Action Alert No. 08-31
July 31, 2008
NOTICE OF MEETINGS
OPEN BOARD MEETING
meetings are available by audio webcast and telephone.)
Wednesday, August 6, 2008, 9:00 a.m.
about credit derivatives (estimated 1-hour discussion).
The Board will begin redeliberations and discuss comments received on
proposed FSP FAS 133-b and FIN 45-c, Disclosures about Credit
Derivatives and Certain Guarantees: An Amendment of FASB Statement No.
133 and FASB Interpretation No. 45. Specifically, the Board will
discuss issues related to scope, disclosures, and effective date.
- 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 SESSION
Wednesday, August 6, 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.
July 23, 2008 Board Meeting
The Board decided to defer development of a new accounting model for
lessors for coordination with related projects such as revenue
recognition; the current project will address only the development of a
high-quality standard of accounting for lessees. The Board also agreed
with an overall approach under which lessees would generally apply the
finance lease model in International Accounting Standard (IAS) 17,
Leases, to all leases, adapted where necessary.
The Board decided to include options to extend or terminate a lease in
the measurement of a right-of-use asset and a lease obligation based on
the best estimate of the expected lease term. The Board also agreed that
contractual factors, noncontractual factors, and business factors should
be considered when determining the lease term.
The Board decided to require lessees to include contingent rentals in
the measurement of the right-of-use asset and the lease obligation based
on their best estimate of expected lease payments.
The Board decided that both the right-of-use asset and the lease
obligation should be initially measured at the present value of the best
estimate of expected lease payments for all leases. The Board also decided
to require the best estimate of expected lease payments to be discounted
using the lessee’s secured incremental borrowing rate.
The Board discussed the subsequent measurement of both the right-of-use
asset and the lease obligation but did not reach a decision. The Board
also discussed whether there should be criteria to distinguish between
leases that are in-substance purchases and leases that are rights to use
an asset but did not reach a decision.
discontinued operations. The Board decided to amend the proposed
definition of discontinued operations to include acquired businesses (as
defined in FASB Statement No. 141 (revised 2007), Business
Combinations) that meet the criteria to be classified as held for sale
on the acquisition date. In addition, the Board decided not to include an
additional criterion that would limit businesses meeting the criteria to
be classified as held for sale on acquisition to be reported in
discontinued operations only when the sale is required by law or
The Board decided that the following discontinued operation disclosures
and business combination disclosures would not be required for businesses
that meet the criteria to be classified as held for sale on
For discontinued operation disclosures:
- The gain or loss recognized for any initial or subsequent write-down
to fair value less cost to sell (FASB Statement No. 144, Accounting
for the Impairment or Disposal of Long-Lived Assets, paragraph
- The amount of pretax profit or loss reported in discontinued
operations (Statement 144, paragraph 47(c)).
- Major classes of assets and liabilities of a disposal group
(Statement 144, paragraph 47(a)).
- Major classes of income and expenses, including impairments,
interest, depreciation, and amortization (a new requirement).
- If applicable, net income attributable to the parent (controlling
interest) (a new requirement).
- Major classes of cash flows (operating, investing, and financing) (a
For business combination disclosures:
- For acquired receivables not subject to requirements of AICPA
Statement of Position 03-3, Accounting for Certain Loans or Debt
Securities Acquired in a Transfer:
- The fair value of the receivables
- The gross contractual amounts receivable
- The best estimate at the acquisition date of the contractual cash
flows not expected to be collected.
The disclosure should be provided by major class of receivable, such
as loans, direct finance leases in accordance with FASB Statement No.
13, Accounting for Leases, and any other class of receivables
(Statement 141(R), paragraph 68(h)).
- The amounts recognized as of the acquisition date for each major
class of assets acquired and liabilities assumed (Statement 141(R),
paragraphs 68(i) and A107).
- If the acquirer is a public business enterprise, as described
in paragraph 9 of FASB Statement No. 131, Disclosures about Segments
of an Enterprise and Related Information:
- The amounts of revenues and earnings of the acquiree since the
acquisition date included in the consolidated income statement for the
- The revenue and earnings of the combined entity for the current
reporting period as though the acquisition date for all business
combinations that occurred during the year had been as of the
beginning of the annual reporting period (supplemental pro forma
- If comparative financial statements are presented, the revenue and
earnings of the combined entity for the comparable prior reporting
period as though the acquisition date for all business combinations
that occurred during the year had occurred as of the beginning of the
comparable prior annual reporting period (supplemental pro forma
information) (Statement 141(R), paragraph 68(r)).
The Board decided that if an entity presents the major classes of
assets and liabilities classified as held for sale and/or major classes of
income and expense of discontinued operations in the notes to the
financial statements, the entity should reconcile those note disclosures
to the amounts presented on the face of the financial statements.
The Board decided that a proposed FSP to be issued on this project
would not provide explicit guidance as to whether the proposed disclosures
should be provided separately for each component of an entity and each
noncurrent asset (disposal group) that either has been disposed of or is
classified as held for sale. Also, the Board decided that the proposed FSP
would not include a question in the notice to recipients on whether the
disclosures should be provided separately for each component and each
noncurrent asset (disposal group) that either has been disposed of or is
classified as held for sale.
The Board decided that the use of proceeds from disposal activities
would be excluded from the disclosure requirements. In addition, the Board
supported including clarifying language in the proposed FSP that an entity
should determine whether the component of an entity meets the definition
of an operating segment regardless of whether it is required to apply
The Board directed the staff to proceed to a draft of a proposed FSP
for vote by written ballot.
FUTURE OPEN MEETINGS
The following is a list of open meetings tentatively scheduled through
September. 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, August 13, 2008—FASB Board Meeting
Wednesday, August 13,
2008—FASB Education Session
Wednesday, August 27, 2008—FASB Board
Wednesday, August 27, 2008—FASB Education Session
September 3, 2008—FASB Board Meeting
Wednesday, September 3, 2008—FASB
Monday, September 8, 2008—Liabilities and Equity
Wednesday, September 10, 2008—FASB Board
Wednesday, September 10, 2008—Emerging Issues Task Force
Monday, September 15, 2008—Liaison Meeting with the AICPA
Private Companies Practice Section, Technical Issues
Wednesday, September 17, 2008—FASB Education
Thursday, September 18, 2008—FASB Board Meeting
September 22, 2008—Financial Accounting Standards Advisory Council
Tuesday, September 23, 2008—Financial Accounting Standards
Advisory Council Meeting
Wednesday, September 24, 2008—FASB Board
Wednesday, September 24, 2008—FASB Education
Wednesday, September 24, 2008—Contingency Disclosures