Action Alert No. 08-19
May 8, 2008


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

Wednesday, May 14, 2008, 9:00 a.m.

  1. Revenue recognition (estimated 90-minute discussion). The Board will discuss a draft chapter of the discussion paper that examines two alternative measurement approaches (current exit price and customer consideration) for the proposed revenue recognition model. The Board will be asked to express a preliminary view in favor of one of these measurement approaches or a hybrid of the two approaches.

  2. Reporting discontinued operations (estimated 60-minute discussion). The Board will discuss the proposed converged definition (with the IASB) of a discontinued operation and related disclosures for all components of an entity that have been (or will be) disposed of. The Board also will discuss any remaining issues, including effective date and transition, and whether to proceed to a draft of a proposed FSP.

  3. 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 14, 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.


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.

April 30, 2008 Board Meeting

Disclosures about credit derivatives. The Board decided to amend FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, to require disclosures about credit derivatives that would be similar to the disclosures currently required to be made by guarantors under FASB Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. The Board also decided to amend Interpretation 45 to require an additional disclosure about the current status of the guarantee (for example, the current credit risk of the underlying guaranteed obligation). Further, the Board decided that the proposed FSP be effective for all fiscal years and interim periods ending after November 15, 2008, and that the comment period for the proposed FSP be 30 days. Finally, the Board directed the staff to proceed to a draft of a proposed FSP for vote by written ballot.

Statement 133 hedging. The Board discussed three technical issues that arose while drafting the Exposure Draft of the proposed Statement to amend the hedging guidance in Statement 133 and made the following decisions:

  1. When calculating the fair value of the perfect derivative in a cash flow hedge, an entity should use the credit risk adjustment for the nonperformance risk of the party in a liability position that is used for calculating the fair value of the actual derivative hedging instrument.

  2. If an entity designates a group of transactions expected to occur within a specific time frame as the hedged forecasted transaction in a cash flow hedge (such as the variability in cash flows on the first $1 million of sales proceeds to be received in January), the perfect derivative could be a derivative that settles on a single date if the hedge ineffectiveness that is expected to result from the timing differences between settlement of the actual derivative and the forecasted transaction is minimal.

  3. If an entity designates a purchased option as the hedging instrument in a cash flow hedge to provide one-sided offset against the hedged risk, the perfect derivative used for measuring ineffectiveness could be an option that includes total changes in the option's cash flows. The initial time value component of the option's fair value should be reclassified to earnings on a rational basis.

The Board decided that the proposed Statement should be effective for fiscal years beginning after June 15, 2009, and interim periods within those fiscal years and that earlier application not be permitted. Additionally, the Board decided that the Exposure Draft should have a comment period ending August 15, 2008.

Mergers and acquisitions by a not-for-profit organization. The Board approved an updated plan for its redeliberations and completion of the project by the end of 2008. As part of that plan, the Board agreed to:

  1. Continue with the existing plan of limiting the Board's substantive redeliberations to significant issues for which new information has arisen. Those issues include (a) differing accounting methods for mergers and acquisitions, (b) donor-related intangible assets (for example, donor lists and relationships), (c) initial recognition of goodwill or a contribution received, and (d) subsequent impairment testing of goodwill.

  2. Adhere to the scope and not address requests for more guidance or concerns about other GAAP that are outside the scope of the project, such as a request that the Board address perceived deficiencies in consolidation guidance applicable to not-for-profit organizations.

  3. Continue to adhere to the difference-based approach and affirmed that the Statement 141(R) post-Exposure Draft changes are to apply to acquisitions by not-for-profit organizations.

  4. Redirect the staff to conduct additional constituent outreach to solicit additional information about the workability of the "ceding control" notion for purposes of distinguishing a merger from an acquisition or other transactions outside the scope of the merger and acquisition proposal. The Board also agreed to utilize more efficient means for gathering that information rather than issuing a revised Exposure Draft.

Agenda decision announcement—definition of a public company. The FASB chairman announced that phase 2 of the project to consider the definition of a public company was removed from the Board's agenda because of cost-benefit considerations. The chairman indicated that the project was originally added to the agenda based on a recommendation from the AICPA Healthcare expert panel. The first phase of the project resulted in the issuance of FSP FAS 126-1, Applicability of Certain Disclosure and Interim Reporting Requirements for Obligors for Conduit Debt Securities. The goal of phase 2 of the project was to create a single definition of a public company to be used throughout GAAP.


Proposed FSP ARB 43-a, Amendment of the Inventory Provisions of Chapter 4 of ARB No. 43, was issued on May 1, 2008, and is available on the FASB website. Comments are requested by June 16, 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 21, 2008—FASB Board Meeting
Wednesday, May 21, 2008—FASB Education Session
Thursday, May 22, 2008—Liaison Meeting with Healthcare Financial Management Association
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