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.

June 26, 2013 FASB Board Meeting

FASB Ratification of EITF Consensuses and Consensuses-for-Exposure. The Board ratified the following consensuses reached at the June 11, 2013 EITF meeting.

Issue 13-A, “Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes”

The Fed Funds Effective Swap Rate (OIS) will be included as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815, Derivatives and Hedging, in addition to UST and LIBOR. In addition, the Issue removes the restriction on using different benchmark rates for similar hedges.

No additional recurring disclosures are required by this Issue.

Amendments resulting from this Issue should be applied on a prospective basis for qualifying new or redesignated hedging relationships entered into on or after the date of issuance of the final Accounting Standards Update. Amendments in the Update are effective immediately upon issuance.

Issue 13-C, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists”

An unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except to the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the entity does not intend to use the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The assessment is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date. An entity should not, for example, evaluate whether the deferred tax asset expires before the statute of limitations on the tax position or whether the deferred tax asset would be used before the unrecognized tax benefit being settled.

No additional recurring disclosures are required by this Issue.

The amendments in the Update should be applied prospectively for public entities for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013, and for nonpublic entities for the fiscal years (and interim reporting periods within those years) beginning after December 15, 2014. Early adoption is permitted. Entities are permitted to adopt the amendments on a retrospective basis.

The Board also approved the following consensuses-for-exposure reached at the June 11, 2013 EITF meeting and decided to expose them for public comment for a period of 60 days.

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, and all of the beneficial interests that have recourse to the related financial assets of the collateralized financing entity are classified as financial liabilities.

The amendments in the revised proposed Update would require a reporting entity within its scope to measure the financial liabilities of the collateralized financing entity using the following calculation:
  1. The sum of the following two amounts:
    1. The fair value of the financial assets held by the collateralized financing entity
    2. The carrying value of any nonfinancial assets held by the collateralized financing entity
  2. Less: the sum of the following two amounts:
    1. The sum of the fair value of financial assets and the carrying value of nonfinancial assets attributable to the beneficial interest owned by the reporting entity
    2. The carrying value of any beneficial interests that represent compensation for services rendered by the reporting entity.
Beneficial interests that represent compensation for services and any nonfinancial assets would be measured in accordance with other applicable U.S. GAAP.

A reporting entity that consolidates a collateralized financing entity under this guidance would disclose all of the information required by paragraph 820-10-50-2(bbb) for the financial assets. For the financial liabilities, a reporting entity would disclose that the liability amounts are determined on the basis of the fair value of the financial assets and the carrying value of any nonfinancial assets.

The amendments in the proposed Update would be applied using a modified retrospective approach. However, reporting entities that previously measured all eligible financial assets and financial liabilities of the consolidated collateralized financing entity at fair value may apply the amendments either retrospectively to all relevant prior periods beginning with the fiscal year in which the amendments in Update 2009-17 were initially adopted or using the modified retrospective method of adoption. Amendments in the revised proposed Update would be effective for fiscal years, and interim reporting periods within those years, beginning after December 15, 2013. For nonpublic entities, the amendments in the revised proposed Update would be effective one year after the first annual period in which public entities are required to adopt them. The Task Force will revisit the effective date during redeliberations.

Issue 12-H, “Accounting for Service Concession Arrangements”

A service concession arrangement is defined as an arrangement under which a grantor (a public sector entity) enters into a contract with an operating entity to operate the grantor's infrastructure for purposes of providing a public service. A public sector entity includes a governmental body or a nongovernmental entity to which the responsibility to provide public service has been delegated. In a public-to-private service concession arrangement, both of the following conditions exist:
  1. The grantor controls or has the ability to modify or approve the services that the operating entity must provide with the infrastructure, to whom it must provide them, and at what price.
  2. The grantor controls, through ownership, beneficial entitlement, or otherwise, any residual interest in the infrastructure at the end of the term of the arrangement.
A service concession arrangement that is within the scope of this Issue would not be a lease under Topic 840, Leases. An operating entity would look to other relevant Codification Topics, as applicable, to account for the various aspects of a service concession arrangement. Infrastructure used in a service concession arrangement would not be recognized as property, plant, and equipment of the operating entity.

No additional recurring disclosures would be required by this Issue, and the amendments in the proposed Update would be applied on a modified retrospective basis. Entities would apply the transition disclosure requirements in paragraphs 250-10-50-1 through 50-3 for an accounting change resulting from this Issue. No additional transition disclosures would be required. The effective date would be determined after considering stakeholder feedback on the proposed Update.

Issue 13-E, “Reclassification of Collateralized Mortgage Loans upon a Troubled Debt Restructuring”

An in substance repossession or foreclosure is deemed to have occurred, and a creditor is considered to have taken physical possession of residential real estate property collateralizing a consumer mortgage loan, upon (1) the creditor obtaining legal title to the residential real estate property or (2) completion of a deed in lieu of foreclosure or similar legal agreement under which the borrower conveys all interests in the residential real estate property to the creditor to satisfy that loan, even though legal title may not yet have passed.

The amendments in the proposed Update would require a roll forward of foreclosed and repossessed residential real estate property collateralizing a consumer mortgage loan at every reporting period and disclosure of the carrying amount of consumer mortgage loans secured by residential properties that are in the process of foreclosure according to local requirements.

The amendments resulting from this Issue would be applied on a modified retrospective basis to collateralized residential consumer mortgage loans and foreclosed residential real estate properties existing at the date of adoption by means of a cumulative-effect adjustment as of the beginning of the reporting period for which the guidance is effective. Prior periods would not be adjusted, and early adoption would be permitted.

Entities would apply the transition disclosure requirements in paragraphs 250-10-50-1 through 50-3 for an accounting change resulting from this Issue. No additional transition disclosures would be required. The effective date would be determined after considering stakeholder feedback on the proposed Update.