Action Alert No. 03-24
June 18, 2003
Updated 06/23/03—See below
NOTICE OF MEETINGS
OPEN BOARD MEETING
Wednesday, June 25, 2003, 9:00 a.m.
- Pension disclosures.
The Board will continue its discussions about disclosures. Specific
issues to be addressed include the types of plan assets to be
separately disclosed, sensitivity information about changes to
key assumptions, applicability of the disclosure requirements
to nonpublic entities, interim period disclosures, and other matters.
(Estimated 75-minute discussion.)
- Clarifying
the criteria for liability extinguishments. The Board
will discuss information received from constituents regarding
how to clarify the meaning of the phrase legally released from
being the primary obligor (as it is used in paragraph 16(b)
of FASB Statement No. 140, Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities) to
eliminate perceived ambiguities under U.S. law. (Estimated
45-minute discussion.)
- AcSEC documents. The Board will meet with representatives
of the AICPA’s Accounting Standards Executive Committee (AcSEC)
to consider the following: (Estimated 60-minute discussion.)
- An Exposure Draft of the proposed AICPA Statement of Position
(SOP), Reporting Financial Highlights and Schedule of Investments
by Nonregistered Investment Partnerships—An Amendment
of the Audit and Accounting Guide Audits of Investment
Companies and AICPA Statement of Position 95-2, Financial
Reporting by Nonpublic Investment Partnerships, for clearance
for public comment
- An Exposure Draft of the proposed SOP, Financial Highlights
of Separate Accounts: An Amendment of the Audit and Accounting
Guide Audits of Investment Companies, for clearance for
public comment.
- An Exposure Draft of the proposed AICPA Statement of Position
(SOP), Reporting Financial Highlights and Schedule of Investments
by Nonregistered Investment Partnerships—An Amendment
of the Audit and Accounting Guide Audits of Investment
Companies and AICPA Statement of Position 95-2, Financial
Reporting by Nonpublic Investment Partnerships, for clearance
for public comment
- Financial instruments:
derivatives implementation. The Board will discuss the
staff’s proposed guidance on Statement 133 Implementation Issue
No. C20, “Interpretation
of Clearly and Closely Related in Contracts That Qualify
for the Normal Purchases and Normal Sales Scope Exception,” and
an analysis of comment letters received. (Estimated 45-minute
discussion.)
- Open discussion. If necessary, the Board will allow time
to discuss minor issues with staff members on technical projects
or administrative matters. Those discussions are held following
regular Board meetings as topics come up.
Revised 6/20/03
OPEN EDUCATION SESSION—[This
Education Session was Cancelled]
Wednesday, June 25, 2003, immediately following the Board meeting
The Board will hold an educational, non-decision-making session to discuss topics that are anticipated to be discussed at a future Board meeting. Those topics will be posted to the FASB calendar four days prior to the education session.
OPEN MEETING OF THE FINANCIAL ACCOUNTING STANDARDS ADVISORY COUNCIL
Tuesday, June 24, 2003, 9:00 a.m.
[Updated 6/23/03: Order of topics revised.]The Advisory Council will meet to discuss:
- FASAC’s process for identifying issues for the FASB to consider
- The Board’s project on stock-based compensation
- The Board’s project on financial performance reporting by business
enterprises
- The Board’s project on fair value measurement
- The Board’s project on revenue recognition.
The Advisory Council will hear reports from the chairman of the FASB on other Board activities and the deputy chief accountant of the SEC on current accounting-related developments.
Closed to Public Observation
The Advisory Council will hold a brief closed session for FASAC members only to discuss administrative matters. The public portion of the meeting is expected to end at approximately 2:40 p.m., at which time the closed session will begin.
BOARD ACTIONS
The Board Actions are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions are included in an Exposure Draft for formal comment only after a formal written ballot. Decisions in an Exposure Draft may be (and often are) changed in redeliberations based on information provided to the Board in comment letters, at public hearings, and through other communication channels. Decisions become final only after a formal written ballot to issue a final Statement or Interpretation.
June 11, 2003 Board Meeting
Revenue recognition. The Board discussed issues relating to contractual rights and obligations, in particular, a proposed conceptual model for analyzing whether assets and liabilities stem from those rights and obligations. Some of the principal conceptual issues are:
- Whether contractual rights meet the definition of assets and
whether contractual obligations meet the definition of liabilities
- Which contractual rights and obligations meet those definitions
- The nature of those assets and liabilities
- How those assets and liabilities should be measured.
The Board considered the economic consequences that contractual rights have for their holders and the related contractual obligations have for their obligors. The Board agreed in principle that conditional rights and obligations do not meet the definitions of assets and liabilities and that unconditional and mature rights and obligations might meet those definitions. The Board also agreed in principle that when recognized, those rights and obligations should be measured at their fair value. The Board directed the staff to further explore issues relating to the proposed conceptual model, including the effects of stated contractual penalties and legal remedies that require specific performance rather than the payment of monetary damages.
Short-term convergence. The Board agreed with the IASB decision to remove the issues of joint ventures, proportionate consolidation, and accounting for hyperinflationary economies from the project scope. The Board also added issues relating to earnings per share to the project scope and decided the following:
- For annual and year-to-date computation of diluted earnings
per share (EPS), the dilutive effect of options and warrants (and
their equivalents) should be reflected by applying the treasury
stock method for the year-to-date period independently from any
interim computation. Options and warrants will have a dilutive
effect under the treasury stock method only when the average market
price of the common stock for the year-to-date period exceeds
the exercise price of the options and warrants.
- When an entity has issued a contract that may be settled either
in shares or in cash at the entity’s option, the entity should
presume that the contract will be settled in shares if the effect
is dilutive. That presumption may not be overcome, regardless
of past practice or stated policy to the contrary.
FUTURE OPEN MEETINGS
The following is a list of open meetings tentatively scheduled through July. Because schedules may change, please check the FASB calendar before finalizing your plans. Revisions to this list since the last issue of Action Alert are highlighted in bold.
Monday, July 7, 2003—FASB Education Session
Tuesday, July 8, 2003—Option Valuation Group Meeting
Wednesday, July 9, 2003—FASB Board Meeting
Wednesday, July 9, 2003—FASB Education Session
Wednesday, July 16, 2003—FASB Board Meeting
Wednesday, July 16, 2003—FASB Education Session
Wednesday, July 23, 2003—FASB Board Meeting
Wednesday, July 23, 2003—FASB Education Session
Tuesday, July 29, 2003—Liaison Meeting with the Edison Electric
Institute
Wednesday, July 30, 2003—FASB Board Meeting
Wednesday, July 30, 2003—FASB Education Session
Thursday, July 31, 2003—Emerging Issues Task Force Meeting
