Recent Happenings

Blogger
Share this content
0

I know it has been a long time since the last update, but here are the highlights.

FASB ratified three EITF consensuses at its November 24th meeting.

EITF 08-6 – “Equity Method Investment Accounting Considerations"

EITF 08-7 – “Accounting for Defensive Intangible Assets"

EITF 08-8 – “Accounting for an Instrument (or Embedded Feature) with a Settlement Amount That is Based on the Stock of an Entity’s Consolidated Subsidiary”

All three of these EITFs are effective for reporting periods beginning after December 15, 2008 and have to do with FAS 141(R) “Business Combinations” and FAS 160 “Minority Issues”. I will write up a summary of each of these soon.

FIN 48 for Nonpublic Companies

The FASB has decided that nonpublic entities with pass through status at the parent company level will have to follow the guidance in FIN 48 “Income Tax Uncertainties” beginning in fiscal years beginning after December 15, 2008. All other nonpublic companies will have to apply the provisions of FIN 48 as of fiscal years beginning after December 15, 2207 or this year. However, nonpublic entities will be allowed to provide fewer disclosures.

They will not be required to disclose a tabular reconciliation of unrecognized tax benefits and the effect those unrecognized tax benefits would have on the effect tax rate if they were recognized. The FASB will provide more guidance on how pass through entities would apply FIN 48 in situations where tax positions are created by subsidiaries or related to nonfederal jurisdictions.

Financial Statement Presentation

The FASB and the IASB have issued a discussion paper on financial statement presentation. The new format would look more like the cash flow statement and be separated into a business section (that would include operating and investing sections, a financing section, income taxes, discontinued operations and equity. All the statements would relate to each other as the assets and liabilities in the operating section would correspond to the cash flows and income from the operating sections of those statements. There would also be a reconciliation between the cash flow statement and the statement of comprehensive income. The information would also be further disaggregated by function, nature or both (in which case nature would be reported as a subset of function). The function of an item would be the primary activities in which an entity is engaged (selling goods, advertising, business development) The nature of an item is the characteristics that distinguish financial statement items that are not equally affected by similar economic events (separating revenue into wholesale and retail). For the cash flow statement, the indirect method would no longer be allowed. A final statement is expected in 2011.

Subsequent Events and Going Concern

The FASB issued two exposure drafts that incorporate the AICPA guidelines into the FASB codification. The new exposure drafts on subsequent events and going concerns basically are the same as the AICPA version. I will do a summary on these soon also.

I hope this catches you up for year end. I will have more soon.

Replies

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.