Action Alert No. 02-34
September 11, 2002



Wednesday, September 18, 2002, 8:30 a.m.–5:30 p.m.

The IASB and the FASB will meet to discuss the following projects. The meeting is informational and no decisions are expected.

  1. Financial performance reporting by business enterprises. The Boards will discuss their respective projects on reporting financial performance. The focus for the discussion will be a summary paper of the joint IASB/UK Accounting Standards Board (ASB) project. That paper summarizes the conceptual approach being developed by the IASB/ASB, together with provisional proposals for the format of a statement of comprehensive income. (8:30 a.m. to 10:30 a.m.)


  2. Business combinations (phase II). The Boards will discuss their progress and plans for their joint project on business combination purchase method procedures. The discussion is expected to focus on issues for which the IASB and FASB reached differing tentative conclusions and opportunities to converge on those issues. Issues include (a) determining the measurement date for equity instruments issued as consideration and (b) measuring the fair value of certain assets acquired and liabilities assumed in a business combination. (10:30 a.m. to 12:30 p.m.)


  3. Convergence. The Boards will discuss their overall strategies for achieving and maintaining consistency between FASB and IASB GAAP. The focus for the discussion will be a paper describing a proposed short-term strategy for reducing certain existing differences. In addition, the Boards will discuss the impact of current major projects and future agendas on convergence. (1:30 p.m. to 3:30 p.m.)


  4. Revenue recognition. The Boards have added projects to their agendas on revenue recognition and have expressed interest in pursuing those projects as a joint project. The Boards will discuss issues necessary to enable each Board to (a) formally decide to pursue the project jointly and (b) decide on consistent joint objectives and responsibilities for the joint project. (3:30 p.m. to 5:30 p.m.)



Thursday, September 19, 2002, 1:30 p.m.

The Board will meet with the American Council of Life Insurers Generally Accepted Accounting Principles Committee to discuss matters of mutual interest.


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.

September 4, 2002 Board Meeting

Financial instruments: liabilities and equity. The Board discussed (1) whether to issue a limited-scope Statement on the accounting for certain financial instruments with characteristics of liabilities or equity and (2) the general effect of the proposed limited-scope Statement on existing accounting guidance.

The Board decided to issue a limited-scope Statement that would address the following financial instruments containing characteristics of liabilities or equity:

  • Derivative financial instruments that are indexed to and potentially settled in an entity’s own stock


  • Financial instruments not containing derivative features that embody obligations that require (or permit at the issuer’s discretion) settlement by issuance of the issuer’s equity shares (that is, obligations consisting of a fixed monetary value that could be settled by a variable number of an entity’s own equity shares)


  • Mandatorily redeemable financial instruments that embody obligations required to be redeemed at a specified or determinable date or upon an event certain to occur (that is, redemption is outside the control of the issuer and the holder).


The Board decided to amend FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, to (1) provide an exception for the conversion option in convertible debt instruments until separation issues related to compound financial instruments are addressed in the next phase of the project and (2) reflect the Board’s decision to initially measure physically settled forward purchase contracts for issuer shares at the present value of the redemption amount.

Combinations of mutual enterprises. The Board continued discussing issues relating to the application of the purchase method to combinations between mutual enterprises. The Board reached the following decisions:

  • In accounting for the acquisition of a mutual enterprise, the fair value of the acquired mutual enterprise should be reported in the financial statements of the acquirer as a direct addition to a capital or equity account and appropriately labeled and identified as capital or equity arising from the acquisition of a mutual enterprise. The Board also decided that the amount and nature of the addition to capital or equity as well as the basis for determining the fair value of the acquired mutual enterprise should be disclosed.


  • To rescind the guidance in FASB Statement No. 72, Accounting for Certain Acquisitions of Banking or Thrift Institutions, and FASB Interpretation No. 9, Applying APB Opinions No. 16 and 17 When a Savings and Loan Association or a Similar Institution Is Acquired in a Business Combination Accounted for by the Purchase Method, as it relates to combinations between mutual enterprises.


  • With respect to the proposed effective date, the Board decided to amend (1) FASB Statement No. 141, Business Combinations, to remove its delayed effectiveness provisions for combinations between mutual enterprises—the provisions of that Statement (including its transition) would apply to combinations initiated after a final Statement is issued and (2) FASB Statement No. 142, Goodwill and Other Intangible Assets, to remove the delayed effectiveness provisions for combinations between mutual enterprises—the provisions of that Statement (including its transition provisions) would apply to mutual enterprises for fiscal years beginning after the date that a final Statement is issued.


  • The Board directed the staff to explore fair value measurement issues related to applying the purchase method to combinations between mutual enterprises and develop a proposal for additional guidance that can be provided as part of this project. In particular, the Board directed the staff to develop a proposal for additional guidance related to measuring the fair value of the acquired mutual enterprise and the fair value of certain assets acquired and liabilities assumed, some of which may be subject to marketability restrictions. The staff plans to coordinate the development of any needed measurement guidance with the other FASB projects that are also studying fair value measurement matters.


September 5, 2002 Roundtable Meeting

Disclosure about intangible assets. The Board met with valuation professionals and other constituents and discussed issues that would arise if the Board were to require disclosure of the fair value of intangible assets. The participants discussed (1) insights gained from identifying and estimating the fair value of purchased intangible assets for purposes of recognition in financial statements in accordance with Statement 141 and (2) the perceived costs and benefits of disclosing the fair value of all of an entity's intangible assets. The meeting was informational and no decisions were reached.


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

Monday, September 23, 2002—Educational FASB Board Meeting on Revenue Recognition

Tuesday, September 24, 2002—Financial Accounting Standards Advisory Council Meeting

Wednesday, September 25, 2002—FASB Board Meeting

Thursday, September 26, 2002—Liaison Meeting with the American Gas Association

Monday, September 30, 2002—FASB Open Roundtable Discussion on Certain Special-Purpose Entities

Wednesday, October 2, 2002—FASB Board Meeting

Friday, October 4, 2002—Liaison Meeting with the AICPA Private Companies Practice Section Technical Issues Committee

Tuesday, October 8, 2002—Liaison Meeting with the AICPA Audit Issues Task Force

Wednesday, October 9, 2002—FASB Board Meeting

Wednesday, October 16, 2002—FASB Board Meeting

Thursday, October 17, 2002—Liaison Meeting with the National Investor Relations Institute

Wednesday, October 30, 2002—FASB Board Meeting

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