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Accounting
Research Manager®
Weekly
Summary of Developments
October 31 -
November 4, 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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ACCOUNTING
AND SEC HEADLINES:
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EITF
Meeting Results -- Decisions Reached
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As described
in detail in our "EITF Flash Report," the Emerging Issues Task Force
(EITF) discussed the following issues at its November 3, 2011 meeting:
-EITF Issue
No. 10-E, "Derecognition of In Substance Real
Estate"; and
-EITF Issue
No. 11-A, "Parent's Accounting for the Cumulative Translation Adjustment
(CTA) upon the Sale or Transfer of a Group of Assets within a Consolidated
Foreign Entity That Meets the Definition of a Business."
The EITF
reached a final consensus on Issue 10-E and a consensus-for-exposure on Issue
11-A. The FASB must still ratify these decisions, scheduled for November 16,
2011.
See our EITF
Flash Report for complete details.
Consolidation
-- FASB Issues Proposal for Improving Financial Reporting of Consolidations
For detail, please contact info@hkcmcpa.us
The FASB has
issued for public comment a proposed Accounting Standards Update (ASU), Consolidation
(Topic 810): Principal versus Agent Analysis. This proposed ASU would
affect all reporting entities that are required to evaluate whether they should
consolidate another entity and is expected to most significantly affect the
financial reporting of entities that are involved with variable interest
entities. Specifically, this proposed ASU includes guidance on the principal
versus agent analysis and guidance on the evaluation to assess whether a
decision maker is using its power as a principal or an agent. Under this
proposal, this evaluation of principal versus agent analysis would focus on:
-The rights
held by other parties;
-The
compensation to which the decision maker is entitled in accordance with its
compensation agreement(s); and
-The
decision maker’s exposure to variability of returns from other interests that
it holds in the entity.
The proposed
ASU would also change the requirements for determining whether a general
partner controls a limited partnership and, therefore, could affect reporting
entities that are involved with partnerships and similar entities. In addition,
the proposal would change the evaluation of participating rights held by noncontrolling shareholders.
Comments on
this proposal are due January 17, 2012.
Impairment
-- FASB Discusses Impairment of Intangible Assets
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As reported
in its "Summary of Board Decisions" publication, the FASB met on
November 2, 2011, and discussed the impairment of indefinite-lived intangible
assets. Specifically, the FASB discussed how it might improve the current
guidance for testing indefinite-lived intangible assets for impairment and
reduce the costs incurred by preparers in association with these tests. The
FASB decided to:
-Provide
entities with the option of qualitatively assessing whether events or
circumstances exist that indicate it is more likely than not that an
indefinite-lived intangible asset is impaired;
-Allow
entities to apply the optional qualitative assessment for all indefinite-lived
intangible assets, including those that involve significant contingencies such
as in-process research and development assets; and
-Exempt
nonpublic entities from the quantitative disclosures about significant
unobservable inputs used in the fair value measurements categorized within
Level 3 of the fair value hierarchy required by FASB Codification paragraph
820-10-50-2(bbb).
The FASB
directed its staff to draft a proposed ASU for vote by written ballot with a
public comment period of 120 days. The FASB decided that the proposed
amendments would be effective for annual and interim impairment tests performed
for fiscal years beginning after June 15, 2012. Early adoption would be
permitted.
Leases --
FASB and IASB Discuss Leases
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As reported
in its "Summary of Board Decisions" publication, the FASB and IASB
(the Boards) met on November 1, 2011, and discussed their joint project on the
accounting for leases. Specifically, the Boards discussed disclosure
requirements for lessors that account for leases
under the receivable and residual approach. The Boards tentatively decided to
require disclosure of a number of items, including the following:
-A table of
all lease related income items recognized in the reporting period disaggregated
into: (a) profit, recognized at lease commencement (split into revenue
and cost of sales if that is how the lessor has
presented the amounts in the statement of comprehensive income); (b)
interest income on the lease receivable; (c) interest income on the
residual asset; (d) variable lease income; and (e) short-term
lease income.
-Information
about the basis and terms on which variable lease payments (contingent rentals)
are determined required in paragraph 73(a)(ii) of the
2010 exposure draft.
-Information
about the existence and terms of options, including for renewal and termination
required in paragraph 73(a)(iii) of the 2010 exposure
draft.
