Although the FASB did not issue any exposure drafts in April, their meetings were productive. On April 5th the Board met to redeliberate both the joint venture formations and accounting for and the disclosure of software costs. During this meeting, the Board affirmed its decision that a joint venture would be required to recognize and initially measure its assets and liabilities at fair value using a new basis of accounting upon formation, and the Board directed staff to draft an Accounting Standards Update for a vote by written ballot relating to joint venture formations. The Board also discussed recent feedback from various stakeholders on potential recognition and measurement models for the accounting for software costs. As a result, the Board directed staff to continue its research on the single model and provided direction for elements of that model. The Board decided not to research the dual model further.
On April 26th, the FASB met once again to discuss agenda prioritization. They discussed an agenda request on addressing whether certain convertible debt instruments settled using terms that differ from the stated contractual conversion provisions should be accounted for as induced conversion or extinguishment. The Board decided to add a project to the Emerging Issues Task Force (EITF) agenda to improve the relevance of the existing induced conversion guidance in Subtopic 470-20.
The GASB also did not issue any exposure drafts in April, but they did meet on April 4th to discuss the classification of nonfinancial assets. During this meeting, they discussed the definition of the term held for sale. The Board tentatively decided on two criteria that must be met in order to classify a capital asset as held for sale: (1) the government has decided to sell the asset, and (2) it is probable that the sale will occur within one year of the financial statement date. The Board tentatively agreed to include two items as factors to consider in evaluating whether it is probable that the sale will occur within one year: (1) the asset is available for immediate sale in its present condition, and (2) an active program to locate a buyer has been initiated, incorporating the idea of an asset being put out for bid.
The GASB then tentatively decided that (1) market conditions for the type of asset and (2) regulatory approvals needed to sell the asset should be included as factors to consider when evaluating whether it is probable that the sale will occur. The Board also tentatively decided to develop additional factors to consider in evaluating whether it is probable that the sale will occur.
The AICPA’s Auditing Standards Board did not meet this month or issue any exposure drafts, but they have a meeting scheduled from May 16 through May 18. Stay tuned!
