Financial Instruments – FASB Discusses Financial Instruments with Characteristics of Equity and other matters
The FASB met on January 28, 2009, and discussed the following items:
-Financial instruments with characteristics of equity;
-Implementation of FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities; and
-Reconsideration of FASB Interpretation (FIN) No. 46 (Revised December 2003), Consolidation of Variable Interest Entities.
The FASB decided to further analyze an approach that would divide puttable and mandatorily redeemable instruments with characteristics of equity into the following categories:
-Instruments that are puttable or mandatorily redeemable upon the occurrence of an event that is certain to occur (such as death or retirement); and
-All other puttable and mandatorily redeemable instruments.
At a future meeting, the FASB is expected to discuss classification and possible separation of instruments in each category.
The FASB also redeliberated significant issues raised in comments received on FASB proposed Statement, Accounting for Transfers of Financial Assets, and decided to limit the circumstances in which a transfer of a portion of a financial asset is eligible for derecognition. The FASB affirmed the definition of “participating interest” with certain changes outlined in the FASB’s Summary of Board Decisions.
Financial Instruments – FASB Discusses Disclosures about Certain Financial Assets
The FASB met on January 23, 2009, and discussed issues raised by respondents in comment letters received on proposed FASB Staff Position (FSP) FAS 107-a, Disclosures about Certain Financial Assets: An Amendment of FASB Statement No. 107, and decided not to finalize the proposed FSP. Rather, the FASB decided to issue a new proposed FSP that would amend FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments, to require interim and annual disclosures of fair value measurements for all financial instruments within the scope of that Statement. The FASB also decided that entities should provide the disclosures in Statement 107 for interim and annual periods ending after March 15, 2009. The FASB expects to issue a proposed FSP on or around January 30, 2009, with a 30-day comment period.