Two new proposals by FASB address balance sheet classification of debt and the disclosure requirements for inventory under the board's Disclosure Framework.
The proposed Accounting Standards Update on debt classification is designed to simplify guidance used to determine whether debt should be classified as current or noncurrent in a classified balance sheet.
If approved, the proposed guidance would replace existing, fact-specific rules with an overarching, cohesive principle for debt classification that would focus on a borrower's contractual rights and obligations that exist as of the reporting date.
FASB is seeking comments on the debt classification proposal by May 5. Comments can be made at FASB's website.
All reporting organizations would be subject to increased disclosure requirements under the proposed inventory disclosure framework. The proposed framework details several types of disclosures.
Under the proposal, organizations that use the retail method to measure inventory would make qualitative and quantitative disclosures of the critical assumptions used to measure inventory. Organizations that use the last-in, first-out (LIFO) method to measure inventory would disclose the excess of replacement cost or current cost over the LIFO inventory amount and the effect on net income of any LIFO liquidations.
Organizations subject to the reporting requirements in FASB Accounting Standards Codification Topic 280, Segment Reporting, would be subject to interim and annual requirements to disclose inventory in total and by major component for each reportable segment if that information is regularly reviewed by the chief operating decision-maker.
Comments on the inventory disclosure proposal will be accepted through March 13 at the board's website.