Action Alert No. 04-25
June 24, 2004

NOTICE OF MEETINGS

OPEN BOARD MEETING
(Board meetings are available by audio webcast and telephone.)

Wednesday, June 30, 2004, 9:00 a.m.

  1. Business combinations: purchase method procedures. The Board will listen to a staff report on the conclusions reached by the IASB at their June 21, 2004 meeting, and the Board will discuss next steps for any remaining issues related to the drafting of the Exposure Draft on business combinations. The Board also will discuss certain issues that have been identified by resource group members and staff in drafting the Exposure Draft on noncontrolling interests. (Estimated 60-minute discussion.)

  2. 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 July 1, 2004—No Board meetings are scheduled for the week of July 5. The next Action Alert will be issued on July 8 and will announce topics for the Friday, July 16 Board meeting.]

OPEN EDUCATION SESSION

[Revised July 1, 2004]
No education sessions will be held during the weeks of June 28 and July 5, 2004. The next scheduled education session is July 14. The topics for that education session will be posted to the FASB calendar four days prior to the session.

OPEN ROUNDTABLE DISCUSSION WITH RESPONDENTS TO THE FASB EXPOSURE DRAFT, SHARE-BASED PAYMENT
(This meeting is available by audio webcast and telephone.)

Tuesday, June 29, 2004, 9:00 a.m. – 12:00 p.m. and 1:00 p.m. – 4:00 p.m.

The Board will hold, at the FASB offices, its second public roundtable discussion to listen to the views of and obtain information from respondents to the March 31, 2004 FASB Exposure Draft, Share-Based Payment.

A wide variety of constituents—including investors, preparers of financial statements, auditors, valuation experts, and others—will be represented at the roundtable. For a list of the organizations participating in the roundtable, which is open to the public, access the Equity-Based Compensation Project Summary at the FASB website.

OPEN MEETING OF THE EMERGING ISSUES TASK FORCE
(This meeting is available by audio webcast and telephone.)

Wednesday, June 30, 2004, 1:00 p.m. – 5:15 p.m.
Thursday, July 1, 2004, 8:00 a.m. – 3:30 p.m.

The task force plans to discuss all of the following issues in the order shown (the task force plans to discuss the first three issues on Wednesday and to begin discussions on Thursday with Issue 03-13):

  1. Issue No. 02-14, "Whether an Investor Should Apply the Equity Method of Accounting to Investments Other Than Common Stock If the Investor Has the Ability to Exercise Significant Influence over the Operating and Financial Policies of the Investee"

  2. Issue No. 03-9, "Determination of the Useful Life of Renewable Intangible Assets under FASB Statement No. 142, Goodwill and Other Intangible Assets"

  3. Issue No. 04-1, "Accounting for Preexisting Relationships between the Parties to a Business Combination"

  4. Issue No. 03-13, "Applying the Conditions in Paragraph 42 of FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, in Determining Whether to Report Discontinued Operations"

  5. Issue No. 04-8, "Accounting Issues Related to Certain Features of Contingently Convertible Debt and the Effect on Diluted Earnings per Share"

  6. Issue No. 04-7, "Determining Whether an Interest Is a Variable Interest in a Variable Interest Entity"

  7. Issue No. 04-6, "Accounting for Post-Production Stripping Costs in the Mining Industry"

  8. Issue No. 04-5, "Investor's Accounting for an Investment in a Limited Partnership When the Investor Is the Sole General Partner and the Limited Partners Have Certain Rights."

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 roundtable discussions, and through other communication channels. Decisions become final only after a formal written ballot to issue a final Statement or Interpretation.

June 16, 2004 Board Meeting

Short-term convergence: liability classification. The Board decided not to issue an Exposure Draft of a proposed Statement to replace ARB 43, Chapter 3A, “Working Capital—Current Assets and Current Liabilities,” as part of its short-term convergence project. The Board concluded that the perceived costs of certain proposed changes might outweigh the perceived benefits for some constituents (in particular, smaller or nonpublic entities and the users of the financial statements of those entities). However, in removing this project from its agenda, the Board directed the staff to consider whether the changes that would have been proposed in this Exposure Draft should be considered in its project on financial performance reporting by business enterprises.

Beneficial interests. The Board decided that all retained interests, including servicing rights, from transfers of financial assets accounted for as sales should be initially measured at fair value rather than based on an allocation of the previous carrying amount between the assets sold and the retained interests based on their relative fair values.

The Board clarified the intent of a decision made at its May 19 meeting relating to the beneficial interests in securitized financial assets project. The Board’s intent was that beneficial interests in transfers of financial assets accounted for as sales should be allowed the fair value accounting option and accounted for at the holder’s election (1) at fair value with changes recognized in earnings or (2) through the application of existing accounting literature with additional guidance to be provided as to how embedded derivatives would be identified. Existing accounting literature, in the context of the Board’s decision at the May 19 Board meeting, does not include Statement 133 Implementation Issue No. D1, “Application of Statement 133 to Beneficial Interests in Securitized Financial Assets,” which the Board has decided will be superseded by this decision.

AcSEC CLEARANCE

June 15, 2004 Board Meeting

AcSEC document. The Board met with representatives of the AICPA's Accounting Standards Executive Committee (AcSEC) and discussed clearance of a draft of the final AICPA Statement of Position (SOP), Clarification of the Scope of the Audit and Accounting Guide Audits of Investment Companies and Accounting by Parent Companies and Equity Method Investors for Investments in Investment Companies. The Board did not object to issuance of the final SOP subject to certain changes being made.

FASB DOCUMENTS AVAILABLE

In June, the Board issued the following exposure documents:

FASB Exposure Draft of a proposed Interpretation, Accounting for Conditional Asset Retirement Obligations (June 17, 2004). Comments are requested by August 1, 2004.

FASB Exposure Draft of a proposed Statement, Fair Value Measurements (June 23, 2004). Comments are requested by September 7, 2004.

Those Exposure Drafts can be downloaded from the FASB website. If you don’t have access to the Internet, you can receive a printed copy by calling the FASB Order Department at 1-800-748-0659.

FUTURE OPEN MEETINGS

The following is a list of open meetings tentatively scheduled through August. 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.

Wednesday, July 14, 2004—FASB Education Session
Friday, July 16, 2004—FASB Board Meeting
Wednesday, July 21, 2004—FASB Board Meeting
Wednesday, July 21, 2004—FASB Education Session
Monday, July 26, 2004—Liaison Meeting with the Edison Electric Institute
Tuesday, July 27, 2004—FASB Board Meeting
Tuesday, July 27, 2004—FASB Education Session
Wednesday, August 4, 2004—FASB Board Meeting
Wednesday, August 4, 2004—FASB Education Session
Wednesday, August 11, 2004—FASB Board Meeting
Wednesday, August 11, 2004—FASB Education Session
Wednesday, August 18, 2004—FASB Board Meeting
Wednesday, August 18, 2004—FASB Education Session
Wednesday, August 25, 2004—FASB Board Meeting
Wednesday, August 25, 2004—FASB Education Session
Friday, August 27, 2004—Liaison Meeting with the Financial Managers Society