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Accounting Research Manager®

Weekly Summary of Developments

April 16-20, 2012

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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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ACCOUNTING AND SEC HEADLINES:

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Business Combinations -- FASB Proposes Guidance on the Subsequent Accounting for an Indemnification Asset Recognized in a Business Combination

For detail, please contact info@hkcmcpa.us

The FASB has issued for public comment a proposed Accounting Standards Update (ASU), Business Combinations (Topic 805) - Subsequent Accounting for an Indemnification Asset Recognized at the Acquisition Date as a Result of a Government-Assisted Acquisition of a Financial Institution. This proposed ASU is the result of an EITF consensus-for-exposure approved by the FASB at their April 9, 2012 meeting. When a reporting entity recognizes an indemnification asset as a result of a government-assisted acquisition of a financial institution and subsequently a change in the cash flows expected to be collected on the indemnification asset occurs (as a result of a change in cash flows expected to be collected on the assets subject to indemnification), the reporting entity would be required to subsequently account for the change in the measurement of the indemnification asset on the same basis as the change in the assets subject to indemnification. Any amortization of changes in value would be limited to the contractual term of the indemnification agreement (i.e., the lesser of the term of the indemnification agreement and the remaining term of the indemnified assets).

Comments on this proposal are due July 16, 2012.

Entertainment -- FASB Issues Proposal on the Accounting for Unamortized Film Costs

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The FASB has issued for public comment a proposed ASU, Entertainment - Films (Topic 926) - Accounting for Fair Value Information That Arises after the Measurement Date and Its Inclusion in the Impairment Analysis of Unamortized Film Costs. This proposed ASU is the result of an EITF consensus-for-exposure approved by the FASB at their April 9, 2012 meeting. The amendments in this proposed ASU would eliminate the rebuttable presumption that the conditions leading to the write-down of unamortized film costs after the balance sheet date existed as of the balance sheet date. The proposed amendments also would eliminate the requirement that an entity incorporate into fair value measurements used in the impairment tests the effects of any changes in estimates resulting from the consideration of subsequent evidence if the information would not have been considered by market participants at the measurement date. The guidance in Topic 926, Entertainment - Films, would be the relevant guidance for performing an impairment test of unamortized film costs. The existing guidance in Topic 820, Fair Value Measurement, and Topic 855, Subsequent Events, would be the relevant guidance for estimating fair value and accounting for subsequent events, respectively.

Comments on this proposal are due July 16, 2012.

Statement of Cash Flows -- FASB Proposes Guidance on Classification of the Sale of Donated Securities for Not-for-Profit Entities

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The FASB has issued for public comment a proposed ASU, Statement of Cash Flows (Topic 230) - Not-for-Profit Entities: Classification of the Sale of Donated Securities in the Statement of Cash Flows. This proposed ASU is the result of an EITF consensus-for-exposure approved by the FASB at their April 9, 2012 meeting. This proposal would require a not-for-profit entity (NFP) to classify cash receipts from the sale of donated securities consistently with cash donations received in the statement of cash flows if those cash receipts were from the sale of donated securities: (a) that upon receipt are directed for sale; and (b) for which the NFP has the ability to avoid significant investment risks and rewards through near immediate conversion into cash. Accordingly, the cash receipts from the sale of those securities would be classified as cash inflows from operating activities, unless the donor restricted the use of the contributed resources to long-term purposes, in which case those cash receipts would be classified as cash flows from financing activities. Otherwise, receipts from the sale of donated securities would be classified as cash flows from investing activities by the NFP.

Comments on this proposal are due July 16, 2012.

JOBS Act -- SEC Staff Provides Guidance on Scaled Disclosure Under JOBS Act

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The SEC Division of Corporation Finance (Corp Fin) has issued, “Jumpstart Our Business Startups Act Frequently Asked Questions: Generally Applicable Questions on Title I of the JOBS Act.” This document includes frequently asked questions (FAQs) regarding the general applicability under Title I of the Jumpstart Our Business Startups Act (JOBS Act). Title I provides scaled disclosure provisions for emerging growth companies (as defined), including, among other things:

-Two years of audited financial statements in a registration statement for an initial public offering of common equity securities;

-The smaller reporting company version of Item 402 of Regulation S-K; and

-No requirement for Sarbanes-Oxley Act Section 404(b) auditor attestations of internal control over financial reporting.

The JOBS Act was signed into law on April 5, 2012, and is intended to increase American job creation and economic growth by improving access to the public capital markets for emerging growth companies.

