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Accounting Research
Manager(TM)
Weekly Summary of
Developments
March 15-19, 2010
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Accounting Research
Manager subscriber,
The Accounting Research
Manager database now contains this week's weekly summary of developments. Click
the link below to access and print the fully-formatted Weekly Summary:
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If you do not have immediate
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of this week's Weekly Summary.
Accounting and SEC
Headlines
EITF Meeting Results -- Decisions Reached
Regulation S-K -- SEC Staff Updates Interpretations
SEC Reporting Obligations -- SEC Staff Issues Guidance on Requests
to Suspend Reporting Obligations
Financial Statement
Presentation -- FASB and
IASB Discuss Financial Statement Presentation and Other Matters
Insurance Contracts -- FASB and IASB Discuss Insurance
Contracts and Other Matters
Financial Instruments -- FASB Discusses Amortized Cost Option
and Other Matters
Production Stripping Costs -- IFRIC Discusses Production Stripping
Costs and Other Matters
Financial Statement
Presentation -- IASB and
FASB Discuss Financial Statement Presentation and Other Matters
Government Headlines
GASB Standards -- GASB Proposed Codification and Other
Matters Discussed
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ACCOUNTING AND SEC HEADLINES:
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EITF Meeting Results --
Decisions Reached
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As described in detail in our
"EITF Flash Report," the Emerging Issues Task Force (EITF) discussed
the following issues at its March 18, 2010 meeting:
-EITF Issue No. 08-9,
"Milestone Method of Revenue Recognition";
-EITF Issue No. 09-B,
"Consideration of an Insurer’s Accounting for Majority-Owned Investments
When the Ownership Is through a Separate Account";
-EITF Issue No. 09-F,
"Casino Base Jackpot Liabilities";
-EITF Issue No. 09-G,
"Accounting for Costs Associated with Acquiring or Renewing Insurance
Contracts";
-EITF Issue No. 09-H,
"Selected Healthcare Organization Issues (Presentation of Insurance Claims
and Related Insurance Recoveries; Revenue Recognition; and Measuring Charity
Care for Disclosure)";
-EITF Issue No. 09-I,
"Effect of a Loan Modification When the Loan Is Part of a Pool That Is
Accounted for as a Single Asset"; and
-EITF Issue No. 09-J,
"Effect of Denominating the Exercise Price of a Share-Based Payment Award
in the Currency of the Market in Which the Underlying Equity Security
Trades."
The EITF reached a final
consensus on Issues 08-9, 09-F, 09-I, and 09-J. The EITF also reached
consensuses-for-exposure on Issues 09-B and 09-H. The FASB must still ratify
these decisions. The EITF did not reach a final consensus on Issue 09-G.
Prior to the EITF meeting
this week, the FASB distributed additional meeting materials relating to Issues
09-F and 09-H, and a proposed SEC staff announcement on foreign currency
issues.
See our EITF Flash Report for
complete details.
Regulation S-K -- SEC
Staff Updates Interpretations
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The staff in the Division of
Corporation Finance (Corp Fin) of the SEC has updated its Compliance and
Disclosure Interpretation (C&DI), Regulation S-K. This C&DI
provides interpretations by Corp Fin, in a question and answer format, of the
SEC’s rules and regulations under Regulation S-K. This update adds questions
119.25, 119.26 and 133.12, which provide guidance on the following topics:
-Reporting grants of annual
non-equity incentive awards in the Grants of Plan-Based Awards Table and the
Summary Compensation Table when an executive officer decides not to receive
payment for such awards;
-Reporting non-accepted
discretionary bonuses to executive officers in the Summary Compensation Table;
-Types of services included
in “additional services” reported under Item 407 for compensation consultants;
and
-Disclosing fees associated
with products sold to a company by a compensation consultant.
SEC Reporting Obligations
-- SEC Staff Issues Guidance on Requests to Suspend Reporting Obligations
For detail, please contact info@zy-cpa.com
The staff in Corp Fin of the
SEC issued Staff Legal Bulletin No. 18, Exchange Act Rule 12h-3. This
guidance provides Corp Fin's views regarding certain situations in which
issuers may utilize Rule 12h-3 under the Securities Exchange Act of 1934
(Exchange Act) to submit routine “no-action requests” seeking to suspend their
reporting obligations under Section 15(d) of the Exchange Act. According to
Corp Fin, the purpose of this legal bulletin is to:
-Explain the operation of
Section 15(d) and Rule 12h-3;
-Identify two common
situations that give rise to favorable no-action responses under Rule 12h-3;
-Set forth the conditions
that must be satisfied in these situations in order for an issuer to use the
reporting suspension provided by Rule 12h-3; and
-Discuss Corp Fin's approach
to processing Rule 12h-3 no-action requests on a going-forward basis.
Financial Statement
Presentation -- FASB and IASB Discuss Financial Statement Presentation and
Other Matters
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As reported in the FASB's "Summary of Board Decisions" publication, the
FASB and IASB (the Boards) held a joint meeting on March 11, 2010, and
discussed the following topics:
-Financial statement
presentation;
-Financial instruments with
characteristics of equity; and
-Fair value measurement.
