Revised 06/12/07—See below

Action Alert No. 07-23
June 7, 2007


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

Wednesday, June 13, 2007, 9:00 a.m.

  1. Business combinations (estimated 60-minute discussion). As part of its redeliberations of the June 2005 Exposure Draft, Business Combinations, the Board will reconsider certain of the decisions reached at its February 28, 2007 meeting on the accounting for assets and liabilities subject to contingencies in a business combination.

  2. [Revised 06/12/07] Open discussion: Statement 140 implementation—repurchase financing agreements (estimated 15-minute discussion). The Board will discuss the effective date, transition, disclosures relating to transition guidance, and the length of the comment period for the proposed FSP on accounting for transfers of financial assets and repurchase financing transactions. The Board also will decide whether the staff should proceed to a draft of the proposed FSP for vote by written ballot.


Wednesday, June 13, 2007, 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.

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

Tuesday, June 12, 2007, 3:30 p.m. - 5:00 p.m.

The Investors Technical Advisory Committee will meet with the Board and discuss the following topics:

  1. Accounting for hedging activities

  2. International convergence issues.

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

Thursday, June 14, 2007, 8:30 a.m. - 3:30 p.m.

The Task Force plans to discuss all of the following issues in the order shown:

  1. Issue No. 07-1, "Accounting for Collaborative Arrangements Related to the Development and Commercialization of Intellectual Property"

  2. Issue No. 07-3, "Accounting for Nonrefundable Advance Payments for Goods or Services to Be Used in Future Research and Development Activities"

  3. Issue No. 06-11, "Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards"

  4. Issue No. 07-2, "Accounting for Convertible Debt Instruments That Are Not Subject to the Guidance in Paragraph 12 of APB Opinion No. 14"

  5. Issue No. 07-4, "Application of the Two-Class Method under FASB Statement No. 128 to Master Limited Partnerships."


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 30, 2007 Board Meeting

Statement 140 implementation: transfers of financial assets and repurchase financing agreements. The Board discussed removing the qualifying special-purpose entity (SPE) concept from FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, and decided to further research that approach. Additionally, the Board instructed the staff to further develop a linked-presentation (LP) model as a solution to the issues in the short-term project to amend Statement 140. The Board directed the staff to focus this research on an LP model that (1) amends paragraph 9(b) of Statement 140 to remove the concept of a qualifying SPE, and (2) is applicable only to transferors of financial assets. The Board also requested that the staff consider the effects of amending paragraph 9(b) on the remaining criteria in paragraph 9, including previous tentative decisions reached by the Board in the Statement 140 amendment project (for example, the tentative decision to use a hypothetical legal opinion when assessing paragraph 9(a)).

The Board also decided on the effective date and transition provisions for the proposed FASB Staff Position that will provide guidance relating to transactions involving a transfer of a financial asset and a repurchase financing of that asset that involve the same counterparty. Guidance in the FSP will be applied prospectively to new transactions and to outstanding repurchase agreements as of the beginning of the first fiscal year following the issuance date of the FSP. Early adoption will not be permitted to ensure consistency in application.

Agenda decision: going concern and liquidation basis of accounting. The Board added a project to its agenda to address an entity’s assessment of its ability to continue as a going concern and the adoption of a liquidation basis of accounting. The Board agreed to a proposed standard that seeks to converge with International Accounting Standard (IAS) 1, Presentation of Financial Statements, and IAS 10, Events after the Balance Sheet Date, supplemented by disclosure requirements in AICPA Statement on Auditing Standards No. 1, Codification of Auditing Standards and Procedures, AU Section 341, "The Auditor’s Consideration of an Entity’s Ability to Continue as a Going Concern.”

The Board will continue to deliberate the timing of the project and the type of evidence considered in determining when disclosures about the going concern assessment should be required. The Board also will continue deliberating when it is appropriate for an entity to adopt a liquidation basis of accounting.

Subsequent events. The Board decided to continue with its previous plan to develop an accounting standard that reflects the principles underpinning existing subsequent events guidance, primarily in the auditing requirements contained in AICPA Codification of Statements on Auditing Standards, AU Section 560, “Subsequent Events,” while considering whether certain minor differences between U.S. guidance and the corresponding international financial reporting standard, IAS 10, Events after the Balance Sheet Date, could be eliminated or minimized. The Board further decided that the project would not address inconsistencies or differences between U.S. GAAP and international financial reporting standards in the following areas:

  1. Refinancing of short-term obligations

  2. Curing breaches of borrowing covenants.

The Board decided that subsequent events should be considered for adjustment to or disclosure in the financial statements through the date that the financial statements are issued or first made available to be issued and that the date through which subsequent events have been considered should be disclosed in the notes to the financial statements.

The Board decided that the standard issued as a result of this project will include a general scope exception for any existing authoritative accounting literature that conflicts with it. In other words, the Board will not seek to amend existing standards that are considered to be inconsistent with the principles underpinning AU 560.


The following is a list of open meetings tentatively scheduled through July. 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.

Tuesday, June 19, 2007—Financial Accounting Standards Advisory Council Meeting
Wednesday, June 20, 2007—Small Business Advisory Committee Meeting
Thursday, June 21, 2007—FASB Board Meeting
Thursday, June 21, 2007—FASB Education Session
Wednesday, June 27, 2007—FASB Board Meeting
Wednesday, June 27, 2007—FASB Education Session
Thursday, July 5, 2007—FASB Education Session
Wednesday, July 11, 2007—FASB Board Meeting
Wednesday, July 11, 2007—FASB Education Session
Wednesday, July 18, 2007—FASB Board Meeting
Wednesday, July 18, 2007—FASB Education Session
Wednesday, July 25, 2007—FASB Board Meeting
Wednesday, July 25, 2007—FASB Education Session