FASB Summary of December 18, 2002 Board Meeting Discussion

FASB: Summary of December 18, 2002 Board Meeting Discussion

Derivatives Implementation Group

Summary of December 18, 2002 Board Meeting Discussion on the Proposed Amendment to Statement 133

Amendment of Statement 133. The Board continued its discussion of issues related to the FASB Exposure Draft, Amendment of Statement 133 on Derivative Instruments and Hedging Activities.

The Board considered a constituent’s request to modify the scope exception in paragraph 10(d) for certain financial guarantee contracts. The Board decided not to modify that exception and reiterated that all the criteria in that exception are necessary to avoid credit derivatives qualifying for the scope exception.

The Board decided that except for amendments relating to Statement 133 Implementation Issues, a final Statement will be effective for transactions and hedging relationships entered into after March 31, 2003, and should be applied prospectively. Early application is encouraged. The Board decided that Statement 133 Implementation Issues that have been cleared by the Board and have been effective for fiscal quarters that began prior to March 15, 2003, should continue to be applied in accordance with their respective effective dates and transitions. However, Statement 133 Implementation Issue No. C13, “When a Loan Commitment Is Included in the Scope of Statement 133,” will be modified in accordance with the decisions made as part of the amendment process, and entities should apply the revised guidance prospectively to contracts entered into after March 31, 2003.