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Action Alert No. 05-42
October 20, 2005
NOTICE OF MEETINGS
OPEN JOINT IASB AND FASB BOARD MEETINGS
(Board
meetings are available by audio webcast and telephone.)
Monday, October 24, 2005, 9:00 a.m.
- Comprehensive business reporting model. Representatives of
CFA Institute will discuss with the Boards its soon-to-be-issued
comprehensive business reporting model. (Estimated 1.25-hour
discussion.)
- Performance
reporting by business entities. The Boards will discuss (a) the
value in providing a category on the financial statements that
distinguishes financing type transactions and events from other types of
transactions and events and (b) any pending issues related to issuance
of the Exposure Draft for Segment A. (Estimated 1.75-hour
discussion.)
- Revenue
recognition. The Boards will discuss (a) certain clarifications
of recent decisions about the initial identification and measurement of
performance obligations using an allocation of the customer
consideration amount, (b) illustrative examples that apply those
decisions to a range of revenue transactions, and (c) certain issues
related to the definition of revenues, including the definition of
customer. (Estimated 2.5-hour discussion.)
- Short-term
convergence: income taxes. The Boards will discuss their
different approaches to (a) accounting for uncertain tax positions and
(b) the timing of the uncertain tax positions project. The Boards also
will discuss certain issues related to their decision to measure
deferred taxes using the undistributed rate. (Estimated 1.5-hour
discussion.)
Tuesday, October 25, 2005, 9:00 a.m.
- Financial instruments. The Boards will discuss (a) long-term
objectives for reporting financial instruments and (b) reporting
information about changes in fair values of financial instruments.
(Estimated 1.5-hour discussion.)
- Conceptual
framework. The Boards will discuss the following matters: (a)
suggestions for improving the process for assessing for qualitative
characteristics of financial information, (b) whether the objectives of
financial reporting and qualitative characteristics of financial
information would differ for particular types of business entities (for
example, small versus large, private versus public), (c) a milestone
draft for the objectives of financial reporting section of a due process
document, including considerations about seeking constituents’ comments,
and (d) project status, plans, and priorities. (Estimated 2.5-hour
discussion.)
OPEN FASB INSURANCE INDUSTRY FORUM
Wednesday, October 26, 2005, 10:30 a.m. – 4:30 p.m.
The Board will meet with representatives of several insurance industry
representational organizations and others to discuss matters of mutual
interest.
OPEN ROUNDTABLE DISCUSSIONS WITH RESPONDENTS TO THE FASB EXPOSURE
DRAFTS ON BUSINESS COMBINATIONS
(This
meeting is available by audio webcast and telephone.)
Thursday, October 27, 2005, 9:00 a.m. – 12:00 p.m. and 1:00 p.m. –
4:00 p.m.
The Board will hold public roundtable discussions to listen to the
views of and obtain information from respondents to the June 30, 2005 FASB
Exposure Drafts, Business Combinations, and Consolidated
Financial Statements, Including Accounting and Reporting of Noncontrolling
Interests in Subsidiaries.
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, Interpretation, or
FSP.
October 12, 2005 Board Meeting
Grant
date. The Board discussed comments received from respondents on
the proposed FSP FAS 123(R)-b, “Practical Exception to the Application of
Grant Date as Defined in FASB Statement No. 123(R).” Specifically, the
Board addressed the transition provisions in the FSP, performance
conditions in which all the key terms and conditions of an award are not
communicated to an employee, and certain drafting considerations. The
Board decided:
- The transition provisions in the final FSP will be modified so that
entities that have already adopted Statement 123(R) would be able to
apply the FSP, once it's been issued, in the earliest reporting period
for which financial statements or interim reports have not been issued.
- Communication of specific performance targets is consistent with the
principles of mutual understanding included in the definition of grant
date in Statement 123(R).
- Explicit modification guidance regarding changes in the key terms
and conditions of an award subsequent to the criteria established in the
proposed FSP (that is, a grant date) would not be added to the final
FSP.
