FASB: Joint Meetings Held November 19 And 20 (November 27, 2012)

FASB

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.

Joint meetings held November 19 and 20

The FASB and IASB met on November 19 to discuss their revenue recognition project. On November 20, the Boards discussed their projects on financial instruments impairment and insurance contracts. The Boards' discussion on revenue recognition is summarized below. They did not reach any tentative decisions on their financial instruments impairment project. Please refer to the meeting highlights, linked above, for a summary of the tentative decisions reached on the insurance contracts project.

Revenue recognition

Constraining revenue

The Boards tentatively decided that the objective of including a constraint on the amount of revenue recognized in the proposed revenue recognition guidance is to avoid significant revenue reversals due to changes in the estimated amount of variable consideration that an entity is entitled to receive. An entity would apply the constraint by qualitatively assessing the risk of a significant revenue reversal, considering all relevant facts and circumstances, including the entity's historical experience.

Collectibility

For customer contracts without a significant financing component, the Boards tentatively decided that an entity would exclude customer credit risk from its measurement of the transaction price, consistent with the guidance in the 2011 Exposure Draft (ED), Revenue from Contracts with Customers. Also, the Boards tentatively agreed that an entity would prominently present impairment losses associated with customer contracts as an expense in the statement of comprehensive income, rather than as a contra revenue line item as proposed in the 2011 ED. In addition, the Boards tentatively affirmed that revenue recognized would not be subject to a collectibility threshold.

Licenses

An entity would be required to assess the nature of its promise under a license arrangement to determine whether it is a promise to (1) transfer a right to a customer or (2) provide a customer with access to the entity's...