Action Alert No. 03-26
July 2, 2003

NOTICE OF MEETINGS

OPEN BOARD MEETING    

Wednesday, July 9, 2003, 9:00 a.m.

  1. Business combinations: purchase method procedures. The Board will discuss how to allocate between the controlling and noncontrolling interests (a) goodwill that arises in an acquisition of a less than 100 percent controlling interest, and (b) subsequent goodwill impairment losses. The Board also will discuss whether an intangible asset that is initially included in the amount recorded as goodwill because it does not meet the criteria for separate recognition should be reclassified from goodwill if it subsequently meets those criteria. (Estimated 90-minute discussion.)

     

  2. Financial instruments: liabilities and equity. The Board will discuss the following matters: (a) objectives and scope of phase two of the liabilities and equity project, (b) plan for redeliberations to accomplish the objectives, (c) timing and necessary resources, and (d) interaction with IASB and SEC literature. (Estimated 60-minute discussion.)

     

  3. Financial instruments: disclosures about fair value (replacement of Statement 107). At its meeting on June 4, 2003, the Board decided that issues relating to measuring the fair value of financial instruments that were in the scope of its project to replace Statement 107 would be addressed in its broader project on fair value measurements. The Board will discuss whether and, if so, how to proceed with its project to replace Statement 107 in light of that decision. (Estimated 30-minute discussion.)

     

  4. Open discussion. If necessary, the Board will allow time to discuss minor issues with staff members on technical projects or administrative matters. Those discussions are held following regular Board meetings as topics come up.

     

OPEN MEETING WITH THE OPTION VALUATION GROUP    

Tuesday, July 8, 2003, 9:00 a.m.

The Board will meet with the Option Valuation Group to discuss issues related to the valuation of employee stock options.

OPEN EDUCATION SESSION

Wednesday, July 9, 2003, immediately following the Board meeting

The Board will hold an educational, non-decision-making session to discuss topics that are anticipated to be discussed at the July 16 Board meeting. Those topics will be posted to the FASB calendar four days prior to the education session.

BOARD ACTIONS

The Board Actions are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions are included in an Exposure Draft for formal comment only after a formal written ballot. Decisions in an Exposure Draft may be (and often are) changed in redeliberations based on information provided to the Board in comment letters, at public hearings, and through other communication channels. Decisions become final only after a formal written ballot to issue a final Statement or Interpretation.

June 25, 2003 Board Meeting

Pension disclosures. The Board continued its discussion of disclosure requirements for defined benefit pension plans and decided to:

  1. Not require further breakdown of asset categories, but to encourage this disclosure if a company deems this information to be useful in understanding the risks and expected long-term rate of return on assets for each asset class.

     

  2. Not require duration information, reversing its previous decision, and instead agreeing that projected benefit payments would be a more useful disclosure.

     

  3. Not require sensitivity information for any of the assumptions discussed. These assumptions included return on assets, discount rate, and rate of expected future salary increases.

     

  4. Relax the disclosure requirements for nonpublic entities, exempting them from the disclosure of income statement classification of net pension cost. The Board also agreed to retain the exemptions for nonpublic entities found in FASB Statement No. 132, Employers’ Disclosures about Pensions and Other Postretirement Benefits.

     

  5. Require interim disclosure of: (a) the income statement classification of net pension cost, (b) a breakdown of the elements of net pension cost (such as service cost, interest expense, and return on asset components), and (c) significant changes in contributions or expected contributions to pension plans from what was previously disclosed.

     

  6. Require separate disclosure, in a tabular format, of the assumptions used to value pension obligations and those used to determine net pension cost.

     

Clarifying the criteria for liability extinguishments. The Board initially discussed information received from legal academics regarding possible clarifications to the phrase legally released from being the primary obligor (as it is used in paragraph 16(b) of FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities) to eliminate perceived ambiguities under U.S. law. Ultimately, the Board decided to expand the scope of the project to broadly reconsider the criteria for liability extinguishment rather than merely clarifying the existing criteria. Under the expanded scope, the Board will explore what changes in commercial arrangements should trigger modifications to the debtor’s accounting for its recognized obligations under those arrangements.

Financial instruments: derivatives implementation. The Board discussed the comments received on Statement 133 Implementation Issue No. C20, “Interpretation of Clearly and Closely Related in Contracts That Qualify for the Normal Purchases and Normal Sales Scope Exception,” and agreed with the staff’s proposed revisions. The Board did not object to the staff’s posting of the revised Implementation Issue C20, which was retitled, “Interpretation of the Meaning of Not Clearly and Closely Related in Paragraph 10(b) regarding Contracts with a Price Adjustment Feature,” on the FASB website as cleared guidance. Implementation Issue C20 was posted on the website on June 27, 2003.

AcSEC CLEARANCE

June 25, 2003 Board Meeting

AcSEC documents. The Board met with representatives of the AICPA's Accounting Standards Executive Committee (AcSEC) to discuss clearance of exposure drafts of the following proposed AICPA Statements of Position:

  1. Financial Highlights of Separate Accounts: An Amendment of the Audit and Accounting Guide Audits of Investment Companies

     

  2. Reporting Financial Highlights and Schedule of Investments by Nonregistered Investment Partnerships—An Amendment of the Audit and Accounting Guide Audits of Investment Companies and AICPA Statement of Position 95-2, Financial Reporting by Nonpublic Investment Partnerships.

     

The Board did not object to issuance of either exposure draft. The AICPA expects to issue both drafts on or around July 15, 2003, with a 60-day comment period.

FUTURE OPEN MEETINGS

The following is a list of open meetings tentatively scheduled through August. Because schedules may change, please check the FASB calendar before finalizing your plans. Revisions to this list since the last issue of Action Alert are highlighted in bold.

Wednesday, July 16, 2003—FASB Board Meeting
Wednesday, July 16, 2003—FASB Education Session
Wednesday, July 23, 2003—FASB Board Meeting
Wednesday, July 23, 2003—FASB Education Session
Tuesday, July 29, 2003—Liaison Meeting with the Edison Electric Institute
Wednesday, July 30, 2003—FASB Board Meeting
Wednesday, July 30, 2003—FASB Education Session
Thursday, July 31, 2003—Emerging Issues Task Force Meeting
Friday, August 8, 2003—FASB Education Session
Wednesday, August 13, 2003—FASB Board Meeting
Monday, August 18, 2003—Liaison Meeting with The Risk Management Association
Wednesday, August 20, 2003—FASB Board Meeting
Wednesday, August 20, 2003—FASB Education Session
Tuesday, August 26, 2003—Open Roundtable on Qualifying Special-Purpose Entities
Wednesday, August 27, 2003—FASB Board Meeting
Wednesday, August 27, 2003—FASB Education Session

Additional Details