FASBBoard meetings held between October 15 and 18 All decisions reached at Board meetings are tentative and may be changed at future meetings. Decisions are included in an Exposure Draft only after a formal written ballot. Decisions reflected in Exposure Drafts are often changed in redeliberations by the Board based on information received in comment letters, at public roundtable discussions, and from other sources. Board decisions become final after a formal written ballot to issue a final Accounting Standards Update. At joint meetings held on October 15, 17, and 18, the FASB and the IASB discussed their projects on insurance contracts and revenue recognition, while on October 15 and October 17, the FASB alone discussed issues related to insurance contracts and financial instruments. Highlights of these meetings are summarized below. The FASB also met on October 19 to discuss classification and measurement issues related to the financial instruments project. Highlights from this meeting will be included in a future edition of On the Horizon. Revenue recognition The Boards tentatively reached the following decisions after discussing issues related to modifying contracts and measuring progress toward the complete satisfaction of a performance obligation. Contract modifications The Boards discussed applying the proposed guidance on modifying contracts to contract claims where changes in scope and price are either unapproved or in dispute, as described in FASB Accounting Standards Codification® (Codification or ASC) 605-35, Revenue Recognition – Construction-Type and Production-Type Contracts. The Boards tentatively decided that contract modifications, including contract claims, would be considered approved when the modification creates or changes the enforceable rights and obligations of the parties to the contract. Approval could be made orally or in writing or could be implied by customary business practice. The Boards also tentatively decided the following: Modifications that result in only a change in transaction price would be accounted for similarly to contract modifications that result in a change in scope. If approved, this change in guidance would require eliminating paragraph 20 in the proposed 2011 Accounting Standards Update (ASU), Revenue from Contracts with Customers. Paragraph 20 requires a modification that results in only a change to the transaction price to be treated consistently with other changes in transaction price. If the remaining goods or services are distinct from the goods or services transferred on or before the date of the contract modification, then the transaction price available for allocation to the remaining separate performance obligations would equal the amount of consideration received from the customer but not yet recognized as revenue, plus the amount of any remaining consideration that the customer has promised to pay that has not been recognized as revenue. If the remaining goods or services are distinct from the...
FASB: Board Meetings Held Between October 15 And 18 (October 23, 2012)
|Author:||Ms Grant Thornton's Audit Practice Group|
|Profession:||Grant Thornton LLP|
To continue readingFREE SIGN UP