FASB Summary of May 17, 2000 Board Meeting Discussion

FASB: Summary of May 17, 2000 Board Meeting Discussion

Derivatives Implementation Group

Summary of May 17, 2000 Board Meeting Discussion on Statement 133 Implementation Issues

Financial instruments: derivatives implementation. The Board did not object to the staff's issuing guidance in a question-and-answer format for the following 19 implementation Issues regarding FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities:

  • Issue No. A9, "Prepaid Interest Rate Swaps"
  • Issue No. A10, "Assets That Are Readily Convertible to Cash"
  • Issue No. B11, "Volumetric Production Payments"
  • Issue No. B13, "Accounting for Remarketable Put Bonds"
  • Issue No. B14, "Purchase Contracts with a Selling Price Subject to a Cap and a Floor"
  • Issue No. B15, "Separate Accounting for Multiple Derivative Features Embedded in a Single Hybrid Instrument"
  • Issue No. B16, "Calls and Puts in Debt Instruments"
  • Issue No. C8, "Derivatives That Are Indexed to Both an Entity's Own Stock and Currency Exchange Rates"
  • Issue No. E6, "The Shortcut Method and the Provisions That Permit the Debtor or Creditor to Require Prepayment"
  • Issue No. E7, "Methodologies to Assess Effectiveness of Fair Value and Cash Flow Hedges"
  • Issue No. G6, "Impact of Implementation Issue E1 on Cash Flow Hedges of Market Interest Rate Risk"
  • Issue No. G7, "Measuring the Ineffectiveness of a Cash Flow Hedge of Interest Rate Risk under Paragraph 30(b) When the Shortcut Method Is Not Applied"
  • Issue No. G8, "Hedging Interest Rate Risk of Foreign-Currency-Denominated Floating-Rate Debt"
  • Issue No. H10, "Hedging Net Investment with the Combination of a Derivative and a Cash Instrument"
  • Issue No. I1, "Interaction of the Disclosure Requirements of Statement 133 and Statement 47"
  • Issue No. J8, "Adjusting the Hedged Item's Carrying Amount for the Transition Adjustment Related to a Fair-Value-Type Hedging Relationship"
  • Issue No. J9, "Use of the Shortcut Method in the Transition Adjustment and upon Initial Adoption"
  • Issue No. K2, "Are Transferable Options Freestanding or Embedded?"
  • Issue No. K3, "Determination of Whether Combinations of Options with the Same Terms Must Be Viewed Separately or as a Single Forward Contract."

Tentative guidance for the above 19 Issues was developed based on the results of discussion by the Derivatives Implementation Group (DIG) and had been posted on the FASB web site for at least 6 months. The Board deferred discussion of Statement 133 Implementation Issue B12, "Embedded Derivatives in Certificates Issued by Qualifying Special-Purpose Entities," until the next clearance meeting.