Highlights

The FASB issued two final accounting standard updates in Q2 2025: 1) ASU 2025-03 for determining the accounting acquirer in an acquisition of a VIE, and 2) ASU 2025-04 for clarifying the accounting for share-based consideration payable to a customer. The FASB’s invitation to comment on the FASB’s Agenda also ended on June 30, 2025. Looking ahead, we can expect a final accounting standard update related to accounting for and disclosure of software costs, purchased financial assets, derivatives scope refinements, hedge accounting improvements, and interim reporting narrow-scope improvements in the last half of 2025.

Final Accounting Standards Issued

• In May 2025, the FASB issued ASU 2025-03— Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity. This Update clarifies the determination of the accounting acquirer in an acquisition primarily effected by exchanging equity interests when the legal acquiree is a VIE that meets the definition of a business by requiring an entity to consider the factors in paragraphs 805-10-55-12 through 55-15. The new standard is applied prospectively to all business combinations with acquisition dates occurring on or after the date of initial application. It is effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an interim or annual reporting period.
• In May 2025, the FASB issued ASU 2025-04— Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Clarifications to Share-Based Consideration Payable to a Customer. This Update clarifies the accounting for share-based payment awards that are granted by an entity as consideration payable to its customer by revising the definition of a “performance condition,” eliminating a forfeiture policy election for service conditions, and clarifying the applicability of the variable consideration constraint. The new standard will be effective for annual reporting periods (including interim periods within annual reporting periods) beginning after December 15, 2026, for all entities. Early adoption is permitted.

Exposure Drafts

The following exposure drafts are open for comment as of June 30, 2025:

Taxonomy Updates

• The FASB issued for comment proposed GAAP Taxonomy Improvements for a Proposed Accounting Standards Update—Debt—Modifications and Extinguishments (Subtopic 470-50) and Liabilities—Extinguishment of Liabilities (Subtopic 405-20). The comment period ended on May 30, 2025.

Meetings

The following summarizes the various meetings with the FASB. Full recaps and more details can be found at FASB.org.

• The FASB met on April 9, 2025 to discuss the proposed Accounting Standards Update related to Derivatives Scope Refinements.
• The FASB met on April 30, 2025 to continue its redeliberations on Purchased Financial Assets, and consider whether to add a project to its technical agenda to address the accounting for paid-in-kind (PIK) dividends on preferred stock for issuers of those instruments.
• The FASB met on May 7, 2025 to discuss the accounting for and disclosure of software costs.
• The Public Markets Advisory Committee (PMAC) met on May 15, 2025 to discuss recognition of intangibles, post-implementation review on leases, debt and equity, definition of a public business entity, and agenda consultation.
• The Investment Advisory Committee (IAC) met on May 22, 2025 to discuss emerging issues and trends, FASB project updates, leases post-implementation review, and share-settleable instruments.
• The Financial Accounting Standards Advisory Council (FASAC) met on June 5, 2025 to discuss highlights on current hot topics, private credit and debt disclosures, business combinations, current trends and changing business practices, and accounting for and disclosure of software costs and interim reporting.
• The FASB met on June 18, 2025 to discuss interim reporting-narrow-scope improvements.
• The FASB met on June 25, 2025 to discuss accounting for government grants.
• The Private Company Council (PCC) met on June 26, 2025 and June 27, 2025 to discuss PCC Agenda Priorities, various PCC Research Projects, FASB Agenda Consultation, accounting for and disclosure of software costs, derivatives scope refinements, EITF-related projects, and accounting for government grants.