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Action Alert No. 04-28
July 22, 2004
NOTICE OF MEETINGS
OPEN BOARD MEETING
(Board
meetings are available by audio webcast and telephone.)
The Board meeting will be held on Tuesday instead of
Wednesday.
Tuesday, July 27, 2004, 9:00 a.m.
- Business
combinations: purchase method procedures. The Board will discuss
how its decisions regarding attributing income and losses to the
controlling and noncontrolling interests of a partially owned subsidiary
interact with FASB Interpretation No. 46(R), Consolidation of
Variable Interest Entities. The Board also will discuss other
matters related to drafting the Exposure Draft on business combinations.
(Estimated 60-minute discussion.)
- Combinations of
not-for-profit organizations. The Board will discuss the scope
of this project. (Estimated 45-minute discussion.)
- Short-term
convergence: income taxes. The Board will discuss whether to
reconsider the existing exception to comprehensive recognition of
deferred taxes for APB Opinion No. 23, Accounting for Income
Taxes—Special Areas, and U.S. steamship enterprise temporary
differences. (Estimated 60-minute discussion.)
- Financial
instruments: derivatives implementation. The Board will discuss
the staff’s further recommendations regarding the proposed guidance on
Statement 133 Implementation Issue No. G25, “Hedging the Variable
Interest Payments on a Group of Prime-Rate-Based Interest-Bearing
Loans.” (Estimated 10-minute discussion.)
- FASB Staff Positions (FSPs). The Board will consider whether
to direct the staff to issue the following proposed FSPs related to the
application of:
- FASB Statement No. 109, Accounting for Income Taxes, to
uncertain tax positions. This proposed FSP would discuss recognition,
classification, and other items related to uncertain tax positions.
(Estimated 60-minute discussion.)
- EITF Issue No. 85-24, “Distribution Fees by Distributors of Mutual
Funds That Do Not Have a Front-End Sales Charge,” when future
distribution fees are sold to unrelated third parties. (Estimated
30-minute discussion.)
- Beneficial
interests. The Board will discuss whether:
- A recognition event has occurred requiring initial fair value
measurement if the transferor “retains” an interest in transferred
assets subsequent to an asset transfer accounted for as a sale under
Statement 140.
- Credit enhancement/subordination should be separately recognized
as a liability in an asset transfer accounted for as a sale under
Statement 140.
The Board also will be asked to affirm the scope of the project and
decide on the remaining issues to be discussed. (Estimated
60-minute discussion.)
- Qualifying
special-purpose entities and isolation of transferred assets.
The Board will discuss information provided by participants at the May
25 and June 17, 2004 public roundtable discussions on legal isolation,
setoff rights, and loan participations and consider the impact of this
information on sale accounting under FASB Statement No. 140,
Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities. In addition, the Board will consider
alternatives to clarify the definition of isolation in Statement 140,
including alternatives that would permit transfers of financial assets
that contain setoff rights to continue to be accounted for and reported
as sales. (Estimated 60-minute discussion.)
- 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 28, 2004, 10:30 a.m.
The Board will hold an educational, non-decision-making session to
discuss topics that are anticipated to be discussed at the August 4 Board
meeting. Those topics will be posted to the FASB calendar four
days prior to the education session.
OPEN MEETING WITH REPRESENTATIVES OF THE EDISON ELECTRIC
INSTITUTE
Monday, July 26, 2004, 3:00 p.m.
The Board will meet with representatives of the Edison Electric
Institute to discuss matters of mutual interest.
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 or
Interpretation.
July 16, 2004 Board Meeting
FASB Staff Positions (FSPs). The Board directed the staff to
release proposed FSP FAS 142-c, “Application of Statement No. 142,
Goodwill and Other Intangible Assets, to Exchange Memberships,” for
a 30-day comment period, after certain revisions are made. (Proposed FSP FAS 142-c was subsequently posted to the
website on Wednesday, July 21, and comments are requested by August 20,
2004.)
Also, the Board did not object to the staff’s release of the proposed
FSP FAS 142-b, “Application of FASB Statement No. 142, Goodwill and
Other Intangible Assets, to Oil- and Gas-Producing Entities,” for a
30-day comment period. Proposed FSP FAS 142-b was posted to the website on Monday,
July 19, and comments are requested by August 17, 2004.
FASB ratification
of an EITF consensus. The Board discussed and ratified the
consensuses reached on EITF Issue No. 02-14, “Whether an Investor Should
Apply the Equity Method of Accounting to Investments Other Than Common
Stock,” at the June 30–July 1, 2004 EITF meeting.
The Board also discussed the tentative conclusion reached on EITF Issue
No. 04-8, “The Effect of Contingently Convertible Debt on Diluted Earnings
per Share,” and did not object to the EITF continuing to deliberate the
Issue. Additionally, the Board did not object to a draft abstract that reflects the Task Force’s tentative
conclusion for Issue 04-8 being posted to the FASB website for a
45-day comment period. The prologue to the abstract will include a request
for comment on whether the tentative conclusion reached should be expanded
to include other instruments that are convertible or exercisable into
common stock after a contingency has been resolved. That Issue, and any
related comment letters received, will be considered by the Task Force at
the September 29–30, 2004 EITF meeting.
Financial
instruments: liabilities and equity. The Board discussed a list of
possible principles for distinguishing liabilities and assets from equity
for financial instruments. The Board agreed with the completeness of the
list and decided to begin its consideration of the principles by:
- Further defining two of those principles:
- A liquidity condition—to be a liability an item must embody a
present duty or responsibility to transfer or use assets.
- An ownership relationship condition—to be equity an item must earn
returns similar to those of an owner, and its holder must participate
in the risks and rewards of ownership.
- Addressing the interaction of a liquidity condition and an ownership
relationship for a financial instrument embodying both characteristics.
The Board will consider the remaining possible principles at future
meetings.
FUTURE OPEN MEETINGS
The following is a list of open meetings tentatively scheduled through
August. 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 4, 2004—FASB Board Meeting
Wednesday, August 4,
2004—FASB Education Session
Wednesday, August 11, 2004—FASB Board
Meeting
Wednesday, August 11, 2004—FASB Education Session
Wednesday,
August 18, 2004—FASB Board Meeting
Wednesday, August 18, 2004—FASB
Education Session
Wednesday, August 25, 2004—FASB Board
Meeting
Wednesday, August 25, 2004—FASB Education Session
Friday,
August 27, 2004—Liaison Meeting with the Financial Managers
Society
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