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Accounting Research Manager(TM)
Weekly Summary of Developments
January 17-21, 2011
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Weekly Summary.
Accounting and SEC Headlines
Troubled Debt Restructurings -- FASB Defers Effective Date of Disclosures About
Troubled Debt Restructurings
New Accounting Standards -- Checklist Updated
SEC Reporting -- SEC Staff Publishes Updated Interpretations
Self-Regulatory Organizations -- SEC Issues Guidance on Proposed Rulemaking By
Self-Regulatory Organizations
Asset-Backed Securities -- SEC Issues Asset-Backed Securities Offering and
Disclosure Rules
Revenue Recognition -- FASB and IASB Discuss Revenue Recognition and
Other Matters
Contingent Pricing -- IFRS Interpretations Committee Discusses
Contingent Pricing and Other Matters
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ACCOUNTING AND SEC HEADLINES:
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Troubled Debt Restructurings -- FASB Defers
Effective Date of Disclosures About Troubled Debt Restructurings
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The FASB has issued Accounting Standards Update
(ASU) No. 2011-01, Receivables (Topic 310): Deferral of the Effective Date
of Disclosures about Troubled Debt Restructurings in Update No. 2010-20.
The amendments in ASU 2011-01 temporarily delay the effective date of the
disclosures about troubled debt restructurings in ASU No. 2010-20, Receivables
(Topic 310): Disclosures about the Credit Quality of Financing Receivables and
the Allowance for Credit Losses, for public entities. The delay is intended
to allow the FASB time to complete its deliberations on what constitutes a troubled
debt restructuring. The effective date of the new disclosures about troubled
debt restructurings for public entities and the guidance for determining what
constitutes a troubled debt restructuring will then be coordinated. Currently,
that guidance is anticipated to be effective for interim and annual periods
ending after June 15, 2011.
The deferral in ASU 2011-01 is effective
January 19, 2011 (date of issuance).
New Accounting Standards -- Checklist
Updated
For detail, please contact info@zy-cpa.com
We have updated our publication "Summary
Checklist of Recent Authoritative U.S. Accounting Standards." This
checklist is intended to serve as a reference tool to help users ensure that
they have considered authoritative standards recently issued or approved by the
FASB. The checklist is updated shortly after the content is added to the FASB
Accounting Standards CodificationTM (Codification) by the
FASB. The standards are listed by source and a summary of the transition
guidance is provided with a reference to the relevant Codification
paragraph(s). Effective dates and application (adoption) requirements are also
presented.
We have updated our checklist to reflect the
issuance of ASU 2011-01, discussed above.
See our Literature Update for complete details.
SEC Reporting -- SEC Staff Publishes Updated
Interpretations
The staff of the Division of Corporation
Finance (Corp Fin) of the SEC has updated the following Compliance and
Disclosure Interpretations (C&DIs):
-Regulation S-K (new questions
111.01-111.07); and
For detail, please contact info@zy-cpa.com
-Exchange Act Form 8-K (new questions
114.01-114.03).
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These C&DIs
provide interpretations by Corp Fin, in a question and answer format, of the
SEC’s rules and regulations related to Regulation S-K and Form 8-K. The Corp
Fin staff has updated its guidance in these C&DIs
regarding the reporting of changes in and disagreements with accountants on
accounting and financial disclosures required under Item 304 of Regulation S-K
and Item 4.01 of Form 8-K. Topics updated include:
-Defining the “subsequent interim period” for
purposes of reporting disagreements with auditors and reportable events;
-Whether a registrant is required to
affirmatively disclose it has no reportable events;
-Reporting an internal control deficiency even
when a remediation occurs before the end of the subsequent interim period;
-Whether the inclusion of a going concern
paragraph in an auditor’s report constitutes a modification and therefore must
be reported;
-Reporting considerations when a registrant's
principal accountant enters into a business combination with another accounting
firm; and
-Form 8-K disclosure requirements where
revocation of the accountant's PCAOB registration has occurred.
