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Accounting Research Manager(TM)
Weekly Summary of Developments
March 16-20, 2009
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Accounting Research Manager subscriber,

The Accounting Research Manager database now contains this week's weekly summary of developments. Click the link below to access and print the fully-formatted Weekly Summary:

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If you do not have immediate Internet access to the Accounting Research Manager database, below is the text of this week's Weekly Summary.

Accounting and SEC Headlines

Fair Value Measurements -- FASB Proposes Additional Guidance on Measuring Fair Value in Inactive Markets
Impairments -- FASB Proposes Additional Guidance on Measuring Other-Than-Temporary Impairments
EITF Meeting Results -- EITF Decisions Reached
Fair Value Measurements -- FASB Discusses Proposes Additional Guidance on Measuring Fair Value in Inactive Markets
Leases -- FASB and IASB Issue Preliminary Views on Accounting for Leases
Variable Interest Entities -- FASB Discusses Proposed Amendments to FIN 46R and Other Matters
Technical Corrections -- FASB Proposes Technical Corrections
Derivatives -- IFRIC Issues Amendments to IFRIC 9 and IAS 39
IFRIC Update -- Statement of Cash Flows and Other Matters Discussed

Auditing and Internal Controls Headlines

Privacy -- Proposal on Generally Accepted Privacy Principles Issued

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ACCOUNTING AND SEC HEADLINES:
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Fair Value Measurements -- FASB Proposes Additional Guidance on Measuring Fair Value in Inactive Markets
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The FASB has issued for public comment proposed FASB Staff Position (FSP) FAS 157-e, Determining Whether a Market Is Not Active and a Transaction Is Not Distressed. This proposed FSP provides additional guidance to help an entity in determining whether a market for an asset is not active and when a price for a transaction is not distressed. The FASB has proposed a model that includes the following two steps:

-Determine whether there are factors present that indicate that the market for the asset is not active at the measurement date; and

-Evaluate the quoted price (i.e., a recent transaction or broker price quotation) to determine whether the quoted price is not associated with a distressed transaction.

As proposed, this FSP would be effective for interim and annual periods ending after March 15, 2009.

Comments on this proposed FSP are due April 1, 2009. The FASB expects to discuss the comments it receives at its meeting on April 2, 2009.

Impairments -- FASB Proposes Additional Guidance on Measuring Other-Than-Temporary Impairments
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The FASB has issued for public comment proposed FSP FAS115-a, FAS 124-a, and EITF 99-20-b, Recognition and Presentation of Other-Than-Temporary Impairments. This proposed FSP includes changes to the guidance for other-than-temporary impairments. Currently, an entity is required to assess whether it has the intent and ability to hold a security to recovery in determining whether an impairment of that security is other-than-temporary. The proposed FSP would change that guidance as follows:

-If the entity intends to sell the security or it is more likely than not that it will be required to sell the security before recovering its cost basis, the entire impairment loss would be recognized in earnings as an other-than-temporary impairment.

-If the entity does not intend to sell the security and it is not likely that the entity will be required to sell the security before recovering its cost basis, only the portion of the impairment loss representing credit losses would be recognized in earnings as an other-than-temporary impairment. The balance of the impairment loss would be recognized as a charge to other comprehensive income.

The proposed FSP would result in a new category within other comprehensive income for the portion of the other-than-temporary impairment that is unrelated to credit losses for held-to-maturity securities. The impairment recognized in other comprehensive income would be amortized over the remaining life of the debt security in a prospective manner based on the amount and timing of future estimated cash flows unless there is an indication of additional credit losses. That amortization would be recognized in other comprehensive income with an offset to the asset and would not affect earnings.

As proposed, the guidance in this FSP would be effective for interim and annual periods ending after March 15, 2009.

Comments on this proposed FSP are due April 1, 2009. The FASB expects to discuss the comments it receives at its meeting on April 2, 2009.

EITF Meeting Results -- EITF Decisions Reached
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As described in our "EITF Flash Report," the EITF discussed the following issues at its March 19, 2009 meeting:

-EITF Issue No. 08-1, "Revenue Arrangements with Multiple Deliverables";
-EITF Issue No. 08-9, "Milestone Method of Revenue Recognition";
-EITF Issue No. 09-1, "Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance";
-EITF Issue No. 09-2, "Research and Development Assets Acquired In an Asset Acquisition"; and
-EITF Issue No. 09-3, "Applicability of SOP 97-2 to Certain Arrangements That Include Software Elements."

The EITF reached a consensus-for-exposure on Issues 08-9 and 09-1 which also requires FASB ratification before they are exposed for comment. The FASB ratification process is scheduled for April 1, 2009. Separately, the EITF did not finalize its consensus-for-exposure on Issue 08-1.

See our EITF Flash Report for complete details.

Prior to its meeting, the EITF issued additional meeting materials which are available on Accounting Research Manager:
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Fair Value Measurements -- FASB Discusses Proposes Additional Guidance on Measuring Fair Value in Inactive Markets
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As reported in its “Summary of Board Decisions” publication, the FASB met on March 16, 2009, and discussed:

-Fair value measurement;
-Other-than-temporary impairments; and
-Financial instruments with characteristics of equity.

As discussed above, subsequent to its March 16, 2009 meeting, the FASB issued two proposed FSPs to address measuring fair value in inactive markets and guidance on other-than-temporary impairments. These two FSPs reflect the decisions discussed in the FASB's Summary of Board Decisions publication.

The FASB also discussed financial instruments with characteristics of equity. Specifically, the FASB continued its discussion of an approach for determining whether a financial instrument should be classified as equity, and decided that a perpetual instrument should be classified as equity.

