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Accounting Research Manager®
Weekly Summary of Developments
July 18-22, 2011
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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

Health Insurers -- FASB Issues Guidance on Recognition of Mandated Fees Paid By Heath Insurers
New Accounting Standards -- Checklist Updated
Property, Plant, and Equipment -- FASB Issues Proposed Guidance
EITF Matters -- June Meeting Minutes Published
Financial Instruments -- FASB and IASB Discuss Financial Instruments and Other Matters

Government Headlines

GASB Standards -- Checklist of Recent GASB Pronouncements Updated
Deferred Inflows and Outflows -- GASB 63 and Other Matters Discussed

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ACCOUNTING AND SEC HEADLINES:
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Health Insurers -- FASB Issues Guidance on Recognition of Mandated Fees Paid By Heath Insurers
For detail, please contact info@hkcmcpa.us

The FASB has issued Accounting Standards Update (ASU) No. 2011-06, Other Expenses (Topic 720): Fees Paid to the Federal Government by Health Insurers. This ASU amends the FASB Accounting Standards Codification^TM (Codification) to provide guidance about how health insurers should recognize and classify in their income statements fees mandated by the "Patient Protection and Affordable Care Act," as amended by the "Health Care and Education Reconciliation Act." ASU 2011-06 represents a consensus of the EITF on Issue No. 10-H, “Fees Paid to the Federal Government by Health Insurers.” ASU 2011-06 requires that the liability for the fee be estimated and recorded in full once the entity provides qualifying health insurance in the applicable calendar year in which the fee is payable with a corresponding deferred cost that is amortized to expense using a straight-line method of allocation unless another method better allocates the fee over the calendar year that it is payable.

ASU 2011-06 is effective for calendar years beginning after December 31, 2013, when the fee initially becomes effective.

New Accounting Standards -- Checklist Updated
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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 FASB adds or revises content in the Codification. The standards are listed by source and a summary of the transition guidance is provided with a reference to the relevant Codification paragraph. Effective dates and application (adoption) requirements are also presented.

We have updated our checklist to reflect the issuance of ASU 2011-06 discussed above.

See our Literature Update for complete details.

Property, Plant, and Equipment -- FASB Issues Proposed Guidance
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The FASB has issued for public comment a proposed ASU, Property, Plant, and Equipment (Topic 360): Derecognition of in Substance Real Estate--a Scope Clarification. The proposed ASU represents a consensus of the EITF on Issue No. 10-E, “Derecognition of in Substance Real Estate.” The amendments to the Codification in the proposed ASU would affect entities that cease to have a controlling financial interest in a subsidiary that is in substance real estate as a result of default on the subsidiary’s nonrecourse debt. When a reporting entity ceases to have a controlling financial interest in a subsidiary that is in substance real estate as a result of default on the subsidiary’s nonrecourse debt, this proposed ASU would require a reporting entity to apply the guidance in Subtopic 360-20 to determine whether it should derecognize the assets (including real estate) and liabilities (including the related nonrecourse debt) of the in substance real estate entity.

The effective date in this proposal will be determined after the EITF considers feedback on the proposed ASU.

Comments on this proposed ASU are due October 3, 2011.

EITF Matters -- June Meeting Minutes Published
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The final meeting minutes of the June 23, 2011, EITF meeting have been issued. The minutes document the results previously described in our meeting summary published in our “EITF Flash Report.” As discussed in the minutes, the EITF reached decisions on the following issues:

-EITF Issue No. 09-H, "Health Care Entities: Presentation and Disclosure of Patient Service Revenue, Provision for Bad Debts, and the Allowance for Doubtful Accounts for Certain Health Care Entities";
-EITF Issue No. 10-H, “Fees Paid to the Federal Government by Health Insurers”; and
-EITF Issue No. 10-E, “Derecognition of in Substance Real Estate.”

Issues 09-H and 10-H were final consensuses. Preliminary copies of the related final ASUs to be issued by the FASB are included in the EITF minutes. Issue 10-E was a consensus-for-exposure and is reflected in the proposed ASU discussed above. Issue 10-H has been incorporated into the Codification as a result of the issuance of ASU 2011-6 discussed above.

Financial Instruments -- FASB and IASB Discuss Financial Instruments and Other Matters
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As reported in its "Summary of Board Decisions" publication, the FASB and IASB (the Boards) met on July 20-21, 2011, and discussed the following topics:

-Accounting for financial instruments-impairment;
-Leases;
-Insurance contracts;
-Balance sheet offsetting;
-Financial statement disclosures;
-Revenue recognition; and
-Effective dates and transition.

Regarding their project on financial instruments, the Boards continued to discuss a “three-bucket” expected loss approach for the impairment of financial assets. The guiding principle of the approach is to reflect the general pattern of deterioration of credit quality of financial assets. The Boards discussed approaches to classify and transfer financial assets between the buckets and agreed to pursue an approach based on credit risk management systems, recognizing that credit risk management is a comprehensive process that includes evaluating all available information.

The Boards considered whether an “absolute" or a “relative" credit risk model should underpin the transfer and classification of financial assets between the three buckets and decided to develop the relative credit risk model. The overall objective of this approach is to reflect the deterioration or improvement in the credit quality of financial assets, thus making the maximum use of credit risk management practices. Under this approach, all originated and purchased financial assets would initially start in Bucket 1 and would move into Bucket 2 and Bucket 3 as credit loss expectations deteriorate, affecting the uncertainty in collectibility of cash flows. Loans acquired at a discount because of credit losses were outside the scope of the discussion and are expected to be addressed at a future meeting of the Boards. The Boards also discussed the measurement of expected loss on financial assets in Bucket 1 and agreed to keep the calculation of the impairment allowance for Bucket 1 operationally simple and directed the staff to explore approaches that would calculate the allowance using 12 or 24 months’ worth of expected losses.

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GOVERNMENT HEADLINES:
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GASB Standards -- Checklist of Recent GASB Pronouncements Updated
For detail, please contact info@hkcmcpa.us

We have updated our "Summary Checklist of Recent GASB Standards," which is intended to serve as a reference tool to review authoritative standards recently issued by the GASB. The standards are listed by source, and include GASB Statements and GASB Technical Bulletins.

We have updated our checklist for the release of the following:

-GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position; and
-GASB Statement No. 64, Derivative Instruments: Application of Hedge Accounting Termination Provisions (an amendment of GASB Statement No. 53).

See our Literature Update for complete details.

Deferred Inflows and Outflows -- GASB 63 and Other Matters Discussed
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The June 2011 edition of the "GASB Report" has been issued and includes the following discussion items:

-GASB calendar;
-Approval of GASB 63 and 64;
-Issuance of GASB pension proposals;
-Summary of recent GASB meetings; and
-Participants sought by GASB for pension field test.

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@hkcmcpa.us