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Action Alert No. 05-12
March 24, 2005
NOTICE OF MEETINGS
OPEN BOARD MEETING
(Board
meetings are available by audio webcast and telephone.)
Wednesday, March 30, 2005, 9:00 a.m.
- Financial
instruments: liabilities and equity. The Board will discuss the
following four issues: (Estimated 60-minute discussion.)
- Should perpetual instruments be subject to direct ownership
requirements?
- Should characteristics of a consolidated subsidiary’s instrument
be used to determine the classification of that instrument within
consolidated financial statements (for example, should a perpetual
instrument of a subsidiary be considered a perpetual instrument in the
consolidated financial statements of the parent)?
- How should instruments issued by a consolidated subsidiary that
are settled by issuing parent company shares be classified in the
subsidiary’s separate financial statements?
- Definition of direct ownership instruments—Can a holder’s claim be
limited prior to liquidation (for example, would a share that is
redeemable at book value represent a limited claim even if there is a
provision to participate in the net assets in liquidation)?
- FASB Staff Position (FSP). The Board will discuss whether to
direct the staff to post to the FASB website a proposed FSP 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,
Accounting for Certain Financial Instruments with Characteristics of
both Liabilities and Equity," to warrants on redeemable shares.
(Estimated 30-minute discussion.)
- Fair value
option. The Board will discuss potential qualifying criteria for
the election of the fair value option as well as potential scope
exceptions that would preclude the availability of the fair value option
for certain financial assets and liabilities. (Estimated 60-minute
discussion.)
- GAAP
hierarchy. The Board will reconsider whether the proposed
Statement should provide the qualitative characteristics that make up
the sources of categories (a)–(d) as presented in paragraph .05 of
AICPA’s Statement on Auditing Standards No. 69, The Meaning of
Present Fairly in Conformity With Generally Accepted Accounting
Principles in the Independent Auditor’s Report, or the types of
documents that make up the sources of categories (a)–(d) as presented in
paragraph .10 of SAS 69. The Board also will consider the status of FASB
Staff Positions and Statement 133 Implementation Issues issued by the
Derivatives Implementation Group within the hierarchy. (Estimated
30-minute discussion.)
- Ratification of EITF consensus. The Board will consider the
ratification of the consensus reached at the March 17, 2005 Emerging
Issues Task Force meeting. The Board also will consider the EITF’s
request that the Board provide guidance on the variability that should
be considered when determining whether an interest is a variable
interest. (Estimated 45-minute discussion.)
- FASB technical plan. The Board will discuss the status of its
agenda projects and a draft of the April 2005 technical plan for
research and technical activities that focuses on plans for the next
six-month period. (Estimated 15-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 SESSION
Wednesday, March 30, 2005, 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 the April 6, 2005
Board meeting. Those topics will be posted to the FASB calendar four
days prior to the education session.
BOARD ACTIONS
No Board meetings were held during the week of March 14,
2005.
EITF ACTIONS
March 17, 2005 EITF Meeting
The task force discussed the following issues:
- 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." The Task Force
reached a tentative conclusion on a model that addresses when a sole
general partner, or the general partners as a group, controls a limited
partnership or similar entity when the limited partners have certain
rights. The Task Force directed the FASB staff to consider certain
changes to EITF Issue No. 96-16, "Investor’s Accounting for an Investee
When the Investor Has a Majority of the Voting Interest but the Minority
Shareholder or Shareholders Have Certain Approval or Veto Rights." These
proposed changes will be posted to the FASB website for public comment.
Additionally, the Task Force Chairman indicated that the FASB would
postpone any further consideration of proposed FSP SOP 78-9-a,
"Interaction of AICPA Statement of Position 78-9, Accounting for
Investments in Real Estate Ventures, and EITF 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,’" until the Task Force reaches a final consensus on this
Issue. This Issue will be discussed further at a future meeting.
- Issue No. 04-6, "Accounting for Stripping Costs in the Mining
Industry." A consensus was reached. The Board will consider the
ratification of that consensus at its March 30, 2005 meeting.
- Issue No. 04-7, "Determining Whether an Interest Is a Variable
Interest in a Potential Variable Interest Entity." The Task Force asked
the Board to consider providing guidance on the variability that should
be considered when determining whether an interest is a variable
interest. The Board will consider this request at its March 30, 2005
meeting. The Task Force will determine whether to continue its
discussions on this Issue based on whether the Board agrees to provide
guidance.
- Issue No. 04-13, "Accounting for Purchases and Sales of Inventory
with the Same Counterparty." The Task Force reached a tentative
conclusion on the question of whether inventory exchanges within the
same line of business should be recognized at fair value. This Issue
will be discussed further at a future meeting.
- Issue No. 05-1, "The Accounting for the Conversion of an Instrument
That Becomes Convertible upon the Issuer's Exercise of a Call Option." A
tentative conclusion was reached. The Task Force asked the FASB staff to
consider the interaction of the tentative conclusion in this Issue with
the computation of earnings per share for these instruments. This Issue
will be discussed further at a future meeting.
FUTURE OPEN MEETINGS
The following is a list of open meetings tentatively scheduled through
April. All meetings are held in Norwalk, Connecticut, unless otherwise
noted. 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, April 6, 2005—FASB Board Meeting
Wednesday, April 6,
2005—FASB Education Session
Wednesday, April 13, 2005—FASB Board
Meeting
Wednesday, April 13, 2005—FASB Education Session
Thursday,
April 21, 2005—IASB/FASB Joint Board Meeting, London
Friday, April 22,
2005—IASB/FASB Joint Board Meeting, London
Wednesday, April 27,
2005—FASB Board Meeting
Wednesday, April 27, 2005—FASB Education
Session
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