Action Alert No. 08-20
May 15, 2008


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

Wednesday, May 21, 2008, 9:00 a.m.

  1. Statement 140 implementation: transfers of financial assets (estimated 30-minute discussion). The Board will discuss whether to amend the guidance related to the measurement of interests that continue to be held by the transferor.

  2. 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.


Wednesday, May 21, 2008, 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.


Thursday, May 22, 2008, 1:00 p.m.

The Board will meet with representatives of the Principles & Practices Board of the Healthcare Financial Management Association 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, Interpretation, FSP, or Statement 133 Implementation Issue.

May 7, 2008 Board Meeting

Conceptual framework: elements and recognition. The Board discussed the following two issues related to the working definition of a liability that is being developed in the elements and recognition phase (Phase B) of the joint conceptual framework:

  1. Distinguishing a liability from a business risk. The Board agreed that the existence of a present economic obligation distinguishes a liability from general business risks. The Board generally agreed that, in concept, a present economic obligation exists when:

    1. An entity is committed to a particular action or actions that are capable of resulting in cash outflows.
    2. There is a mechanism to enforce that economic obligation against the entity.

    The Board also agreed that laws and regulations are examples of mechanisms and are not, by themselves, present obligations.

  2. Identifying a stand-ready obligation. The Board agreed that it is helpful to analyze contracts and other binding agreements to identify whether they contain unconditional and conditional obligations. An unconditional obligation requires performance to occur now or over a period of time, whereas a conditional obligation requires performance to occur if an uncertain future event occurs. In situations where a conditional obligation is identified, it can be helpful to assess whether there is an accompanying unconditional obligation that presently requires the entity to perform. The Board also agreed that noncontractual scenarios can be analyzed to identify unconditional and conditional obligations.

The IASB separately discussed the above issues as part of joint work on its project on liabilities and equity (revisions of IAS 37) and the conceptual framework project, and reached similar conclusions.

Determining whether instruments granted in share-based payment transactions are participating securities. The Board discussed two significant issues in the draft of final FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities, and decided the following:

  1. When calculating basic earnings per share pursuant to the two-class method, all awards that contain rights to nonforfeitable dividends should be considered participating securities. Dividends or dividend equivalents actually paid on share-based payment awards not expected to vest should be excluded from the earnings allocation to avoid counting the dividends as both compensation cost and distributed earnings. Undistributed earnings should be allocated to all outstanding share-based payment awards, including those that are not expected to vest.

  2. The effective date should be the first reporting period beginning after the date the final FSP is posted to the FASB website.

The Board instructed the staff to continue drafting the final FSP for vote by written ballot.


The following final documents were issued and are available on the FASB website:

FASB Statement No. 162, The Hierarchy of Generally Accepted Accounting Principles (May 9, 2008)

FSP APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) (May 9, 2008)


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, May 28, 2008—FASB Education Session
Wednesday, June 4, 2008—FASB Board Meeting
Wednesday, June 4, 2008—FASB Education Session
Tuesday, June 10, 2008—Investors Technical Advisory Committee Meeting
Wednesday, June 11, 2008—FASB Board Meeting
Wednesday, June 11, 2008—FASB Education Session
Thursday, June 12, 2008—Emerging Issues Task Force Meeting
Monday, June 16, 2008—FAF/FASB Forum on High-Quality Global Accounting Standards: Issues and Implications for U.S. Financial Reporting, New York City
Wednesday, June 18, 2008—FASB Board Meeting
Wednesday, June 18, 2008—FASB Education Session
Thursday, June 19, 2008—Liaison Meeting with Financial Executives International, Stamford, CT
Tuesday, June 24, 2008—Financial Accounting Standards Advisory Council Meeting
Wednesday, June 25, 2008—FASB Board Meeting
Wednesday, June 25, 2008—FASB Education Session
Friday, June 27, 2008—Small Business Advisory Committee Meeting