Leases -- FASB and IASB Issue Preliminary Views on Accounting for Leases

The FASB and IASB have issued for public comment a joint discussion paper providing preliminary views on the accounting for leases. The FASB and IASB versions of the joint discussion paper are available as follows:

-Discussion Paper, Leases: Preliminary Views (FASB); and
For detail, please contact info@zy-cpa.com

-Discussion Paper, Leases: Preliminary Views (IASB).
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The joint discussion paper discusses a possible new approach to lease accounting that provides that lease accounting should be based on the principle that all leases give rise to liabilities for future rental payments and assets (the right to use the leased asset) that should be recognized in an entity’s statement of financial position. The FASB and IASB believe this approach would ensure leases are accounted for consistently across sectors and industries. The FASB and IASB have not yet discussed the method of transition or the effective date, and will wait until after comments are received on the joint discussion paper.

Comments on the joint discussion paper are due July 17, 2009.

Variable Interest Entities -- FASB Discusses Proposed Amendments to FIN 46R and Other Matters
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As reported in its "Summary of Board Decisions" publication, the FASB met on March 18, 2009, and discussed: (a) reconsideration of FASB Interpretation (FIN) No. 46 (Revised December 2003), Consolidation of Variable Interest Entities; and (b) loan loss disclosures. The FASB continued its redeliberations of the Exposure Draft, Amendments to FASB Interpretation No. 46(R), and reached the following decisions:

-To retain the existing definitions of "expected losses," "expected residual returns," and "variable interests," as set out in paragraph 2 of FIN 46R;

-Enterprises should consider kick-out rights in the analysis of power in paragraph 14A(a) of the proposed amendments to FIN 46R only if those kick-out rights are substantive rights that can be unilaterally exercised by a single party;

-Clarify several aspects of the power principle, including modifications to: (a) contingent power; (b) protective and participating rights; and (c) involvement in the design of a variable interest entity (VIE);

-Power is shared if two or more parties together have the power to direct the activities of a VIE that most significantly impact the entity’s economic performance, and each of the parties sharing power must consent to the decisions relating to those activities; and

-To add a discussion within the standard about the need for skepticism when an enterprise’s exposure to benefits or losses of a variable interest entity is not aligned with its power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance.

Technical Corrections -- FASB Proposes Technical Corrections
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The FASB has issued for public comment a proposed statement, Rescission of FASB Technical Bulletin No. 01-1, Nullification of EITF Topics No. D-33 and No. D-67, Amendments, and Technical Corrections. This proposal would:

-Address certain inconsistencies in existing accounting pronouncements;
-Provide certain clarifications to reflect the FASB’s intent in previously issued pronouncements;
-Eliminate certain outdated guidance; and
-Make technical corrections considered to be nonsubstantive in nature to an authoritative pronouncement.

This proposed statement would rescind FASB Technical Bulletin No. 01-1, Effective Date for Certain Financial Institutions of Certain Provisions of Statement 140 Related to the Isolation of Transferred Financial Assets, and nullify EITF Topics No. D-33, “Timing of Recognition of Tax Benefits for Prereorganization Temporary Differences and Carryforwards,” and D-67, “Isolation of Assets Transferred by Financial Institutions under FASB Statement No. 125.”

Comments on this proposal are due by May 15, 2009.

Derivatives -- IFRIC Issues Amendments to IFRIC 9 and IAS 39
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The IFRIC has issued Embedded Derivatives: Amendments to IFRIC 9 and IAS 39. This standard would amend IFRIC 9, Reassessment of Embedded Derivatives, and IAS 39, Financial Instruments: Recognition and Measurement. These amendments provide that unless assessment and separation of embedded derivatives is done when reclassifying hybrid (combined) financial assets out of the fair value through profit or loss category, structuring opportunities are created that the embedded derivative accounting requirements in IAS 39 were intended to prevent. The amendments also clarify that an assessment on reclassification should be made on the basis of the circumstances that existed when the entity first became a party to the contract, or, if later, the date of a change in the terms of the contract that significantly modified the cash flows that otherwise would be required under the contract.

The amendments must be applied for annual periods ending on or after June 30, 2009.

IFRIC Update -- Statement of Cash Flows and Other Matters Discussed
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As reported in the IASB's "IFRIC Update" publication, the IFRIC met on March 5, 2009, and discussed the following items:

-Determination of cash equivalents under IAS 7, Statement of Cash Flows;
-Update on IFRIC projects since the meeting in November 2008;
-Costs of compliance with the requirements of the European regulation concerning the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH);
-Partial use of fair value through profit or loss under IAS 28, Investments in Associates;
-Agenda decisions;
-Tentative agenda decisions; and
-Work in progress.

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AUDITING AND INTERNAL CONTROLS HEADLINES:
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Privacy -- Proposal on Generally Accepted Privacy Principles Issued
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The AICPA and Canadian Institute of Chartered Accountants issued for public comment, Exposure Draft (ED), Generally Accepted Privacy Principles. This ED proposes a comprehensive framework to assist in creating an effective privacy program that addresses privacy obligations, risks, and business opportunities. Specifically, this ED sets out generally accepted privacy principles that can be used by any organization as part of its privacy program. This ED includes 10 generally accepted privacy principles covering the following areas:

-Management;
-Notice;
-Choice and consent;
-Collection;
-Use and retention;
-Access;
-Disclosure to third parties;
-Security;
-Quality; and
-Monitoring and enforcement.

Comments on this proposal are due April 15, 2009.

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:
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