FASB has agreed to work on decreasing financial reporting complexity for development stage companies. FASB defines such companies as those which devote substantially all efforts to establishing a new business and:
- Have not begun planned principal operations; or
- Have begun planned principal operations without producing significant revenue.
Under existing Generally Accepted Accounting Principles (“GAAP”), development-stage entities must present the same basic financial statements as established companies, applying the same standards of measurement and recognition, and presenting accumulated income statement line items, cash flows, and equity transactions. By agreeing to consider changes, FASB is agreeing that such items are less relevant and not cost-justified for these entities.