Action Alert No. 05-15
April 14, 2005


(This joint meeting is available by audio webcast and telephone. An audio playback file will be available to listeners for free via the FASB’s website after 3:00 p.m. EDT.)

The Council Room
One Great George Street
Westminster, London, England

Thursday, April 21, 2005, 4:00 a.m. EDT (9:00 a.m. BST)

The IASB and the FASB will meet in London to discuss the following projects:

  1. Financial instruments: convergence. The Boards plan to discuss possible future projects on accounting for financial instruments. (Scheduled for 4:00 a.m. EDT – 5:45 a.m. EDT)

  2. Performance reporting. The Boards will discuss the overall plans for this project. In addition, the Boards will discuss whether to (a) specify the financial statements that should be included in a full set of financial statements and (b) require entities to disclose comparative amounts for all items reported in financial statements. (Scheduled for 6:00 a.m. EDT – 7:45 a.m. EDT)

  3. Short-term convergence: income taxes. The Boards will discuss whether and, if so, how to eliminate certain differences between their existing standards of accounting for income taxes relating to intraperiod tax allocation, specifically the reporting of the effects in tax rates (or law), tax status, and valuation allowances. (Scheduled for 8:45 a.m. EDT – 10:30 a.m. EDT)

  4. Conceptual framework. The Boards will discuss issues concerning the objectives of financial reporting. (Scheduled for 10:45 a.m. EDT – 12:30 p.m. EDT)


No education sessions are scheduled for the week of April 18, 2005.


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.

April 6, 2005 Board Meeting

Financial instruments: liabilities and equity. The Board discussed two issues relating to the classification of indirect ownership instruments and decided the following:

  1. An indirect ownership instrument must be indexed to a direct ownership instrument and settled with that same instrument to be classified as equity. Otherwise, it is classified as a liability or asset.

  2. From the perspective of the subsidiary and other entities in a consolidated group, shares of a parent entity, or other subsidiaries of that parent, would not be considered shares of the standalone subsidiary.

The Board’s decisions should result in liability classification for (a) instruments indexed to one class of shares and settled with a different class of shares and (b) instruments indexed to a subsidiary’s shares and settled with the parent entity’s shares.

Useful life and amortization of intangible assets. The Board reconsidered certain aspects of FASB Statement No. 142, Goodwill and Other Intangible Assets, as they relate to the determination of the useful life and amortization of intangible assets. The Board decided that:

  1. An amortization methodology that reflects the “pattern of economic benefit” to the reporting entity should not be developed.

  2. A renewable intangible asset comprises a single asset.

  3. The scope of this project should be limited to intangible assets.

The Board has yet to clarify whether the scope of this project includes all intangible assets or just renewable intangibles. The Board asked the staff to develop a model for the single-asset approach that would include a reconsideration of the residual value guidance in paragraph 13 of Statement 142. The Board also requested that the staff specifically address measurement and impairment issues associated with this proposed model.

Agenda decision: risk transfer in insurance and reinsurance contracts. The Board decided to add a project to its agenda to consider risk transfer in insurance and reinsurance contracts. The project will include developing a definition of insurance contracts and exploring simplified approaches to bifurcating insurance contracts.


The following is a list of open meetings tentatively scheduled through May. All meetings are held in Norwalk, Connecticut, unless otherwise noted. 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, April 27, 2005—FASB Board Meeting
Wednesday, April 27, 2005—FASB Education Session
Wednesday, May 4, 2005—FASB Board Meeting
Wednesday, May 4, 2005—FASB Education Session
Monday, May 9, 2005—American Accounting Association Liaison Meeting
Wednesday, May 11, 2005—FASB Board Meeting
Wednesday, May 11, 2005—FASB Education Session
Wednesday, May 18, 2005—FASB Board Meeting
Wednesday, May 18, 2005—FASB Education Session
Friday, May 20, 2005—American Petroleum Institute Risk Control and Accounting Committee Liaison Meeting
Tuesday, May 24, 2005—Equipment Leasing Association of America Liaison Meeting
Wednesday, May 25, 2005—FASB Board Meeting
Wednesday, May 25, 2005—FASB Education Session