FASB Board Decisions: New Projects on Fair Value, Private Credit, and Equity Method

FASB May 2026 Board Meeting: Three Key Developments

FASB's May 13, 2026 board meeting yielded three significant developments that will shape upcoming standard-setting activity. The decisions reflect the board's continued focus on investment company reporting, private market transparency, and longstanding practice issues in equity-method accounting.

New Project: Fair Value of Equity Securities with Contractual Sale Restrictions (Topic 946)

FASB voted to add a project addressing the fair value measurement of equity securities subject to contractual sale restrictions. The project is scoped to investment companies under Topic 946 — a deliberate limitation intended to focus the standard-setting effort on the entities most affected by this issue.

The central question is whether contractual restrictions on the sale of equity securities should cause those securities to be measured at a discount to the quoted market price of an otherwise identical unrestricted security. This has been a persistent area of diversity under ASC 820, Fair Value Measurement, particularly for private equity and hedge funds holding SPAC founder shares and similar instruments. A focused standard for investment companies will provide clearer guidance without reopening the broader fair value framework.

New Project: Private Credit Disclosures (Topic 946)

In a companion decision, FASB added a project to improve disclosures around private credit instruments held by investment companies. Private credit — direct lending, mezzanine debt, and related instruments — has grown substantially as an asset class, yet existing disclosure requirements under Topic 946 have not kept pace with the complexity and risk profile of these investments.

The project is expected to address the nature, terms, credit quality, and concentration of private credit holdings, giving investors and regulators better visibility into a segment of the market that has historically lacked transparency.

Continued Deliberations: Equity Method Targeted Improvements (Topic 323)

The board continued its deliberations on targeted improvements to the equity method of accounting under ASC 323. This long-running project is examining several narrow-scope issues, including the application of the equity method to investments with basis differences, the unit of account, and certain impairment-related questions. No final decisions were announced; further board meetings are expected.

What to Watch

All three projects remain at the early deliberation or project-initiation stage. Exposure drafts and comment periods will follow before final standards are issued. Investment companies and their advisers should begin assessing potential impacts, particularly for entities with significant restricted security holdings or private credit portfolios.