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Action Alert No. 07-29
July 19, 2007
NOTICE OF MEETINGS
OPEN BOARD MEETING
(Board
meetings are available by audio webcast and telephone.)
Wednesday, July 25, 2007, 9:00 a.m.
- Convertible debt instruments that may be settled in cash upon
conversion (including partial cash settlement) (estimated
90-minute discussion). The Board will discuss whether to add a
project to its agenda to provide guidance on accounting for convertible
debt instruments that may be settled in cash upon conversion (including
partial cash settlement) and, if a project is added, whether to issue a
proposed FSP for public comment.
- Earnings
per share (estimated 45-minute discussion). The Board
will discuss issues that have arisen in the drafting of the revised
Exposure Draft on the proposed amendments to FASB Statement No. 128,
Earnings per Share, as part of its international convergence
efforts.
- Insurance
risk transfer (estimated 60-minute discussion). The Board
will discuss the application of the insurance risk transfer conditions
of FASB Statement No. 113, Accounting and Reporting for Reinsurance
of Short-Duration and Long-Duration Contracts, to insurance
contracts between corporate policyholders and insurers. In addition, if
a decision is reached, the Board also will discuss transition, effective
date, and exposure period for an Exposure Draft that will incorporate
into FASB Statement No. 5, Accounting for Contingencies, and
Statement 113, editorial changes, enhanced disclosure requirements, and
the insurance risk transfer guidance.
- Derivative
disclosures (estimated 45-minute discussion). The Board
will begin redeliberations of the FASB Exposure Draft, Disclosures
about Derivative Instruments and Hedging Activities. The Board will
discuss whether the scope of the project should be limited to derivative
instruments and related hedged items as proposed in the Exposure Draft.
- 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, July 25, 2007, following the Board meeting
The Board will hold an educational, non-decision-making session to
discuss topics that are anticipated to be discussed at a future Board
meeting. Those topics will be posted to the FASB calendar four
days prior to the education session.
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, FSP, or
Statement 133 Implemenation Issue.
July 11, 2007 Board Meeting
Conceptual
framework. The Board discussed matters related to three phases of
the conceptual framework project—elements and recognition, measurement,
and reporting entity.
Elements and Recognition
The Board discussed whether the staff should temporarily set aside
further consideration of the remaining issues about the working
definitions of an asset and a liability and focus its limited resources on
considering other related cross-cutting issues in this phase. Those issues
deal with unit of account, recognition, and derecognition. The Board
suggested that, in order to better understand the remaining asset and
liability definition issues and how they relate to other cross-cutting
issues, the staff should:
- Apply the working definition of an asset to various types of assets
- Document the issues that arise from the application of that
definition
- Determine whether (and how) resolution of those issues could benefit
from working on unit of account, recognition, derecognition, and
measurement.
Measurement
The Board discussed the following:
- The Board began deliberations for Milestone II of the measurement
phase with a discussion of measurement concepts, principles, and terms.
The discussion was intended to help the Board and staff understand the
nature of measurement and differences between measurement and other
processes such as estimation, calculation, allocation, and forecasting.
- The Board also discussed the use of three criteria derived from the
concepts and principles of measurement (real attribute, present
attribute, and observable attribute) to evaluate measurement basis
candidates. Those criteria and evaluations will be considered in
conjunction with other criteria and evaluations yet to be discussed in a
holistic summary and evaluation of the measurement basis candidates at
the end of Milestone II.
Reporting Entity
The Board decided that the forthcoming Preliminary Views on the
reporting entity concept should be exposed for public comment for a period
of 120 days.
Useful
life and amortization of intangible assets. The Board began its
deliberations on how to resolve the inconsistency between the useful life
estimated for amortization purposes pursuant to FASB Statement No. 142,
Goodwill and Other Intangible Assets, and the periods of cash flows
used in determining the fair value of an intangible asset. The Board made
the following decisions:
- The Board decided to revise paragraph 11 of Statement 142 to remove
the concept of "material modification" and better match the useful life
determination for amortization purposes with the factors considered in
the intangible asset's fair value measurement by utilizing as an input
in the useful life determination the periods of undiscounted cash flows
used in the fair value measurement, adjusted for certain entity-specific
factors. The Board decided to replace the factor in subparagraph 11(d)
with a consideration of an entity's historical experience, if any, in
renewing or extending similar arrangements. An entity that does not have
historical experience with similar arrangements would consider a market
participant's assumptions about renewal or extension for purposes of
applying subparagraph 11(d).
- The Board decided to provide guidance on the treatment of renewal
costs and instructed the staff to develop alternatives for presentation
at a future Board meeting.
- The Board decided to amend paragraph B54 to make the guidance in
that paragraph consistent with the requirement in paragraph 12 for an
entity to select an amortization pattern that best reflects the pattern
in which the economic benefits of the intangible asset are consumed or
used, and only if that pattern cannot be reliably determined should a
straight-line amortization method then be used. The Board decided to
amend paragraph 12 to state that to the extent an income-based valuation
technique is used to determine the fair value of the intangible asset,
an entity should generally conclude that the pattern of cash flows from
the valuation is reliable for amortization purposes.
- The Board decided to provide application guidance to address periods
of negative/zero cash flows and asked the staff to develop alternatives
for presentation at a future Board meeting.
FUTURE OPEN MEETINGS
The following is a list of open meetings tentatively scheduled through
September. 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, August 1, 2007—FASB Board Meeting
Wednesday, August 1,
2007—FASB Education Session
Wednesday, August 8, 2007—FASB Board
Meeting
Wednesday, August 8, 2007—FASB Education Session
Wednesday,
August 15, 2007—FASB Board Meeting
Wednesday, August 15, 2007—FASB
Education Session
Wednesday, August 22, 2007—FASB Board
Meeting
Wednesday, August 22, 2007—FASB Education Session
Wednesday,
August 29, 2007—FASB Board Meeting
Wednesday, August 29, 2007—FASB
Education Session
Tuesday, September 4, 2007—Financial Guarantee
Insurance Roundtable
Wednesday, September 5, 2007—FASB Board
Meeting
Wednesday, September 5, 2007—FASB Education
Session
Wednesday, September 12, 2007—FASB Board Meeting
Wednesday,
September 12, 2007—FASB Education Session
Wednesday, September 19,
2007—FASB Board Meeting
Wednesday, September 19, 2007—FASB Education
Session
Thursday, September 20, 2007—Financial Accounting Standards
Advisory Council Meeting
Wednesday, September 26, 2007—FASB Board
Meeting
Wednesday, September 26, 2007—FASB Education
Session
Thursday, September 27, 2007—Liaison Meeting with the Institute
of Management Accountants
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