday, March 17, to seek additional feedback. Prospective attendees must submit a comment letter on the proposed inventory disclosure changes by Monday, February 27.

More details on both proposals are available in the FASB’s January 10 news release.