Financial Reporting Manual -- Updated Financial Reporting Manual Released

For detail, please contact info@hkcmcpa.us

The staff in Corp Fin has released the updated Financial Reporting Manual, reflecting changes through December 31, 2011. This manual represents informal guidance prepared for use by the Corp Fin staff. Corp Fin has made this manual public because readers may find the guidance useful in preparing filings with the SEC. We have prepared a Literature Update highlighting areas in the manual updated by the Corp Fin staff. In addition, as described in our Literature Update, we have made available in PDF format the prior quarterly versions of Corp Fin’s Financial Reporting Manual, dating back to December 2008 when the first version was released.

See our Literature Update for complete details.

Structured Note Offerings -- SEC Staff Publishes Illustrative Letter Regarding Structured Note Offerings Disclosure

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The staff in Corp Fin has published an illustrative letter, “Sample Letter Sent to Financial Institutions Regarding Their Structured Note Offerings Disclosure in Their Prospectus Supplements and Exchange Act Reports.” This letter was sent to certain financial institutions in connection with their structured note offerings and highlights areas where Corp Fin believes there could be disclosure improvements in connection with future structured note offerings. Topics covered in this letter include the following:

-Product names;

-Product pricing and value;

-Use of proceeds and reasons for offerings;

-Plan of distribution;

-Liquidity;

-Issuer credit risk;

-Tax consequences;

-Referenced asset or index disclosure;

-Disclosure format; and

-Exhibits.

Financial Instruments -- FASB Discusses Financial Instruments and Other Matters

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As reported in its "Summary of Board Decisions" publication, the FASB and IASB (the Boards) met on April 17-19, 2012, and discussed the following issues:

-Accounting for financial instruments-classification and measurement;

-Investment companies;

-Accounting for financial instruments-impairment; and

-Insurance contracts.

Regarding their project on the classification and measurement of financial instruments, the Boards discussed the business model assessment for classifying financial assets at amortized cost and bifurcation of financial assets and financial liabilities. The Boards reached the following tentative decisions:

-Financial assets would qualify for amortized cost if the assets are held within a business model whose objective is to hold the assets in order to collect contractual cash flows;

-To clarify the primary objective of hold to collect by providing additional implementation guidance on the types of business activities and the frequency and nature of sales that would prohibit financial assets from qualifying for amortized cost measurement;

-Financial assets that contain cash flows that are not solely principal and interest would not be eligible for bifurcation and would be classified and measured in their entirety at fair value through net income; and

-Financial liabilities would be bifurcated using the existing bifurcation requirements in IFRS 9, Financial Instruments, and U.S. GAAP.

Regarding their project on the impairment of financial instruments, the Boards clarified the attributes of an expected credit loss estimate to address concerns raised about the use of the term "expected value." Specifically, the Boards clarified that an estimate of expected credit losses should reflect the following:

-All reasonable and supportable information considered relevant in making the forward-looking estimate;

-A range of possible outcomes and the likelihood and reasonableness of those outcomes; and

-The time value of money.

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For detail, please contact info@hkcmcpa.us

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GOVERNMENT HEADLINES:

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Governmental Entities -- New Edition of Knowledge-Based Audits of Governmental Entities Published

For detail, please contact info@hkcmcpa.us

We have published a new edition of Knowledge-Based Audits of Governmental Entities. This publication is designed to help the auditor efficiently and effectively perform financial statement audits of state and local governments in accordance with auditing standards generally accepted in the United States, and, when applicable, generally accepted Government Auditing Standards. This edition of the publication includes revisions and updates to reflect current accounting authoritative literature and, among other things, pronouncements through:

-AICPA Statement on Auditing Standards No. 125, Alert That Restricts the Use of the Auditor’s Written Communication;

-AICPA Statement on Quality Control Standards No. 8, A Firm’s System of Quality Control; and

-The U.S. Government Accountability Office issued Government Auditing Standards, 2011 Internet Version (The Yellow Book).

See our Literature Update for complete details.

GASB Report Issued -- GASB Statements 65 and 66 Issued

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The March 2012 edition of the "GASB Report" has been issued and includes the following discussion items:

-GASB calendar;

-GASB issues GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, and GASB Statement No. 66, Technical Corrections-2012-an amendment of GASB Statements No. 10 and No. 62;

-GASB issues exposure draft on government combinations and disposals of government operations;

-Summary of recent GASB meetings; and

-Summary of recent meeting of the Governmental Accounting Standards Advisory Council.

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@hkcmcpa.us