Action Alert No. 07-37
September 13, 2007


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

Wednesday, September 19, 2007, 9:00 a.m.

  1. Subsequent events and going concern and liquidation basis of accounting (estimated 15-minute discussion). The Board will consider whether to keep these projects on its agenda or whether to include them as part of the codification project.

  2. Mergers and acquisitions by a not-for-profit organization (estimated 1-hour discussion). As part of its redeliberations of the October 2006 Exposure Draft, Not-for-Profit Organizations: Mergers and Acquisitions, the Board will discuss:

    1. Whether to further explore the possible use of a method of accounting other than the acquisition method for so-called true mergers or combinations in which an acquirer cannot be identified.

    2. Whether to permit use of the historical cost pooling-of-interests method of accounting for mergers and acquisitions by certain "small" not-for-profit organizations based on cost-benefit or other considerations.

  3. Conceptual framework: reporting entity (estimated 1-hour discussion). The Board will discuss comments, suggestions, and concerns raised during the drafting process of the forthcoming Preliminary Views on the reporting entity.

  4. 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, September 19, 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.


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.

September 6, 2007 Board Meeting

Agenda decision on accounting for contingencies and business combinations. The Board added a project to its technical agenda to comprehensively reconsider the accounting for contingencies, as currently provided for in FASB Statement No. 5, Accounting for Contingencies. As a first step, the Board will consider enhancing the disclosure requirements about contingencies to address constituent concerns that information about contingencies may not be currently disclosed in the notes to the financial statements in a timely basis. At the same time, the Board instructed the staff to begin preliminary research to consider the scope, timing, and identification of potential convergence issues relating to a comprehensive long-term project for the accounting for contingencies.

The Board also decided to change its previous decision that assets and liabilities arising from contingencies that are recognized in a business combination should be subsequently measured at fair value. Instead of fair value, the Board decided those assets and liabilities should be measured as follows:

  1. A liability will be measured at the higher of:

    1. Its acquisition-date fair value

    2. The amount that would be recognized by applying Statement 5

  2. An asset will be measured at the lower of:

    1. Its acquisition-date fair value

    2. The best estimate of its future settlement amount.

The Board directed the staff to prepare a revised draft of the revised final Statement on business combinations for vote by written ballot.

Useful life and amortization of intangible assets. The Board continued its deliberations of how to resolve the inconsistency between the guidance for determining the useful life for amortization purposes under FASB Statement No. 142, Goodwill and Other Intangible Assets, and the periods of cash flows used in determining the fair value of an intangible asset. The Board reached the following decisions:

  1. The scope of the project will be limited to providing guidance on the determination of the useful life of intangible assets for amortization purposes.

  2. The Board affirmed its previous decision to revise paragraph 11 of Statement 142 to remove the concepts of "material modification" and "substantial cost" and better match the useful life determination for amortization purposes with the factors considered in the intangible asset’s fair value measurement. The Board decided to replace the factor in subparagraph 11(d) of Statement 142 with a consideration of an entity’s historical experience, if any, in renewing or extending similar arrangements. An entity that does not have historical experience with similar arrangements would consider a market participant’s assumptions about renewal or extension for purposes of applying subparagraph 11(d).

  3. Existing disclosure requirements in paragraphs 44 and 45 of Statement 142 will be enhanced by requiring an entity to disclose the following:

    1. The weighted-average period to renewal

    2. An entity’s history of renewal

    3. Amounts expended to renew or extend the contractual term of an intangible asset

    4. Changes in the likelihood of renewal or extension.

  4. The effective date of the proposed changes would be fiscal years beginning after June 15, 2008, with early adoption prohibited. This guidance would be issued in the form of a proposed FSP. For purposes of determining an intangible asset’s useful life, the proposed FSP would be applied prospectively to intangible assets acquired after the effective date. The Board decided to require the application of the additional disclosure requirements in the proposed FSP to intangible assets acquired or renewed after the effective date.

The Board authorized the staff to proceed to a draft of a proposed FSP for vote by written ballot, with a comment period of 45 days.


The following is a list of open meetings tentatively scheduled through October. 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, September 26, 2007—FASB Board Meeting
Wednesday, September 26, 2007—FASB Education Session
Wednesday, October 3, 2007—FASB Board Meeting
Wednesday, October 3, 2007—FASB Education Session
Friday, October 5, 2007—Liaison Meeting with the AICPA Private Companies Practice Section, Technical Issues Committee
Wednesday, October 10, 2007—FASB Board Meeting
Wednesday, October 10, 2007—FASB Education Session
Wednesday, October 17, 2007—FASB Board Meeting
Wednesday, October 17, 2007—FASB Education Session
Monday, October 22, 2007—FASB/IASB Joint Board Meeting, Norwalk, CT
Tuesday, October 23, 2007—FASB/IASB Joint Board Meeting, Norwalk, CT
Wednesday, October 24, 2007—FASB/IASB Joint Board Meeting, Norwalk, CT
Wednesday, October 31, 2007—FASB Board Meeting
Wednesday, October 31, 2007—FASB Education Session