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Accounting Research Manager(TM)
Weekly Summary of Developments
April 30 - May 4, 2007
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Accounting Research Manager subscriber,
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Accounting and SEC Headlines
Implementing FIN 48 -- Affect on Contractual Obligations Table
Income Taxes -- FASB Issues Guidance Amending FIN 48
Fair Value Option -- Implementation Issues to Consider
Derivatives and Offsetting -- FASB Issues Guidance Amending FIN 39
Business Combinations -- FASB Discusses Business Combinations Project and Other Matters at April 23-24, 2007 Meeting
FASB Reports Issued -- Business Combinations and Other Matters
IASB Update -- IASB Discusses Business Combinations and Other Matters at Its April 17-20, 2007 Meeting
International Financial Reporting -- IASB Issues Agenda for International Financial Reporting Interpretations Committee (IFRIC) Meeting on May 3-4, 2007
Insurance Contracts -- IASB Issues Discussion Paper on Insurance Contracts
Auditing Headlines
Fair Value Option -- Implementation Issues to Consider
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ACCOUNTING AND SEC HEADLINES:
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Implementing FIN 48 -- Affect on Contractual Obligations Table
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FASB Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes, is effective for fiscal years beginning after December 15, 2006. We have prepared a hot topic that describes that an SEC registrant should consider, when preparing its first quarter Form 10-Q, whether the uncertain tax liabilities recorded under FIN 48 materially affect its prior disclosures of contractual obligations. If so, an update of those prior disclosures should be included in MD&A in the period FIN 48 is adopted. Our hot topic is based on the views expressed by members of the SEC staff at a recent meeting of the AICPA's SEC Regulations Committee.
Income Taxes -- FASB Issues Guidance Amending FIN 48
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The FASB has issued FASB Staff Position (FSP) FIN 48-1, "Definition of 'Settlement' in FASB Interpretation No. 48." This FSP amends FASB Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes, to provide guidance on how an enterprise should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits.
The FASB clarifies in this FSP that a tax position could be effectively settled upon examination by a taxing authority. Assessing whether a tax position is effectively settled is a matter of judgment because examinations occur in a variety of ways. In determining whether a tax position is effectively settled, companies should make the assessment on a position-by-position basis, but a company could conclude that all positions in a particular tax year are effectively settled.
The guidance in this FSP should be applied by companies upon the initial adoption of FIN 48. Companies that applied FIN 48 in a manner consistent with the provisions of this FSP would continue to apply the provisions in this FSP from the date of initial adoption of FIN 48. However, companies that did not apply FIN 48 in a manner consistent with the provisions of this FSP are required to retrospectively apply the provisions in this FSP to the date of the initial adoption of FIN 48.
Fair Value Option -- Implementation Issues to Consider
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We have prepared a hot topic that discusses implementation issues companies may face when applying the guidance in FASB Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. Statement 159 is effective as of the beginning of an entity's first fiscal year beginning after November 15, 2007. Early adoption is permitted as of the beginning of an entity's fiscal year provided that the entity makes that choice in its first 120 days of the fiscal year. However, in order for a company to early adopt Statement 159, it must also early adopt all of the provisions of FASB Statement No. 157, Fair Value Measurements.
Derivatives and Offsetting -- FASB Issues Guidance Amending FIN 39
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The FASB has issued FASB Staff Position (FSP) FIN 39-1, "Amendment of FASB Interpretation No. 39." This FSP addresses: (a) certain modifications to FASB Interpretation (FIN) No. 39, Offsetting of Amounts Related to Certain Contracts, and (b) whether a reporting entity that is party to a master netting arrangement can offset fair value amounts recognized for the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) against fair value amounts recognized for derivative instruments that have been offset under the same master netting arrangement in accordance with paragraph 10 of FIN 39.
Business Combinations -- FASB Discusses Business Combinations Project and Other Matters at April 23-24, 2007 Meeting
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As reported in its "Action Alert" publication, the FASB met with the IASB in a joint meeting on April 23-24, 2007, and addressed the following projects or topics:
-Intangible Assets
-Financial Instruments: Liabilities and Equity
-Conceptual Framework
-Business Combinations
-Lease Accounting
The FASB and IASB considered various convergence issues in their joint project on business combinations. For example, the IASB decided to converge with the FASB and require that an acquirer measure and recognize an asset subject to an operating lease at its acquisition date fair value without considering the terms of the operating lease. If the terms of an operating lease are favorable (unfavorable) relative to market terms as of the acquisition date, the acquirer would recognize an intangible asset (liability) separately from the asset subject to the operating lease. Separately, the FASB decided to converge with the IASB and retain the guidance in paragraph 32 of FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, that allows an acquirer to classify long-lived assets as held for sale if the sale is expected to be completed within one year and the other criteria in Statement 144 are probable of being met within a short period from the acquisition date (usually within three months). That guidance is similar to the guidance in IFRS 5, Non-current Assets Held for Sale and Discontinued Operations.
