|
Action Alert No. 05-21
May 26, 2005
NOTICE OF MEETINGS
OPEN BOARD MEETING
(Board
meetings are available by audio webcast and telephone.)
Wednesday, June 1, 2005, 9:00 a.m.
- Issuer credit standing and fair value remeasurements. The
Board will discuss whether to add a project to its agenda to consider
issues relating to issuer credit standing and derivative liabilities
remeasured at fair value under FASB Statement No. 133, Accounting for
Derivative Instruments and Hedging Activities. If the Board decides
to add the project, it will discuss whether the guidance should be in
the form of an FASB Staff Position (FSP). (Estimated 30-minute
discussion.)
- Fair value
option. The Board will discuss whether to consider the effect of
changes in a debtor’s creditworthiness in reporting liabilities at fair
value when the fair value option has been elected. The Board also will
discuss possible disclosures related to the effect of changes in the
debtor’s creditworthiness. (Estimated 60-minute discussion.)
- Measuring fair value of energy trading and other derivative
contracts under Statement 133. The Board will discuss whether to add
a project to its agenda relating to 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.” If the Board decides to add the project, it will discuss
significant project issues and whether the related guidance should be
issued in the form of an FSP. (Estimated 60-minute discussion.)
- Fair
value measurement. The Board will continue redeliberations of
the FASB Exposure Draft, Fair Value Measurements. The Board will clarify
certain of its earlier decisions relating to blocks and disclosures.
(Estimated 60-minute discussion.)
- Other
comprehensive income upon the loss of significant influence. The
Board will consider comment letters received 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," and whether to issue that FSP as final. (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
Tuesday, May 31, 2005, 11:00 a.m.
Wednesday, June 1, following
the Board meeting
The Board will hold educational, non-decision-making sessions to
discuss topics that are anticipated to be discussed at the June 8, 2005
Board meeting. Those topics will be posted to the FASB calendar four
days prior to the education sessions.
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.
May 18, 2005 Board Meeting
Electronic
waste obligations. The Board affirmed its decision to issue an FSP
that addresses accounting for obligations associated with Directive
2002/EC/96 on Waste Electrical and Electronic Equipment (the “Directive”)
adopted by the European Union. The Board made the following decisions:
- In a transaction involving a producer that is selling replacement
equipment to a commercial user and assuming an obligation from that
commercial user, he producer of the replacement equipment should
recognize revenue only for the amount received that relates to the sale
of the replacement equipment (not the assumption of the obligation) in
those situations in which the recycling of electronic waste is not one
of the primary revenue-generating business activities for that producer.
- In a transaction involving a producer that is selling a new asset to
a commercial user and assuming an asset retirement obligation from the
commercial user, the producer of the replacement equipment should
measure the portion of the consideration received that relates to the
sale of the replacement equipment as the residual amount (the excess of
the price paid over the fair value of the obligation transferred) in
those situations in which the recycling of electronic waste is not one
of the primary revenue-generating business activities for that producer.
- The scope of the final FSP should not be expanded to include the
accounting for new waste.
- The effective date for the final FSP should be the first reporting
period beginning after the date the FSP is posted to the FASB website.
- Commercial users who have already recorded obligations for
historical electronic equipment waste, or for entities operating in
countries that enacted laws to comply with the Directive prior to the
issuance of a final FSP, should recognize the cumulative effect of
initially applying the guidance as a change in accounting principle.
The Board directed the staff to proceed to a draft of a final FSP for
vote by written ballot.
Segment
reporting: similar economic characteristics. The Board
redeliberated the provisions in proposed FSP FAS 131-a, “Determining
Whether Operating Segments Have ‘Similar Economic Characteristics‘ under
Paragraph 17 of FASB Statement No. 131.” The Board decided not to issue
the proposed FSP because it does not appear to address different
interpretations of existing generally accepted accounting principles
(GAAP) that have resulted in diversity of financial reporting. The Board
based its decision on its review of the comment letters received on the
proposed FSP, discussions with constituents, and discussions with the SEC
staff. The Board plans no further action on this issue.
Minimum
revenue guarantees. The Board added this project to its agenda and
supported issuing a proposed FSP to affirm that the recognition,
measurement, and disclosure provisions of FASB Interpretation No. 45,
Guarantor’s Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others, apply to a
guarantor’s accounting for a minimum revenue guarantee granted to a
business or its owners.
The Board agreed that the recognition and measurement provisions in the
proposed FSP would be effective for new transactions and arrangements
entered into on or after the beginning of the first fiscal quarter
following the date that the final FSP is posted to the FASB website.
Earlier application of the provisions of that FSP would be permitted. For
any minimum revenue guarantees issued prior to the initial application of
the FSP and not accounted for under Interpretation 45, the retroactive
application of the initial recognition and initial measurement provisions
of Interpretation 45 would not be permitted. The proposed FSP transition
provisions for disclosures would parallel the transition provisions of
Interpretation 45. The proposed FSP would indicate that the disclosure
requirements in paragraphs 13–16 of Interpretation 45 should be applied to
all minimum revenue guarantees in financial statements of interim or
annual periods ending after the beginning of the first fiscal quarter
following the date that the final FSP is posted to the FASB website. Thus,
the disclosure requirements in paragraphs 13–16 would be applied to any
minimum revenue guarantees issued prior to the initial application of the
proposed FSP, regardless of whether those guarantees were recognized and
measured under Interpretation 45.
The Board directed the staff to proceed to a draft of a proposed FSP
for vote by written ballot. The proposed FSP will have a 60-day comment
period.
Employee
compensation: classification of freestanding financial
instruments. The Board discussed whether to finalize proposed FSP
EITF 00-19-a, “Application of EITF Issue No. 00-19 to Freestanding
Financial Instruments Originally Issued as Employee Compensation,” and
directed the staff to proceed to a draft of a final FSP for vote by
written ballot.
The Board had previously decided the following at its May 11, 2005
meeting:
- An evaluation of the substantive terms of instruments subject to the
guidance in the proposed FSP is appropriate (that is, retain paragraph 6
of the proposed FSP).
- Explicit guidance about the classification of instruments with
multiple settlement alternatives should not be included in the final
FSP.
The Board also decided to amend FASB Statement No. 123 (revised 2004),
Share-Based Payment, to defer indefinitely the provisions of
Statement 123(R) that make freestanding financial instruments subject to
the recognition and measurement requirements of other GAAP when the rights
conveyed by the instrument are no longer dependent on employment.
FUTURE OPEN MEETINGS
The following is a list of open meetings tentatively scheduled through
June. 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, June 8, 2005—FASB Board Meeting
Wednesday, June 8,
2005—FASB Education Session
Friday, June 10, 2005—Liaison Meeting with
Financial Executives International Committee on Corporate Reporting,
Stamford, CT
Tuesday, June 14, 2005—Joint International Group Meeting
on Performance Reporting, New York, NY
Wednesday, June 15, 2005—FASB
Board Meeting
Wednesday, June 15, 2005—FASB Education
Session
Wednesday, June 15, 2005—p.m. Emerging Issues Task Force
Meeting
Thursday, June 16, 2005—Emerging Issues Task Force
Meeting
Friday, June 17, 2005—FASB Education Session
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
| |