FASB on Monday issued a proposal designed partly to clarify the scope of its nonfinancial asset derecognition guidance.
The proposal includes amendments that would address:
- The scope of its nonfinancial asset derecognition guidance and clarify its reference to “in substance financial assets.”
- Guidance on partial sales of nonfinancial assets.
The proposal is part of Phase 2 in a three-phase project on clarifying the definition of a business with the objective of adding guidance to assist entities in evaluating whether transactions should be counted for as acquisitions or disposals of assets, or acquisitions or disposals of businesses.
In Phase 1, the board proposed guidance to assist entities in applying the definition of a business in Proposed Accounting Standards Update, Business Combinations (Topic 805): Clarifying the Definition of a Business, which was issued in November.
On Monday, the board issued Proposed Accounting Standards Update, Other Income—Gains and Losses From the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.
Comments on Monday’s proposal will be accepted through Aug. 5 and can be submitted at the board’s website.
—Ken Tysiac (ktysiac@aicpa.org) is a JofA editorial director.
