Proposed ASU—Statement of Cash Flows (Topic 230)

Proposed Accounting Standards Update

Issued: January 29, 2016 Comments Due: March 29, 2016

Statement of Cash Flows (Topic 230)

Classification of Certain Cash Receipts and Cash Payments

a consensus of the FASB Emerging Issues Task Force

The Board issued this Exposure Draft to solicit public comment on proposed changes to Topic 230 of the FASB Accounting Standards Codification?. Individuals can submit

comments in one of three ways: using the electronic feedback form on the FASB website, emailing written comments to director@, or sending a letter to "Technical Director, File Reference No. EITF-15F, FASB, 401 Merritt 7, PO Box 5116,

Norwalk, CT 06856-5116."

The FASB Accounting Standards Codification? is the source of authoritative generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. An Accounting Standards Update is not authoritative; rather, it is a document that communicates how the Accounting Standards Codification is being amended. It also provides other information to help a user of GAAP understand how and why GAAP is changing and when the changes will be effective.

Notice to Recipients of This Exposure Draft of a Proposed Accounting Standards Update

The Board invites comments on all matters in this Exposure Draft and is requesting comments by March 29, 2016. Interested parties may submit comments in one of three ways:

Using the electronic feedback form available on the FASB website at Exposure Documents Open for Comment

Emailing a written letter to director@, File Reference No. EITF15F

Sending written comments to "Technical Director, File Reference No. EITF-15F, FASB, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116."

Do not send responses by fax.

All comments received are part of the FASB's public file. The FASB will make all comments publicly available by posting them to the online public reference room portion of its website.

An electronic copy of this Exposure Draft is available on the FASB's website.

Copyright ? 2016 by Financial Accounting Foundation. All rights reserved. Permission is granted to make copies of this work provided that such copies are for personal or intraorganizational use only and are not sold or disseminated and provided further that each copy bears the following credit line: "Copyright ? 2016 by Financial Accounting Foundation. All rights reserved. Used by permission."

Proposed Accounting Standards Update

Statement of Cash Flows (Topic 230)

Classification of Certain Cash Receipts and Cash Payments

January 29, 2016

Comment Deadline: March 29, 2016

CONTENTS

Page Numbers

Summary and Questions for Respondents........................................................1?6 Amendments to the FASB Accounting Standards Codification? .....................7?23 Appendix: Paragraphs Amended by Multiple Issues .....................................24?26 Background Information and Basis for Conclusions ......................................27?37 Amendments to the XBRL Taxonomy .................................................................38

Summary and Questions for Respondents

Why Is the FASB Issuing This Proposed Accounting Standards Update (Update) and What Are the Main Provisions?

Stakeholders indicated that there is diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics.

This proposed Update addresses eight specific cash flow issues with the goal of reducing the existing diversity in practice. Those cash flow issues and the proposed solutions include:

Cash Flow Issue

Debt Prepayment or Debt Extinguishment Costs: There is no specific guidance on the classification of cash payments for debt prepayment or extinguishment costs.

Settlement of Zero-Coupon Bonds: There is no specific guidance on the classification of the cash payment made by a bond issuer at the settlement of a zerocoupon bond.

Contingent Consideration Payments Made after a Business Combination: There is no specific guidance on the classification of cash payments made by an acquirer after a business combination for the settlement of a contingent consideration liability.

Proposed Solution

Cash payments for debt prepayment or extinguishment costs would be classified as cash outflows for financing activities.

At settlement, the portion of the cash payment attributable to the accreted interest would be classified as cash outflows for operating activities, and the portion of the cash payment attributable to the principal would be classified as cash outflows for financing activities.

Cash payments made by an acquirer that are not paid soon after a business combination for the settlement of a contingent consideration liability would be separated and classified as cash outflows for financing activities and operating activities. Cash payments up to the amount of the contingent consideration liability recognized at the acquisition date would be

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