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Revised 06/10/05—See below
Action Alert No. 05-23
June 9, 2005
NOTICE OF MEETINGS
OPEN BOARD MEETING
(Board
meetings are available by audio webcast and telephone.)
Wednesday, June 15, 2005, 9:00 a.m.
- Short-term
international convergence: income taxes. The Board will discuss
whether to modify the existing disclosure requirements in FASB Statement
No. 109, Accounting for Income Taxes, to eliminate differences
between those requirements and the disclosures required under IAS 12,
Income Taxes. (Estimated 45-minute discussion.)
- Warrants
for redeemable shares. The Board will discuss comment letters
received on proposed FASB Staff Position (FSP) FAS 150-e, “Issuer’s
Accounting under Statement 150 for Freestanding Warrants and Other
Similar Instruments on Shares That Are Redeemable,” to clarify the
applicability of FASB Statement No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and
Equity, and FSP FAS 150-1, “Issuer's Accounting for Freestanding
Financial Instruments Composed of More Than One Option or Forward
Contract Embodying Obligations under FASB Statement No. 150,” to
warrants on redeemable shares. (Estimated 30-minute discussion.)
- Interpretation of paragraph 40(b) of Statement 140. The Board
will consider whether to add a project to its agenda to clarify the
accounting guidance provided in paragraph 40(b) of FASB Statement No.
140, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities, relative to the notional amount of
passive derivative instruments held by qualifying special-purpose
entities. (Estimated 60-minute discussion.)
- Qualifying
special-purpose entities and isolation of transferred assets.
[Revised 06/10/05: This topic was added to the
agenda.] The Board will discuss amending Statement 140 to
allow qualifying special-purpose entities to hold and issue passive
derivative financial instruments that pertain to all beneficial
interests issued (including those that are subsequently purchased by the
transferor, its affiliates, or its agents). (Estimated 30-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.
OPEN EDUCATION SESSIONS
Wednesday, June 15, 2005, following the Board meeting
Friday,
June 17, 2005, 9:00 a.m.
The Board will hold educational, non-decision-making sessions to
discuss topics that are anticipated to be discussed at the June 22, 2005,
and June 29 Board meetings. Those topics will be posted to the FASB calendar four
days prior to the education sessions.
OPEN JOINT INTERNATIONAL GROUP MEETING ON PERFORMANCE
REPORTING
Tuesday, June 14, 2005, 8:30 a.m.
Le Parker Meridien
118 West 57th Street
New York, New
York
The FASB and IASB will meet with members of the Joint International
Group (JIG) on Performance Reporting. The meeting will include:
- Presentations by JIG members on "What Does Net Income Mean?"
- An update on decisions reached by the FASB and IASB Boards at their
April and May meetings.
- An open discussion of differing methods that might be used to
categorize information presented in the statement of earnings and
comprehensive income.
Further information about this meeting is available on the FASB
website.
OPEN MEETING OF THE EMERGING ISSUES TASK FORCE
(This meeting is
available by audio webcast and telephone.)
Wednesday, June 15, 2005, 1:00 p.m. – 5:30 p.m.
Thursday, June
16, 2005, 8:00 a.m. – 4:30 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 04-5):
- Issue No. 05-4, "The Effect of a Liquidated Damages Clause on a
Freestanding Financial Instrument Subject to EITF Issue No. 00-19,
'Accounting for Derivative Financial Instruments Indexed to, and
Potentially Settled in, a Company's Own Stock'"
- Issue No. 05-2, "The Meaning of 'Conventional Convertible Debt
Instrument' in EITF Issue No. 00-19, 'Accounting for Derivative
Financial Instruments Indexed to, and Potentially Settled in, a
Company's Own Stock'"
- Issue No. 05-1, "Accounting for the Conversion of an Instrument That
Becomes Convertible upon the Issuer's Exercise of a Call Option"
- Issue No. 04-5, "Determining Whether a General Partner, or the
General Partners as a Group, Controls a Limited Partnership or Similar
Entity When the Limited Partners Have Certain Rights"
- Issue No. 05-3, "Accounting for Rental Costs Incurred during the
Construction Period"
- Issue No. 05-6, "Determining the Amortization Period for Leasehold
Improvements"
- Issue No. 04-13, "Accounting for Purchases and Sales of Inventory
with the Same Counterparty"
- Issue No. 05-5, "Accounting for the Altersteilzeit Early Retirement
Programs and Similar Type Arrangements."
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 1, 2005 Board Meeting
Issuer credit standing and fair value remeasurements. The Board
discussed but did not reach a decision on whether to add a project to its
agenda to amend FASB Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities, to allow for situations in which
changes in an issuer’s own creditworthiness might be excluded from
subsequent remeasurements of derivative liabilities at fair value. The
Board asked the staff to further research related issues as a basis for
considering those issues more broadly, in conjunction with its fair value
option project.