-A
qualitative description of purchase options in leasing arrangements, including
information about the extent to which the entity is subject to such agreements.
-A
reconciliation of the opening and closing balance of the right to receive lease
payments and residual assets.
In addition,
the Boards tentatively decided that a lessor is not
required to disclose the following:
-The initial
direct costs incurred in the period;
-The
weighted average or range of discount rates used to calculate the right to
receive lease payments; or
-The fair
value of the right to receive lease payments or the residual asset.
Goodwill
Impairment -- Working Draft of AICPA Guidance on Testing Goodwill for
Impairment Published
For detail, please contact info@hkcmcpa.us
The AICPA
Impairment Task Force has issued for public comment a working draft of an
Accounting and Valuation Guide, Testing Goodwill for Impairment. This
proposed guide provides nonauthoritative accounting
and valuation guidance for impairment testing of goodwill. Specifically, it
discusses practice issues related to the first step of the two-step test, such
as identifying reporting units and assigning assets and liabilities to a
reporting unit. This proposed guide also discusses measuring the fair value of
a reporting unit in accordance with the guidance in FASB Codification Topic
820, Fair Value Measurement, and illustrates the valuation techniques
often utilized for this purpose. This proposed guide also provides an
illustration of the second step of the two-step goodwill impairment test.
Comments on
this proposed guidance are due March 15, 2012.
SEC
Regulations Committee -- CAQ SEC Regulations Committee Minutes Issued
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The Center
for Audit Quality SEC Regulations Committee has issued minutes from its joint
meeting with the staff of the SEC held on September 27, 2011. This committee
meets periodically with the SEC staff to discuss emerging technical accounting
and reporting issues relating to SEC rules and regulations. Topics discussed at
this meeting included the following:
-Various
financial reporting matters including: (a) loss contingency disclosures;
(b) MD&A disclosures about foreign operating results and income
taxes; and (c) definition of “full and unconditional” related to
guaranteed securities under Rule 3-10 of Regulation S-X.
-Update on
SEC staff IFRS papers, including the expected issuance of additional papers on:
(a) a principles level analysis of U.S. GAAP as compared to IFRS; and (b)
an analysis of the application of IFRS in practice.
-Management’s
responsibilities when using third-party sources of fair value information.
-Restatement
disclosures in initial public offering registration statements.
-Retrospective
application of ASU No. 2011-05, Comprehensive Income (Topic 220) -
Presentation of Comprehensive Income, in connection with filing a new
registration statement.
-XBRL
exhibit requirements for registration statements and retrospectively revised
financial statements in Form 8-K.
-Application
of the guidance in Corp Fin’s “Financial Reporting Manual” regarding the
requirements to file historical financial statements under Rule 3-05 of
Regulation S-X for a certain transaction.
Financial
Instruments -- IASB and FASB Discuss Financial Instruments and Other Matters
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As reported
in its "IASB Update" publication, the Boards held joint sessions on
October 19-20, 2011, and discussed the following topics:
-Impairment
of financial assets under IFRS 9, Financial instruments;
-Fair value
measurement;
-Insurance
contracts;
-Leases;
-Revenue
recognition;
-Accounting
for financial instruments-disclosures (education session); and
-Work plan.
The IASB
held a separate meeting to discuss its Annual Improvements project.
IFRS for SMEs -- Status of Q&As About
IFRS for SMEs and Other Matters Discussed
For detail, please contact info@hkcmcpa.us
The IASB
staff has issued its periodic "IFRS for SMEs
Update" publication which is a summary of news relating to the International
Financial Reporting Standard for Small and Medium-sized Entities(IFRS for SMEs). This update includes discussion of the following
topics:
-Q&As about the IFRS for SMEs-status
report;
-IFRS for SMEs translations-status report;
-New
training module available-Section 7, Statement of Cash Flows;
-Additional
Spanish-language training module released;
-Recent and
upcoming "train the trainers" workshops; and
-Where to
obtain IFRS for SMEs materials.
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=======================================
AUDITING AND
INTERNAL CONTROLS HEADLINES:
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Real
Estate Entities -- New Edition of Knowledge-Based Audits of Real Estate
Entities Published
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We have
published the 2012 edition of Knowledge-Based Audits of Real Estate
Entities. This publication provides practitioners with an effective
approach for conducting financial statement audits of real estate entities in
accordance with auditing standards generally accepted in the
See our
Literature Update for complete details.
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