Action Alert No. 05-37
September 15, 2005


(Board meetings are available by audio webcast and telephone.)

Wednesday, September 21, 2005, 8:00 a.m.

The Board meeting will begin at 8:00 a.m. instead of 9:00 a.m.

  1. Rental costs. The Board will discuss comments received on proposed FSP FAS 13-b, "Accounting for Rental Costs Incurred during a Construction Period." (Estimated 30-minute discussion.)

  2. Nontraditional loan products. The Board will discuss whether to add a project to its agenda to provide disclosure guidance for entities that originate, hold, guarantee, or service nontraditional loan products (for example, option adjustable rate mortgages). The Board will discuss whether the guidance should be in the form of an FSP. (Estimated 30-minute discussion.)

  3. Alternative transition option related to accounting for the tax effects of share-based payment awards. The Board will discuss whether to add a project to its agenda to provide guidance on a practical transition option related to accounting for the tax effects of share-based payment awards upon adoption of FASB Statement No. 123 (revised December 2004), Share-Based Payment. The Board will discuss whether the guidance should be in the form of an FSP. (Estimated 30-minute discussion.)

  4. Short-term convergence: earnings per share. The Board will discuss the effective date and the comment period for the upcoming Exposure Draft. (Estimated 15-minute discussion.)

  5. Conceptual framework. The Board will continue its discussion of issues relating to the qualitative characteristics of financial information. The Board also will discuss plans for addressing matters relating to the concept of the reporting entity. In addition, the Board will consider whether to address matters relating to providing prospective information as part of the objectives of financial reporting being considered in Phase A or as part of a later phase of this project. Finally, the Board will decide whether to issue an Invitation to Comment prepared by the staff relating to assets and liabilities with uncertainties. Comments would be used in the next phase of the project, which addresses the elements of financial statements and their recognition and measurement. (Estimated 2-hour discussion.)

  6. Revenue recognition. The Board will consider certain issues relating to the initial identification and measurement of performance obligations in the context of an approach that would measure performance obligations based on an allocation of the customer consideration amount. (Estimated 2-hour discussion.)

  7. 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.


No education sessions are planned for the week of September 19, 2005.


Monday, September 19, 2005, 3:00 p.m.

The Board will meet with representatives of the AICPA Private Companies Practice Section Technical Issues Committee to discuss matters of mutual interest.

(This meeting is available by audio webcast and telephone.)

Thursday, September 22, 2005, 9:00 a.m.

The Advisory Council will meet to discuss:

  1. The preliminary results of the FASAC survey

  2. An FASB agenda proposal on accounting for postretirement benefits

  3. The Board’s project on the conceptual framework

  4. The Board’s project on derivatives disclosures

  5. The Board’s project on fair value measurements.

The Advisory Council will hear reports from the chairman of the FASB on other Board activities and the deputy chief accountant of the SEC on current accounting-related developments. The Advisory Council also will hear a report from the chief auditor of the Public Company Accounting Oversight Board.

Closed to Public Observation

The FASAC Steering Committee will hold a closed session with the Board to discuss administrative and strategic matters. The closed session, which will be the last item on the agenda, is expected to begin at approximately 2:15 p.m.


Friday, September 23, 2005, 9:00 a.m.

The Board will meet with representatives of the Financial Reporting Committee of the Institute of Management Accountants to discuss matters of mutual interest.


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.

September 7, 2005 Board Meeting

Variable interest entities. The Board decided that a proposed FSP that addresses determining the variability to be considered when applying FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, should be issued for public comment. The proposed FSP will recognize that there currently is diversity in practice with respect to determining the variability to consider when applying Interpretation 46(R). The proposed FSP outlines, in principle, a systematic process for analyzing the design of the variable interest entity (VIE) or potential VIE to determine the purpose of the entity and the risks and variability the entity was designed to create and pass along to its interest holders. Examples will be included to illustrate how that process would be applied to specific transactions.

The Board also decided that the guidance in the final FSP would be effective prospectively from the date the FSP is posted to the FASB website for new initial determinations as to whether an entity is a VIE (including newly created entities). In addition, the guidance would be effective for all entities previously analyzed under Interpretation 46(R) for which a reconsideration event as to whether an entity is a VIE occurs pursuant to paragraph 7 of Interpretation 46(R) after the effective date. Early application also would be permitted for periods for which financial statements have not yet been issued. Retroactive application to the date of the initial application of Interpretation 46(R) would be permitted but not required. The amount of time that will be allowed for an enterprise to retroactively apply the guidance in the FSP, if that transition approach is elected, was not determined at the meeting, but will be included in the proposed FSP.

The Board instructed the staff to proceed to a draft of a proposed FSP for vote by written ballot.

Other-than-temporary impairment. The Board discussed whether to provide transition guidance in the final FSP. The Board raised the concern that constituents may interpret the final FSP as eliminating the ability to place securities on nonaccrual once the FSP becomes effective. Some Board members further asserted that the perceived elimination of the nonaccrual approach would not be consistent with other existing GAAP and that not accreting income may be warranted under certain circumstances. The Board directed the staff to research the issue further for discussion before deciding on the issue.


The following is a list of open meetings tentatively scheduled through October. 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, September 28, 2005—FASB Board Meeting
Wednesday, September 28, 2005—FASB Education Session
Thursday, September 29, 2005—User Advisory Council Meeting, New York City
Wednesday, October 5, 2005—FASB Board Meeting
Wednesday, October 5, 2005—FASB Education Session
Monday, October 10, 2005—Uncertain Tax Positions Roundtable Meeting
Wednesday, October 12, 2005—FASB Board Meeting
Wednesday, October 12, 2005—FASB Education Session
Friday, October 14, 2005—Liaison Meeting with the National Investor Relations Institute
Tuesday, October 18, 2005—FASB Education Session
Wednesday, October 19, 2005—FASB Board Meeting
Monday, October 24, 2005—Joint IASB/FASB Meeting
Tuesday, October 25, 2005—Joint IASB/FASB Meeting
Wednesday, October 26, 2005—FASB Insurance Forum
Thursday, October 27, 2005—Business Combinations Roundtable Meetings