Fair value
option. The Board was unable to reach an agreement on whether to
curtail a debtor’s recognizing in earnings the effect of changes in its
credit worthiness in reporting liabilities at fair value when the fair
value option has been elected. The Board directed the staff to perform
further research on the subject and present that research to the Board at
a later date.
Measuring
fair value of certain derivative contracts under Statement 133.
The Board decided to add a project to its agenda and issue an FSP relating
to derivative contracts that are marked-to market under Statement 133. The
project will reconsider the guidance in EITF Issue No. 02-3, “Issues
Involved in Accounting for Derivative Contracts Held for Trading Purposes
and Contracts Involved in Energy Trading and Risk Management Activities,”
in the context of the guidance developed to date in its fair value
measurement project. The Board discussed but did not reach any decisions
on the project issues. The Board plans to discuss those issues at a future
meeting.
Fair
value measurements. The Board continued redeliberations of the
FASB Exposure Draft, Fair Value Measurements, focusing on issues
relating to blocks and disclosures.
The Board reconsidered its previous decision to allow a broker-dealer
to use a blockage factor to estimate the fair value of a large position of
an unrestricted security with a quoted price in an active market (block).
Instead, the Board decided to preclude the use of a blockage factor in all
cases. Accordingly, a quoted price in an active market should be used to
estimate the fair value of an unrestricted security within Level 1 of the
fair value hierarchy, even if an entity (including a broker-dealer or an
investment company) holds a large position of the security. A final
Statement will make a conforming change to the AICPA Audit and Accounting
Guides for broker-dealers and investment companies.
The Board decided that disclosure of unrealized gains or losses
relating to assets and liabilities still held at the reporting date should
be limited to those assets and liabilities that are remeasured at fair
value within the lowest level of the fair value hierarchy. That limited
disclosure would be required in all cases. The Board affirmed its earlier
decision to also require disclosure of total gains or losses (unrealized
and realized) for assets and liabilities held during the period (whether
or not those assets and liabilities are still held at the reporting date)
and to segregate those gains or losses included in earnings and in
accumulated other comprehensive income.
Other
comprehensive income upon the loss of significant influence. The
Board discussed the following issues raised in comment letters on proposed
FSP APB 18-a, “Accounting by an Investor for Its Proportionate Share of
Other Comprehensive Income of an Investee Accounted for under the Equity
Method in Accordance with APB Opinion No. 18 upon a Loss of Significant
Influence”:
- Agreed that the proposed FSP is not inconsistent with subparagraph
19(l) of APB Opinion No. 18, The Equity Method of Accounting for
Investments in Common Stock.
- Agreed that the proposed FSP is not inconsistent with paragraph 376
of Statement 133.
- Agreed that the second and third sentences of paragraph 4 of the
proposed FSP should be removed because they are inconsistent with
subparagraph 19(m) of Opinion 18.
- Agreed that any amount of an investor’s proportionate share of an
investee’s equity adjustments for other comprehensive income that remain
after reducing the carrying amount of the investment to zero should be
recorded in periodic income.
The Board directed the staff to proceed to a draft of a final FSP for
vote by written ballot.
FASB DOCUMENTS AVAILABLE
The following FSPs were issued and are available on the FASB
website:
Final FSP
FAS 143-1, “Accounting for Electronic Equipment Waste Obligations”
(June 8, 2005).
Proposed
FSP FIN 45-b, “Application of FASB Interpretation No. 45 to
Minimum Revenue Guarantees Granted to a Business or Its Owner” (June 9,
2005). Comments are requested by August 8, 2005.
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.
Tuesday, June 21, 2005—Financial Accounting Standards Advisory
Council
Wednesday, June 22, 2005—Small Business Advisory
Committee
Wednesday, June 22, 2005—p.m. FASB Board Meeting
Thursday,
June 23, 2005—FASB Education Session
Wednesday, June 29, 2005—FASB
Board Meeting
Wednesday, June 29, 2005—FASB Education
Session
Wednesday, July 6, 2005—FASB Board Meeting
Wednesday,
July 6, 2005—FASB Education Session
Wednesday, July 13, 2005—FASB Board
Meeting
Wednesday, July 13, 2005—FASB Education Session
Wednesday,
July 20, 2005—FASB Board Meeting
Wednesday, July 20, 2005—FASB
Education Session
Monday, July 25, 2005—Liaison Meeting with the Edison
Electric Institute
Wednesday, July 27, 2005—FASB Board
Meeting
Wednesday, July 27, 2005—FASB Board Meeting
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