Action Alert No. 07-05
February 1, 2007


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

Wednesday, February 7, 2007, 9:00 a.m.

  1. Application of Interpretation 46(R) to investment companies (estimated 30-minute discussion). The Board will discuss comments received on proposed FSP FIN 46(R)-d, "Application of FASB Interpretation No. 46(R) to Investment Companies," and will decide whether to issue that proposed FSP as final.

  2. Implementation guidance for Interpretation 48 (estimated 45-minute discussion). The Board will discuss whether to issue implementation guidance for FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, on the term ultimate settlement in paragraph 10(b). The Board also will discuss potential transition guidance on the issue of ultimate settlement.

  3. 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, February 7, 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 the February 13, 2007 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 FSP.

January 24, 2007 Board Meeting

Financial statement presentation. The Board discussed three issues: (1) the definition of discontinued operations and related disclosures; (2) application of the working format by a "hybrid" entity; and (3) the statement of changes in equity and equity-related issues.

Discontinued Operations

The Board decided to propose a change to the current definition of discontinued operations in FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. The Board decided that a discontinued component of an entity would be reported in the discontinued operation section of the basic financial statements only if that component is an operating segment, as defined in FASB Statement No. 131, Disclosures about Segments of an Enterprise and Related Information. The Board also decided that an entity would be required to disclose in the notes to the financial statements disaggregated financial information for both (1) a component reported as a discontinued operation in the basic financial statements and (2) a discontinued component that was reported in the business section because it was not an operating segment. The expanded disclosure is intended to meet the needs of those users that find the Statement 144 definition of discontinued operations decision useful. The Board decided to propose expanding the existing disclosures about discontinued components to include information such as:

  1. The major classes of revenues and expenses, including impairments, interest, depreciation and amortization expense, and minority interest

  2. The major classes of cash flows (operating, investing, and financing)

  3. The major classes of assets and liabilities

  4. The nature of the disposal activities and the use of the proceeds from the disposal activities.

The Boards decided that the information disclosed in the notes to the financial statements would be for all periods presented.

The Board discussed whether it should separately issue an Exposure Draft of proposed changes to the reporting of discontinued operations to be responsive to recent requests that it revise the current guidance. The Board did not conclude on that issue.

Hybrid Entity Considerations

The Board discussed whether the initial discussion document should address how an entity that has both financial and nonfinancial operations (a "hybrid" entity) would apply the working format and related classification guidance. The Board noted that a nonfinancial entity that operates significantly different businesses (such as both retail and manufacturing) might raise similar application questions. The Board decided to include in the discussion document its preliminary view on the high-level question of how an entity consisting of significantly different businesses should apply the working format and classification guidance; for example, whether an entity with retail and manufacturing businesses would be able to classify accounts payable from the retail businesses in the financing liabilities category and the accounts payable from the manufacturing businesses in the operating category.

Statement of Changes in Equity and Other Equity-Related Issues

The Board had previously decided that the proposed working format would include a single financing section that included financing assets, financing liabilities, and equity. The Board decided to modify that decision, requiring instead that the statements of financial position and cash flows include separate sections—one for financing assets and liabilities, the other for equity.

The Board affirmed a past decision to require a separate statement of changes in equity and decided that that statement would include details of the change in the beginning and ending balance of each component of equity (except for accumulated other comprehensive income, which would be presented in the aggregate on the face of the statement of changes in equity and the details for each other comprehensive income item in the notes to the financial statements). In addition, the Board agreed that proceeds from capital transactions should be presented in the aggregate on the statement of changes in equity.

The Board considered, but decided not to replace the statement of comprehensive income with a statement of changes in net assets that would include changes in net assets arising from transactions with owners in their capacity as owners.

The Board decided not to explore a suggestion that it require a supplemental schedule providing information about the allocation of comprehensive income to various capital providers or a supplemental schedule that would provide fair value information for equity items (and possibly financing liabilities).

Fair value option. The Board discussed certain disclosure items and a scope exception for "in substance real estate." The Board decided:

  1. To delete the Level 3 disclosure example and the "Statement 107 Summary Table" from a draft of Appendix C of the fair value option final Statement.

  2. To require an entity to annually disclose the methods and significant assumptions used to estimate fair value for instruments for which the fair value option has been elected and that are not in the scope of FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments, which has a similar requirement.

  3. Not to add a scope exception for an investment whose transfer is considered in substance the sale of real estate under FASB Statement No. 66, Accounting for Sales of Real Estate, or EITF Issue No. 98-8, "Accounting for Transfers of Investments That Are in Substance Real Estate."


Proposed FSP FAS 128-a, "Computational Guidance for Computing Diluted EPS under the Two-Class Method," was issued and posted to the FASB website on January 26, 2007. Comments are requested by March 27, 2007.


The following is a list of open meetings tentatively scheduled through March. 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, 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
Wednesday, March 7, 2007—FASB Board Meeting
Wednesday, March 7, 2007—FASB Education Session
Wednesday, March 14, 2007—FASB Board Meeting
Wednesday, March 14, 2007—FASB Education Session
Thursday, March 15, 2007—Emerging Issues Task Force Meeting
Tuesday, March 20, 2007—Financial Accounting Standards Advisory Council Meeting
Wednesday, March 21, 2007—FASB Board Meeting
Wednesday, March 21, 2007—FASB Education Session
Tuesday, March 27, 2007—Not-for-Profit Roundtable Meeting
Wednesday, March 28, 2007—FASB Board Meeting
Wednesday, March 28, 2007—FASB Education Session