Regarding their project on financial
statement presentation, the Boards decided that the forthcoming proposal should
clarify that:
-Only one comparative period
is required for a complete set of financial statements;
-An opening statement of
financial position for that one comparative period is the only additional
statement that an entity is required to present to be in compliance with IFRSs/U.S. GAAP when there is a change in accounting
policy, restatement, or reclassification; and
-If an item of other
comprehensive income relates to, or will relate to, a discontinued operation,
it should be identified and presented as such on the statement of comprehensive
income.
Regarding their project on
financial instruments with characteristics of equity, the Boards made several
decisions, including the following:
-Shares issued upon exercise
of written call options or conversion of convertible debt should be reported at
their fair values on the issuance date;
-An instrument should be
reclassified if events occur or circumstances change so that the instrument no
longer meets the conditions for its existing classification;
-An entity should immediately
remeasure a reclassified instrument according to the
requirements for the new classification as if it were a newly issued instrument
on the date of reclassification;
-Economic compulsion (as
distinguished from expressed or implied contractual obligations) should not be
considered in determining an instrument’s classification; and
-An issuer may not avoid
separation of an instrument with a liability and equity component by electing
the fair value option for the instrument in its entirety.
The Boards also discussed
their project on fair value measurement and tentatively decided to permit an
exception to fair value measurement principles by permitting entities to use
mid prices as a basis for establishing fair values for offsetting market risk
positions (e.g., interest rate risk, currency risk, or other price risk) and to
apply the price within the bid-ask spread that is most representative of fair
value to the net open risk position.
Insurance Contracts --
FASB and IASB Discuss Insurance Contracts and Other Matters
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As discussed in the FASB's "Summary of Board Decisions" publication,
the Boards met on March 15-17, 2010, and discussed the following topics:
-Insurance contracts;
-Revenue recognition;
-Consolidations; and
-Leases.
The Boards discussed their
proposed measurement model for insurance contracts which includes a residual
margin, determined at inception as the difference between: (a) the
expected premiums; and (b) the expected claims and expenses plus a risk
adjustment. The Boards discussed how an insurer should subsequently release the
residual margin to profit or loss and tentatively decided that the insurer
should release the residual margin over the coverage period in a systematic way
that best reflects the exposure from providing insurance coverage, as follows:
-On the basis of passage of
time; but
-If the insurer expects to
incur benefits and claims in a pattern that differs significantly from passage
of time, the residual margin should be released on the basis of the expected
benefits and claims.
Regarding their project on
revenue recognition, the Boards discussed disclosure and contract costs. The
Boards tentatively approved a revised set of disclosure requirements for the
forthcoming proposal, including requirements for an entity to:
-Disaggregate the amount of
revenue recognized and clarify how that disaggregation
relates to amounts presented or disclosed in accordance with other standards;
and
-Disclose the amount and
expected timing of the satisfaction of its remaining performance obligations in
contracts with an original duration of more than one year.
Financial Instruments --
FASB Discusses Amortized Cost Option and Other Matters
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As reported in its
"Summary of Board Decisions" publication, the FASB met on March 17,
2010, and discussed the following issues related to its project on the
accounting for financial instruments:
-Amortized cost option;
-Loan commitments; and
-Scope.
The FASB chairman announced
that he added a project to the FASB’s agenda to
improve disclosures made by an employer about its participation in a multiemployer
plan. Although this is not a joint project with the IASB, the FASB is expected
to consider international convergence by evaluating disclosures about
multiemployer plans proposed by the IASB in its ongoing project on postemployment benefits (including pensions).
Production Stripping Costs
-- IFRIC Discusses Production Stripping Costs and Other Matters
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As reported in its
"IFRIC Update" publication, the International Financial Reporting
Interpretations Committee (IFRIC) met on March 4-5, 2010, and discussed the
following topics:
-Production stripping costs;
-Vesting and nonvesting conditions;
-IFRIC agenda decisions;
-IFRIC tentative agenda
decisions;
-Annual improvements project;
and
-IFRIC work in progress.
Financial Statement
Presentation -- IASB and FASB Discuss Financial Statement Presentation and
Other Matters
For detail, please contact info@zy-cpa.com
As reported in its "IASB
Update" publication, the Boards held a joint meeting on March 11, 2010,
and discussed the following topics:
-Financial statement
presentation;
-Financial instruments with
characteristics of equity; and
-Fair value measurement.
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======================
GOVERNMENT HEADLINES:
======================
GASB Standards -- GASB
Proposed Codification and Other Matters Discussed
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The February 2010 edition of
the "GASB Report" has been issued and includes the following
discussion items:
-GASB calendar;
-Discussion of GASB exposure
draft, Codification of Accounting and Financial Reporting Guidance Contained
in Pre-November 30, 1989 FASB and AICPA Pronouncements;
-Summary of GASB meeting held
on January 26, 2010;
-GASB seeks participants for
financial reporting entity field test; and
-GASB events.
Some of the documents
listed above may not be accessible under your current subscription. For
information about upgrading your subscription to include additional content,
click here:
For detail, please contact info@zy-cpa.com