FASB issues final ASU to simplify presentation of debt issuance costs

Contents FASB
     Board issues final ASU to simplify presentation of debt issuance costs
     FASB posts highlights of April 7 meeting
FAF issues strategic plan

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.

Board issues final ASU to simplify presentation of debt issuance costs The FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, requiring entities to present debt issuance costs related to a recognized debt liability as a direct deduction from the carrying amount of the debt liability. This new guidance is similar to existing presentation requirements for debt discounts and aligns with the presentation of debt issuance costs under IFRS. The new guidance does not affect entities’ recognition and measurement of debt issuance costs. Previously, entities were required to present debt issuance costs as deferred charges in the asset section of the statement of financial position.

The guidance in the ASU is effective for all entities in fiscal years beginning after December 15, 2015. Public business entities must apply the guidance in interim periods within the fiscal year of adoption, while all other entities must apply the guidance in interim periods within fiscal years beginning after December 15, 2016.

All entities must apply the guidance retrospectively and provide the required disclosures for a change in accounting principle in the period of adoption. Early adoption is permitted.

FASB posts highlights of April 7 meeting At its April 7 meeting the Board reached tentative decisions related to its projects on clarifying the definition of a business, accounting for leases, the financial statements of not-for-profit entities, and technical corrections to the Codification.

The Board also discussed its projects on hedge accounting and on how public business entities and not-for-profit entities account for identifiable intangible assets in a business combination and goodwill, but made no decisions.

In addition, the Board ratified the EITF’s consensuses and consensuses-for-exposure reached at the Task Force’s March 19 meeting. Refer to the March 26 edition of the On the Horizon for details about these consensuses and consensuses-for-exposure.

Clarifying the definition of a business

The Board began deliberating the second phase of its project on clarifying the definition of a business, which focuses on accounting for partial sales of a nonfinancial asset. Board members tentatively decided that an entity should recognize a gain or loss on the partial sale of a nonfinancial asset within the scope of ASC 610-20, Other Income: Gains and Losses from the Derecognition of Nonfinancial Assets, only if the partial sale both

  • Represents a contract based on the guidance in ASC 606-10-25-1 through 25-8, Revenue from Contracts with Customers
  • Transfers control at a point in time as described in ASC 606-10-25-30

Upon partial sale of an asset, such as a sale of a noncontrolling interest in a legal entity that holds only a nonfinancial asset, the entity would be precluded from recognizing a gain or loss on the portion sold if it consolidates the legal entity (similar to the accounting for sale of a noncontrolling interest).

An entity would measure any retained noncontrolling interest in the legal entity on a carryover basis.


The FASB tentatively decided not to provide any alternative recognition, measurement, disclosure, presentation, or transition guidance for nonpublic business entities as part of its leasing project, except for the previously discussed practical expedient that would allow nonpublic business entities to use a risk-free rate to measure lease liabilities.

Financial statements of not-for-profit entities

The Board decided that the comment period for its proposal to improve financial statement presentation for not-for-profit entities will be 120 days from the date the proposed guidance is issued. The Board expects to issue the proposed guidance on April 23, 2015.

Technical corrections

Based on stakeholder feedback, the Board decided to make some additional amendments, and not to pursue certain proposed amendments, to the Codification as part of its latest technical corrections project. The objective of the technical corrections project is to clarify, correct unintended application of, or make minor improvements to existing guidance in the Codification. The proposed technical corrections would be effective for all entities in annual periods beginning after December 15, 2015 and in interim periods within those annual periods. Early adoption would be permitted.

FAF issues strategic plan The Financial Accounting Foundation (FAF) published its strategic plan to describe the long-range vision, mission, and strategic goals for itself and the two standard setters it oversees: the FASB and GASB.

Vision The vision for the FASB and GASB is to set the highest quality accounting standards through a comprehensive process that exemplifies a commitment to integrity, objectivity, independence, transparency, inclusiveness, and leadership. High quality accounting standards promote the reporting of financial information that is relevant, representationally faithful, understandable, verifiable, timely, and comparable. In addition, high quality accounting standards provide sufficient benefits to justify their implementation costs.

Mission The collective mission of the FAF and its standard setters is to develop accounting standards that provide useful information to investors and other financial statement users, and to educate stakeholders about how to most effectively understand and implement those accounting standards.

Strategic goals The strategic plan describes four strategic goals intended to help the FAF and its standard setters fulfill their mission:

  1. To practice and promote continued excellence in standard setting
  2. To demonstrate a commitment to leadership in standard setting by creating the highest quality accounting standards through a process that reflects the FAF’s core values
  3. To build and maintain trust with stakeholders
  4. To promote public discourse on current and future financial reporting issues

© 2015 Grant Thornton LLP, U.S. member firm of Grant Thornton International Ltd. All rights reserved. This Grant Thornton LLP On the Horizon provides information and comments on current accounting and SEC reporting issues and developments. It is not a comprehensive analysis of the subject matter covered and is not intended to provide accounting or other advice or guidance with respect to the matters addressed in this publication. All relevant facts and circumstances, including the pertinent authoritative literature, need to be considered to arrive at conclusions that comply with matters addressed in this publication. For additional information on topics covered in this publication, contact a Grant Thornton client-service partner.