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.
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