The Board directed the staff to proceed with a draft of the final FSP
for vote by written ballot. Subsequently, final FSP FAS
123(R)-2, “Practical Accommodation to the Application of Grant
Date as Defined in FASB Statement No. 123(R),” was issued on October 18,
2005, and is available on the FASB website.
Useful
life and amortization of intangible assets. The Board discussed
proposed transition, effective date, and comment period for a proposed FSP
that will amend the guidance on certain aspects of FASB Statement No. 142,
Goodwill and Other Intangible Assets, as it relates to the
determination of the useful life and amortization of renewable intangible
assets. Specifically, the Board decided:
- The provisions of the proposed FSP would be applied (a)
prospectively for all preexisting renewable intangible assets that are
renewed subsequent to the effective date of the proposed FSP and (b)
prospectively for all renewable intangible assets that are acquired
subsequent to the effective date.
- The provisions of the proposed FSP would be effective for interim
and annual periods beginning after June 15, 2006.
- The comment period for the proposed FSP would be 90 days.
The Board directed the staff to proceed with a draft of the proposed
FSP for vote by written ballot.
Issues
involved in accounting for certain derivative contracts (formerly
measuring fair value of certain derivative contracts under Statement
133). The Board clarified certain of its previous decisions
relating to the issuance of a proposed FSP on accounting for unrealized
gains (losses) relating to derivative instruments measured at fair value
under FASB Statement No.133, Accounting for Derivative Instruments and
Hedging Activities. Specifically:
- The Board decided not to require disclosure of the fair value of the
derivative instrument at initial recognition. Therefore, the proposed
FSP would require disclosures about unrealized gains (losses) at initial
recognition of the derivative instrument, segregating unrealized gains
(losses) recognized in income and those recognized as a deferred credit
(debit). The proposed FSP also would require a reconciliation of the
beginning and ending deferred balance(s) during the period, indicating
where in the statement of financial position the deferred amounts are
reported.
- The Board affirmed that under the final Statement on fair value
measurements, the determination of where within the fair value hierarchy
an estimate of fair value falls would depend on where within the fair
value hierarchy the inputs that have a significant effect on the
estimate fall. The Board clarified that the requirement to consider the
significance of the inputs on the estimate is not intended to prescribe
a formulaic sensitivity analysis of the data. The Board decided not to
provide incremental guidance for making that determination in the FSP.
Proposed FSP FAS 133-a, “Accounting for Unrealized Gains (Losses)
Relating to Derivative Instruments Measured at Fair Value under Statement
133,” is expected to be issued on October 21, 2005, and will be available
on the FASB website. Comments will be requested by November 21, 2005. The
proposed FSP will refer to certain aspects of the guidance in a final
Statement on fair value measurements. A working draft of that Statement
also is expected to be available on the FASB website on October 21,
2005.
EITF ANNOUNCEMENT
At its October 10, 2005 meeting, the EITF Agenda Committee added a new
issue to the EITF Agenda on accounting for payments made by a service
provider to equipment manufacturers and/or retailers/resellers of
specialized equipment that is necessary for a customer to receive a
service from the service provider.
FUTURE OPEN MEETINGS
The following is a list of open meetings tentatively scheduled through
November. 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, November 2, 2005—No Board Meeting
Scheduled
Wednesday, November 2, 2005—FASB Education
Session
Monday, November 7, 2005—Liaison Meeting with American Gas
Association
Wednesday, November 9, 2005—No Board Meeting
Scheduled
Wednesday, November 9, 2005—FASB Education
Session
Wednesday, November 9, 2005—Business Combinations Roundtable
Meetings, London
Thursday, November 10, 2005—FASB Board
Meeting
Wednesday, November 16, 2005—FASB Board
Meeting
Wednesday, November 16, 2005—FASB Education Session
Tuesday,
November 22, 2005—FASB Board Meeting
Tuesday, November 22, 2005—FASB
Education Session
Tuesday, November 29, 2005—FASB Board
Meeting
Tuesday, November 29, 2005—FASB Education Session
Wednesday,
November 30, 2005—Small Business Advisory Committee
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