Action Alert No. 06-51
December 21, 2006


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

No Board meetings are planned for the week of December 25, 2006. The next scheduled Board meeting is Wednesday, January 3, 2007, and will be announced in next week's issue of Action Alert.


No education sessions are planned for the week of December 25, 2006. The next scheduled education session is Wednesday, January 3, 2007, and will be announced in next week's issue of Action Alert.


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, or FSP.

December 13, 2006 Board Meeting

Financial statement presentation. The Board continued its discussion of the application of the working principles to the statements of financial position, comprehensive income, and cash flows.

Other Comprehensive Income

The Board decided that other comprehensive income items should be presented in a subcategory within the functional category to which the events or transactions relate (for example, the operating, investing, or financing category). A subcategory within the functional category would distinguish items of income and expense that are components of other comprehensive income from those that are not. Accordingly, all current-period changes in assets and liabilities would be recognized in one of the functional categories on the statement of comprehensive income. The Board decided that another comprehensive income item should be reclassified, if necessary, within the functional category in which the other comprehensive income item was initially recognized.

The Board indicated it would be willing to consider a presentation format in which short- and long-term subcategories would be presented on the statements of comprehensive income and cash flows if a reason other than a strict application of the cohesiveness principle would support that presentation format.

The Statement of Cash Flows

The Board discussed the objectives of the statement of cash flows that are included in paragraph 5 of FASB Statement No. 95, Statement of Cash Flows, some of which are embodied in IAS 7, Cash Flow Statements. The Board agreed that those objectives should be carried forward (as modified below) as working principles for the financial statements as a whole, not just the statement of cash flows.

    Information should be presented in the financial statements in a manner that will help investors, creditors, and others to assess:

  1. An entity's ability to generate future cash inflows

  2. An entity's ability to meet its obligations, its ability to pay dividends, and its needs for external financing

  3. The difference between cash transactions and accrual accounting

  4. The effects of noncash activities during the period on an entity's financial position.

Acknowledging that the statement of cash flows may not be the most effective way to achieve the above working principles, the Board directed the staff to explore the possibility of presenting information similar to that currently presented using the direct method and the related reconciliation of operating income to cash flows from operating activities as part of a broader disclosure that will be discussed at a future meeting.

Application of the Working Format to Financial Institutions

The Board discussed how the working format might be applied by financial institutions and what modifications, if any, might be necessary to address their presentation needs. The Board agreed that the overall working format—the categorization scheme and criteria for classifying items in the financing, operating, and investing categories—should apply to financial institutions as well as nonfinancial institutions. The Board confirmed that cash and cash equivalents must be classified in a single category but would not be required to be classified in the financing asset category.

The Board agreed that its tentative decisions to (1) present information in the financial statements on a gross basis except when the additional information provided by a gross presentation (rather than a net presentation) provides no incremental value and (2) include general guidance and not a bright—line rule for when line items should be further disaggregated on the face of the financial statements should apply equally to financial institutions.

The Board agreed that financial institutions should not be required to present short- and long-term subcategories for each category on the statement of financial position and asked the staff to develop a principle for presenting liquidity information that would apply to both financial institutions and nonfinancial institutions. As a result of that discussion, the Board acknowledged that it may change its prior decision to require nonfinancial institutions to include short- and long-term subcategories for each category on the statement of financial position.

The Board agreed with the staff's plan to consider financial institutions in future discussions related to presenting information about remeasurements, displaying information in the statement of comprehensive income by function and then by nature, and issues related to presentation of other recognized income and expense items.

Statement 133 Implementation Issue—cash flow hedges of variable-rate assets and liabilities that are not based on a benchmark interest rate. The Board approved proposed Statement 133 Implementation Issue No. G26, "Cash Flow Hedges: Hedging Interest Cash Flows on Variable-Rate Assets and Liabilities That Are Not Based on a Benchmark Interest Rate," as final guidance. The Board also decided to delete the last sentence of the third paragraph under the Commercial Paper heading in the Background section of Implementation Issue G19, "Those short-term instruments are not 'indexed' to any market rate," because it was misleading and irrelevant to Implementation Issue G19.

Fair value measurements in business combinations and impairment tests. After considering the comment letters received on proposed FSP FAS 141-b, 142-e, and 144-b, "Fair Value Measurements in Business Combinations and Impairment Tests," the Board decided not to issue a final FSP and to remove the project from its agenda.


The following document was issued on December 21, 2006 and is available on the FASB website:

Final FSP EITF 00-19-2, "Accounting for Registration Payment Arrangements."


The following is a list of open meetings tentatively scheduled through February. 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, January 3, 2007—FASB Board Meeting
Wednesday, January 3, 2007—FASB Education Session
Monday, January 8, 2007—AICPA Statement of Position 05-1 Implementation Issues Roundtable
Tuesday, January 9, 2007—Liaison Meeting with the National Association of College and University Business Officers
Wednesday, January 10, 2007—FASB Board Meeting
Wednesday, January 10, 2007—FASB Education Session
Thursday, January 11, 2007—Investors Technical Advisory Council Meeting
Wednesday, January 17, 2007—FASB Board Meeting
Wednesday, January 17, 2007—FASB Education Session
Wednesday, January 24, 2007—FASB Board Meeting
Wednesday, January 24, 2007—FASB Education Session
Wednesday, January 31, 2007—FASB Board Meeting
Wednesday, January 31, 2007—FASB Education Session
Thursday, February 1, 2007—Conceptual Framework Measurement Roundtable
Monday, February 5, 2007—Liaison Meeting with National Investors Relations Institute
Wednesday, February 7, 2007—FASB Board Meeting
Wednesday, February 7, 2007—FASB Education Session
Tuesday, February 13, 2007—FASB Board Meeting
Tuesday, February 13, 2007—FASB Education Session
Thursday, February 15, 2007—Joint Working Group Meeting on Lease Accounting, London
Wednesday, February 21, 2007—FASB Board Meeting
Wednesday, February 21, 2007—FASB Education Session
Wednesday, February 28, 2007—FASB Board Meeting
Wednesday, February 28, 2007—FASB Education Session