Self-Regulatory Organizations -- SEC Issues
Guidance on Proposed Rulemaking By Self-Regulatory
Organizations
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The SEC has issued a final rule, Rules of
Practice, which includes rule amendments to implement certain requirements
of Section 916 of the "Dodd-Frank Wall Street Reform and Consumer
Protection Act" (Dodd-Frank Act). This release adopts new rules intended
to formalize the process the SEC will use when conducting proceedings to determine
whether an self-regulatory organization's proposed rule change should be
disapproved under Section 19(b)(2) of the Securities Exchange Act of 1934. In
addition, this release amends existing regulations to add a rule providing that
the new Rules of Practice also formalize the process the SEC will use
when conducting proceedings to determine whether a PCAOB proposed rule should
be disapproved.
This rule is effective when it is published in
the Federal Register.
Asset-Backed Securities -- SEC Issues
Asset-Backed Securities Offering and Disclosure Rules
The SEC has issued the following final rules:
-Disclosure for Asset-Backed Securities
Required by Section 943 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (Rule 1); and
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-Issuer Review of Assets in Offerings of
Asset-Backed Securities (Rule 2).
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These final rules implement Sections 943 and
945 of the Dodd-Frank Act. Rule 1 provides guidance on representations and
warranties in asset-backed securities (ABS) offerings. Under this rule, securitizers of ABS are required to disclose fulfilled and
unfulfilled repurchase requests. In addition, Rule 1 requires nationally
recognized statistical rating organizations to include information regarding
the representations, warranties and enforcement mechanisms available to
investors in an ABS offering in any report accompanying a credit rating issued
in connection with such offering, including a preliminary credit rating.
Rule 2 includes new guidance under the
Securities Act of 1933 to require any issuer registering the offer and sale of
an ABS to perform a review of the assets underlying the ABS. In addition, this
rule amends Item 1111 of Regulation AB to require an ABS issuer to disclose the
nature of its review of the assets and the findings and conclusions of the
issuer’s review of the assets.
These final rules are effective 60 days after
they are published in the Federal Register.
Revenue Recognition -- FASB and IASB Discuss
Revenue Recognition and Other Matters
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As reported in its "Summary of Board
Decisions" publication, the FASB and IASB (the Boards) met on January
18-20, 2011, and discussed the following topics:
-Revenue recognition;
-Leases;
-Insurance contracts; and
-Accounting for financial instruments:
impairment.
The Boards began their redeliberations
of the Exposure Draft, Revenue from Contracts with Customers, and made a
number of decisions, including to:
-Eliminate the proposed requirement to account
for one contract as two or more contracts if the price of some goods or
services in the contract is independent of the price of other goods or services
in the contract;
-Provide that the revenue standard should
clarify that the objective for identifying separate performance obligations is
to depict the transfer of goods or services and the profit margin that is attributable
to those goods or services;
-Retain the principle of “distinct goods or
services” as the basis for identifying separate performance obligations; and
-Affirm the core principle that an entity
should recognize revenue to depict the transfer of goods and services to a
customer.
Regarding their project on leases, the Boards
reviewed feedback received in response to the Exposure Draft, Leases,
which was published for public comment in August 2010. The Boards plan to begin
redeliberations of this proposal by considering two
of the fundamental issues raised by respondents: (a) the definition of a
lease; and (b) the next steps to be taken relating to lessor accounting.
The Boards also discussed the feedback received
in the comment letters on the IASB's Exposure Draft, Insurance
Contracts, and the FASB's Discussion Paper, Preliminary
Views on Insurance Contracts. No decisions were made.
For further information on the Boards projects
on revenue recognition and leases, see the following discussion and analysis we
previously published:
-“A Closer Look: The FASB's
Proposal on Leases”; and
For detail, please contact info@zy-cpa.com
-"A Closer Look: The FASB’s Proposal on Revenue Recognition."
For detail, please contact info@zy-cpa.com
Contingent Pricing -- IFRS Interpretations
Committee Discusses Contingent Pricing and Other Matters
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As reported in its "IFRIC Update"
publication, the IFRS Interpretations Committee met on January 6-7, 2011, and
discussed the following topics:
-Accounting for stripping costs in the
production phase of a surface mine;
-Contingent pricing of property, plant and
equipment and intangible assets;
-Put options written over non-controlling
interests;
-Tentative agenda decisions;
-Issues considered for Annual Improvements
project; and
-Work in progress.
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