The Action Alert also notes that the following projects or topics are scheduled to be discussed by the FASB at its meeting scheduled for May 8, 2007:
-Financial Instruments: Liabilities and Equity
-Transfers of Financial Assets
-Conceptual Framework: Reporting Entity
FASB Reports Issued -- Business Combinations and Other Matters
The April edition of the "FASB Report" includes a discussion of the decisions reached and projects added by the FASB during the three-months ended March 31, 2007:
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In addition, activities planned for the six-months ending September 30, 2007 are also discussed. As of April 1, 2007, the FASB has the following projects on its active agenda:
Joint Projects with the IASB--
-Conceptual Framework
-Business Combinations
-Financial Instruments: Liabilities and Equity
-Financial Statement Presentation
-Leases
-Revenue Recognition
-Earnings per Share
-Income Taxes
-Research and Development
-Insurance Contracts
-Financial Instruments
FASB Only Projects--
-Mergers and Acquisitions by a Not-for-Profit Organization
-Postretirement Benefit Obligations Including Pensions
-Derivatives Disclosures
-Fair Value Option (Phase 2)
-Financial Guarantee Insurance
-GAAP Hierarchy
-Subsequent Events
-Statement 140 - Transfers of Financial Assets
-Insurance Risk Transfer
-Loan Disclosures
-Emission Allowances
-Various FASB Staff Positions
-Valuation Standards for Financial Reporting
The March 2007 edition of the "FASB Report" has also been issued and includes discussion of the following topics or items of interest:
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-Financial Accounting Foundation Appoints Lawrence W. Smith to the FASB
-Private Company Financial Reporting Committee Announces Membership
-FASB Issues Standard That Establishes Fair Value Option for Financial Assets and Liabilities
-Former FASB Practice Fellow (James L. Kroeker) Joins the SEC
IASB Update -- IASB Discusses Business Combinations and Other Matters at Its April 17-20, 2007 Meeting
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As reported in its "IASB Update" publication, the IASB met on April 17-20, 2007, and discussed the following projects or topics:
-Business Combinations (Phase II)
-IAS 37 Redeliberations
-Conceptual Framework
-Financial Instruments
-Financial Instruments Puttable at Fair Value and Obligations Arising on Liquidation
-Discontinued Operations
-Post-Employment Benefits
-Annual Improvements Process
-Short-Term Convergence: Income Taxes
-Short-Term Convergence: Joint Ventures
The IASB also met with the FASB in a joint meeting on April 23-24, 2007, where they discussed the following projects or topics:
-Business Combinations
-Lease Accounting
-Conceptual Framework
-Liabilities and Equity
-Intangible Assets
International Financial Reporting -- IASB Issues Agenda for International Financial Reporting Interpretations Committee (IFRIC) Meeting on May 3-4, 2007
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The IASB has issued the agenda for the IFRIC May 3-4, 2007, meeting which includes:
-D20 Customer Loyalty Programs
-IAS 18 Revenue
-IAS 19 Employee Benefits
-D19 IAS 19 - The Asset Ceiling: Availability of Economic Benefits and Minimum Funding Requirements
-IAS 21 The Effects of Changes in Foreign Exchange Rates
-IAS 27 Consolidated and Separate Financial Statements
-IFRS 3 Business Combinations
-IAS 1 Presentation of Financial Statements/ IAS 39 Financial Instruments: Recognition and Measurement
-IAS 16 Property, Plant and Equipment
-IAS 39 Financial Instruments: Recognition and Measurement
-IFRS 5 Non-current Assets held for Sale and Discontinued Operations
-IAS 12 Income Taxes
Insurance Contracts -- IASB Issues Discussion Paper on Insurance Contracts
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The IASB has issued a Discussion Paper, "Preliminary Views on Insurance Contracts," which is currently planned to supersede IFRS 4 Insurance Contracts. IFRS 4 was issued as an interim standard with the expectation of considering a broad project, as outlined in this Paper, on the components of an accounting model for insurance contracts.
Comments on the Discussion Paper are due November 16, 2007.
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AUDITING HEADLINES:
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Fair Value Option -- Implementation Issues to Consider
For detail, please contact info@zy-cpa.com
As discussed above in our Accounting and SEC Summaries, we have prepared a hot topic that discusses implementation issues companies may face when applying the guidance in FASB Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. Statement 159 is effective as of the beginning of an entity's first fiscal year beginning after November 15, 2007. Early adoption is permitted as of the beginning of an entity's fiscal year provided that the entity makes that choice in its first 120 days of the fiscal year. However, in order for a company to early adopt Statement 159, it must also early adopt all of the provisions of FASB Statement No. 157, Fair Value Measurements.
Some of the documents listed above may not be accessible under your current subscription. For information about upgrading your subscription to include additional content, click here:
For detail, please contact info@zy-cpa.com