Summary of Board Decisions

Summary of Board decisions are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions are included in an Exposure Draft for formal comment only after a formal written ballot. Decisions in an Exposure Draft may be (and often are) changed in redeliberations based on information provided to the Board in comment letters, at public roundtable discussions, and through other communication channels. Decisions become final only after a formal written ballot to issue an Accounting Standards Update.

March 28, 2013 FASB Board Meeting

Accounting for financial instruments: impairment. The Board discussed whether to modify the comment period for the proposed Accounting Standards Update, Financial Instruments—Credit Losses (Subtopic 825-15), in response to both formal and informal feedback. The original comment period for the proposed Update ends on April 30, 2013. The Board decided to extend the comment period to May 31, 2013.


FASB ratification of EITF consensuses and tentative conclusions.

The Board ratified the following consensuses reached at the March 14, 2013 EITF meeting.

Issue 12-B, “Not-for-Profit Entities: Services Received from Personnel of an Affiliate”

All services received from personnel of any affiliate that directly benefit the recipient not-for-profit entity (NFP) and for which the affiliate does not charge the recipient NFP should be recognized by the recipient NFP.

Services received from personnel of an affiliate within the scope of this Issue should be measured at the cost recognized by the affiliate for the personnel providing those services. However, in circumstances in which recording the service received from personnel of an affiliate at the cost recognized by the affiliate would significantly overstate or understate the value of the service received, the recipient NFP could elect to recognize that service at either (a) the cost recognized by the affiliate for the personnel providing that service or (b) the fair value of that service.

A recipient NFP within the scope of Topic 954, Health Care Entities, that is required to provide a performance indicator, should report as an equity transfer the increase in net assets associated with services received from personnel of an affiliate within the scope of this Issue. For other recipient NFPs, the guidance does not prescribe presentation guidance for the increase in net assets associated with services received from personnel of an affiliate other than prohibiting reporting as a contra-expense or a contra-asset. All recipient NFPs should report the corresponding decrease in net assets or the creation or enhancement of an asset resulting from the use of services received from personnel of an affiliate in a way that is similar to how other such expenses or assets are reported.

The disclosures in Subtopic 850-10, Related Party Disclosures—Overall, apply to services received from personnel of an affiliate within the scope of this Issue, and no additional recurring disclosures are required by this Issue.

The guidance is effective prospectively for fiscal years beginning after June 15, 2014, and interim and annual periods thereafter. A recipient not-for-profit entity may apply the guidance using a modified retrospective approach under which all prior periods presented upon the date of adoption should be adjusted, but no adjustment should be made to the beginning balance of net assets of the earliest period presented. Early adoption is permitted.

Issue 12-G, “Accounting for the Difference between the Fair Value of the Assets and the Fair Value of the Liabilities of a Consolidated Collateralized Financing Entity”

A collateralized financing entity is defined as an entity that holds financial assets, issues beneficial interests in those financial assets, and has no more than nominal equity. All of the beneficial interests that have recourse to the related financial assets of the collateralized financing entity are financial liabilities. A collateralized financing entity also may temporarily hold nonfinancial assets as a result of default on the underlying debt instruments held by the collateralized financing entity or in an effort to restructure the debt.

A reporting entity that measures the financial assets and financial liabilities of a collateralized financing entity at fair value should determine the fair value of the collateralized financing entity’s financial assets and financial liabilities consistently with how market participants would price the reporting entity’s net risk exposure at the measurement date. The reporting entity should present financial assets and financial liabilities on a gross basis and allocate the portfolio-level fair value adjustments to the individual financial assets or financial liabilities. The portfolio-level fair value adjustment is determined by (1) measuring the more observable fair value of either the financial assets or the financial liabilities, excluding the amounts relating to beneficial interests that represent compensation for services or nonfinancial assets that are being temporarily held as a result of default on the underlying debt instruments held by the collateralized financing entity or in an effort to restructure the debt, and then (2) allocating that amount to the remaining, less observable fair values of the individual financial assets or financial liabilities.

Beneficial interests that represent compensation for services, such as management fees, and nonfinancial assets that are being temporarily held by a collateralized financing entity as a result of default on the underlying debt instruments held by the collateralized financing entity or in an effort to restructure the debt should be measured in accordance with other applicable U.S. GAAP and then excluded from the measurement of the net risk exposure.

The guidance is effective for fiscal years (and interim periods within those years) beginning after December 15, 2013. For nonpublic entities, the guidance is effective for fiscal years beginning after December 15, 2014, and interim and annual reporting periods thereafter.

The guidance should be applied prospectively by all reporting entities. Reporting entities that measure all eligible financial assets and financial liabilities of the consolidated collateralized financing entity at fair value may apply the guidance retrospectively to all relevant prior periods beginning in the fiscal year in which the amendments in Accounting Standards Update No. 2009-17, Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities, were initially adopted.

At the date of adoption, entities may elect to measure all eligible financial assets and financial liabilities of the consolidated collateralized financing entity at fair value in accordance with Topic 825, Financial Instruments. Entities electing the fair value option at the date of adoption should only apply the amendments in this Update prospectively.

The Board also approved the following consensus-for-exposure reached at the March 14, 2013 EITF meeting and decided to expose it for public comment for a period of 60 days.

Issue 13-B, “Accounting for Investments in Qualified Affordable Housing Projects”

A reporting entity that invests in a qualified affordable housing project through a limited liability entity (such as limited partnership or limited liability companies) may elect to account for the investment using the effective yield method if all of the following conditions are met:
  1. It is probable that the tax credits allocable to the investor will be available.
  2. The investor retains no operational influence over the investment other than protective rights, and substantially all of the projected benefits are from tax credits and other tax benefits (for example, tax benefits generated from the operating losses of the investment).
  3. The investor’s projected yield based solely on the cash flows from the tax credits and other tax benefits is positive.
  4. The investor is a limited liability investor in the affordable housing project for both legal and tax purposes, and the investor’s liability is limited to its capital investment.
An investment in a qualified affordable housing project that does not qualify for the effective yield method would be accounted for as an equity or cost method investment in accordance with Subtopic 970-323.

The guidance would include disclosure objectives for reporting entities to meet and provide suggestions for how reporting entities would meet those objectives.

The guidance would be applied retrospectively by applying the requirements for accounting changes in paragraphs 250-10-45-5 through 45-10. Early adoption would be permitted.