Several recent developments from the Financial Accounting Standards Board (FASB) are of interest to valuation professionals:

Definition of ‘business’: The FASB issued a proposed Accounting Standards Update, Clarifying the Definition of a Business, intended to explain the definition of a business to assist organizations evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance in the proposed ASU would provide a more robust framework for determining when a set of assets and activities is a business.

Deferred taxes on the balance sheet: The FASB issued Accounting Standards Update (ASU) 2015-17, Balance Sheet Classification of Deferred Taxes, intended to improve how deferred taxes are classified on organizations’ balance sheets. The ASU eliminates the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will now be required to classify all deferred tax assets and liabilities as noncurrent.

Update to PCC procedures: The Financial Accounting Foundation (FAF) released a report outlining revisions to the operating procedures of the Private Company Council (PCC) that are intended to improve the group’s effectiveness without significantly changing the PCC’s roles and responsibilities. Some of the decisions made by the FAF trustees include maintaining the ability of the PCC to propose private-company alternatives and that the PCC should increase effectiveness of its advisory role by, for example, regularly communicating with the FASB on projects for which the PCC is advising.

For more information on these and other FASB developments, see the latest edition of FASB Outlook, a quarterly publication.