SUMMARY OF BOARD DECISIONS

Summary of Board decisions 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 standard.

November 4, 2009 Board Meeting

Accounting for financial instruments. [Revised 11/5/09]

The Board’s decision at the October 14, 2009 meeting was to initially measure financial instruments with subsequent changes in fair value recognized in other comprehensive income at the transaction price. At today’s Board meeting, the Board discussed how an entity would account for the difference, if any, between transaction price and fair value at initial measurement for those financial instruments in situations when it is clear that the transaction price differs from fair value. The staff was asked to develop a principle to help identify when the transaction price would differ from fair value and, if so, how to calculate the initial value of the financial instrument at that date, similar to FASB Accounting Standards CodificationTM Section 310-10-30 on initial measurement of receivables (originally issued as APB Opinion No. 21, Interest on Receivables and Payables). For example, if an entity issues a loan with a zero interest rate in a 5 percent market rate environment, it is clear that the transaction price differs from the fair value of the loan. In that situation the entity would record the loan at an amount other than the transaction price with the loss recorded in other comprehensive income. If the entity decides that the transaction involves any other consideration, an expense may be recognized relating to the other element in the transaction.


Subsequent events implementation. The Board discussed implementation issues relating to accounting and reporting for subsequent events (FASB Accounting Standards CodificationTM Topic 855, Subsequent Events, originally issued as FASB Statement No.165, Subsequent Events).

The Board clarified that all entities would be required to disclose the date through which subsequent events have been evaluated, in both originally issued and reissued financial statements (as is presently required by paragraphs 855-10-50-1 and 855-10-50-4), unless they have a regulatory requirement to review subsequent events up through the filing or furnishing of financial statements with the SEC.

The Board clarified that entities that are not subject to such regulatory requirement with respect to filing or furnishing of financial statements with the SEC would be required to disclose the date through which subsequent events have been evaluated in originally issued financial statements as well as in a restatement of previously issued financial statements; restatements include both correction of an error and retrospective application of U.S. GAAP.

The Board decided that entities that file or furnish financial statements with the SEC should use an issued date in evaluating subsequent events. An entity that does not file or furnish financial statements with the SEC would be able to use an available-to-be issued date unless the entity has a current expectation of widely distributing its financial statements to shareholders and other financial statement users. If the entity has that expectation, it would use an issued date.

The Board directed the staff to proceed to a draft of an Exposure Draft of a proposed Accounting Standards Update for vote by written ballot, with a 30-day comment period. The Exposure Draft will propose that the Accounting Standards Update be effective prospectively upon issuance of a final document.


Agenda decisions announcement. The FASB chairman added the following short-term projects to the Board’s agenda to address implementation issues relating to:
  1. Accounting and reporting for subsequent events
  2. The impact of the consolidations guidance in FASB Statement No. 167, Amendments to FASB Interpretation 46(R), on the investment management industry.