Action Alert No. 06-27
July 6, 2006
NOTICE OF MEETINGS
OPEN BOARD MEETING
meetings are available by audio webcast and telephone.)
Wednesday, July 12, 2006, 9:00 a.m.
benefit obligations, including pensions (estimated 1-hour
discussion). The Board will discuss issues related to its March 31,
2006 Exposure Draft, Employers’ Accounting for Defined Benefit
Pension and Other Postretirement Plans. Specifically, the Board will
discuss the project’s objectives, scope, and transition method.
- 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.
OPEN EDUCATION SESSIONS
Monday, July 10, 2006, 10:30 a.m.
Wednesday, July 12, 2006,
following the Board meeting
The Board will hold educational, non-decision-making sessions to
discuss topics that are anticipated to be discussed at the July 19, 2006
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, or
June 28, 2006 Board Meeting
value measurements. The Board discussed comments received from
certain external reviewers of a draft of the final FASB Statement on fair
value measurements regarding the application of a market-participant
approach to nonfinancial assets and nonfinancial liabilities measured at
fair value in business combinations and impairment tests. The Board
unanimously agreed to add a project to its agenda to address the diversity
in practice that has arisen with respect to the use of entity-specific
assumptions, rather than market-participant assumptions, to measure the
fair value of nonfinancial assets and nonfinancial liabilities under FASB
Statements No. 141, Business Combinations, No. 142, Goodwill and
Other Intangible Assets, and No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. The guidance will be in the form of
In addition, the Board discussed the following issues raised by
external reviewers of a draft of the final Statement on fair value
- The Board affirmed but clarified the current definition of fair
value to refer to the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between
market participants at the measurement date.
- The Board clarified that inputs to valuation techniques should
reflect the assumptions that market participants would use in pricing an
asset or liability, including assumptions about risk. In the absence of
observable inputs, a fair value measurement should be determined using
unobservable inputs reflecting the reporting entity’s own assumptions
about the assumptions that market participants would use in pricing the
asset or liability developed based on the best information available in
the circumstances, including the reporting entity’s own data provided
that no contrary data indicate that market participants would use
- The Board decided to remove the guidance from the draft Statement
for offsetting long and short positions in the same instrument.
- The Board decided to require qualitative disclosures about
unobservable inputs used for nonrecurring fair value measurements within
Level 3 (including a description of the inputs and the information used
to develop the inputs).
- The Board decided to allow derivative assets and liabilities
measured within Level 3 to be presented net for purposes of disclosures
of changes in those beginning and ending balances reported in the
statement of financial position.
- For financial instruments subject to limited retrospective
application, the Board decided to remove the requirement to disclose
information about the effect of the change in accounting in the fiscal
year in which the final Statement is initially applied. The Board
clarified that the transition adjustment should be determined in a
single step based on the difference between the carrying amount and the
fair value of those instruments at the date the final Statement is
initially applied and recognized as a cumulative-effect adjustment to
the opening balance of retained earnings for that fiscal year.
Issuance of a final Statement is pending, subject to the Board’s
deliberations in its related FSP project to consider practice issues
relating to the application of the fair value measurement objective under
particular existing pronouncements.
of EITF consensuses and tentative conclusions. The Board
considered and ratified the consensuses on the following issues reached at
the June 15, 2006 EITF meeting:
- Issue No. 05-1, "Accounting for the Conversion of an Instrument That
Became Convertible upon the Issuer’s Exercise of a Call Option"
(including related modifications to Issue No. 03-7, "Accounting for the
Settlement of the Equity-Settled Portion of a Convertible Debt
Instrument That Permits or Requires the Conversion Spread to Be Settled
in Stock (Instrument C of Issue No. 90-19)")
- Issue No. 06-2, "Accounting for Sabbatical Leave and Other Similar
Benefits Pursuant to FASB Statement No. 43"
- Issue No. 06-3, "How Taxes Collected from Customers and Remitted to
Governmental Authorities Should Be Presented in the Income Statement
(That Is, Gross versus Net Presentation)."
The Board also considered and ratified the tentative conclusions on the
following issues reached at the June 15, 2006 EITF meeting. The Board also
approved the exposure of a draft abstract for each of these issues for a
30-day public comment period. The draft abstracts are expected to be
posted to the FASB website after July 6, 2006.
- Issue No. 06-1, "Accounting for Consideration Given by a Service
Provider to Manufacturers or Resellers of Equipment Necessary for an
End-Customer to Receive Service from the Service Provider"
- Issue No. 06-4, "Accounting for Deferred Compensation and
Postretirement Benefit Aspects of Endorsement Split-Dollar Life
- Issue No. 06-5, "Accounting for Purchases of Life
Insurance—Determining the Amount That Could Be Realized in Accordance
with FASB Technical Bulletin No. 85-4."
FASB DOCUMENT AVAILABLE
Views, Conceptual Framework for Financial Reporting: Objective
of Financial Reporting and Qualitative Characteristics of Decision-Useful
Financial Reporting Information, was issued on July 6, 2006 and is
available on the FASB website. Comments are requested by November 3,
FUTURE OPEN MEETINGS
The following is a list of open meetings tentatively scheduled through
August. 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, July 19, 2006—FASB Board Meeting
Wednesday, July 19,
2006—FASB Education Session
Wednesday, July 26, 2006—FASB Board
Wednesday, July 26, 2006—FASB Education Session
August 2, 2006—FASB Board Meeting
Wednesday, August 2, 2006—FASB
Wednesday, August 9, 2006—FASB Board
Wednesday, August 9, 2006—FASB Education Session
August 16, 2006—FASB Board Meeting
Wednesday, August 16, 2006—FASB
Wednesday, August 23, 2006—FASB Board
Wednesday, August 23, 2006—FASB Education Session
August 28, 2006—Liaison Meeting with Edison Electric Institute and
American Gas Association
Wednesday, August 30, 2006—FASB Board
Wednesday, August 30, 2006—FASB Education Session
†FASB Meetings Available by Audio Webcast and
To monitor available live meetings free of charge by audio
webcast, access the link http://www.trz.cc/fasb/live.html. To monitor by
telephone, call 1-800-846-4717. You will be charged $.45 per minute, and
VISA, MasterCard, American Express, or Discover Card is required. To
listen to a recording of the most recent Board meeting via webcast free of
charge, access the link http://www.trz.cc/fasb/archive.html. To listen to a
recording by telephone, for a charge of $.45 per minute, call
1-800-462-0393. Questions can be directed to 1-800-846-4630.
distributed to the audience at Board meetings are posted to our website
one-half hour before the start of the meeting. A synopsis of each
issue to be discussed at EITF meetings also is posted to this
Education sessions are not available by audio webcast or
telephone, and no handouts are distributed to the audience.