On The Horizon - March 19, 2013

Author:Ms Grant Thornton's Audit Practice Group
Profession:Grant Thornton LLP


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.

On March 13, the Board reached tentative decisions on two projects, investment companies and discontinued operations, which are summarized below.

Investment companies

After considering the results of the staff's outreach to constituents, the Board agreed to exclude from the final standard the disclosure requirements for when an investment company invests in another investment company. Instead, the Board will focus on that guidance after the final standard has been issued.

The Board directed the staff to draft a final Accounting Standards Update for a vote.

Discontinued operations

Reacting to stakeholders' concerns, the Board tentatively decided to amend the proposed definition of a "discontinued operation" in order to replace the cash-generating unit concept with the current U.S. GAAP definition of a component. Accordingly, an entity would be able to apply the discontinued operations reporting guidance to a component (or group of components) that represents a separate major line of business or major geographic area of operations.


Because consensuses and consensuses-for-exposure are subject to ratification by the FASB and some of the details of conclusions reached at an EITF meeting are determined during the process of developing the minutes of the meeting, the following descriptions are preliminary.

At its meeting on March 14, the EITF discussed four issues and reached two final consensuses and one consensus-for-exposure, as summarized below.

The FASB will consider ratification of the consensuses and consensus-for-exposure at its March 29 meeting. Board-ratified consensuses will be issued as Accounting Standards Updates (ASUs) and will be incorporated into the FASB Accounting Standards Codification® (ASC). A Board-ratified consensus-for-exposure will be posted to the FASB website for comment as a proposed ASU.

Final consensuses

Issue 12-B, "Not-for-Profit Entities: Services Received from Personnel of an Affiliate for Which the Affiliate Does Not Charge the Recipient NFP"


Many not-for-profit entities (NFPs) have arrangements whereby services are provided to the NFP by the personnel of an affiliate. Long-standing guidance in ASC 958-605, Not-for-Profit Entities: Revenue Recognition, calls for the recognition of contributed services at fair value if the services require specialized skills. The guidance does not stipulate, however, whether personnel costs incurred by an affiliate on behalf of an NFP should be recognized in the financial statements of the NFP receiving the services. As a result, practice has been diverse on this matter, with some NFPs recognizing only affiliate services that meet the specialized skills criterion, while others recognize all services provided by an affiliate.

Current developments

The Task Force reached a final consensus on Issue 12-B, affirming its consensus-for-exposure that an NFP must recognize as contributions services that are provided by the personnel of an affiliate and for which the affiliate does not charge the recipient NFP. The consensus applies regardless of whether the affiliate is a...

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