FASB

A&A

Banks Cheer FASB's Delay of Rule on Writing Down Debt

The Financial Accounting Standards Board (FASB) on Wednesday delayed a rule that would force companies to reduce the value of debt securities because of rising interest rates.The new guideline called for financial services firms to recognize certain losses in their bond holdings each quarter, even if the losses are caused only by higher interest rates, the Wall Street Journal reported.The delay is "a sigh of relief" to banks, said Donna Fisher, the director of tax and accounting at the American Bankers Association.
A&A

FASB May Delay Rule Change on Debt Securities

The Financial Accounting Standards Board (FASB) may delay a rule change that would require financial institutions to reduce the value of debt in their bond holdings when interest rates fluctuate.The proposal would force banks and financial institutions to record declines in the value of mortgage-backed securities in their income statements even if the losses are caused only by rising interest rates rather than falling credit quality, the Wall Street Journal reported.The proposed requirement is part of a group of guidelines called EITF 03-1, which are designed to clarify when companies mu
A&A

FASB Will Allow Companies to Decide How to Value Stock Options

The Financial Accounting Standards Board (FASB) took a big step toward finalizing a rule on expensing stock options Wednesday by agreeing to let companies choose their own method for calculating value.FASB had previously singled out one approach as the preferred method for estimating the fair value of stock options.
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Equity Wins Out Over Liability in FASB Debate Over Options

The Financial Accounting Standards Board (FASB) on Wednesday ruled out the possibility that stock-option pay could be treated as a liability.The decision ends the debate between the liability advocates and those who believe stock-option pay should be classified as equity.Wall Street analysts have argued that employee options are an economic liability because the actual cost to shareholders is the difference between the strike price of the options versus the higher stock price when the options are exercised, the Associated Press reported.
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FASB Addresses Merger Reserve Liability Funds

Under new rules proposed by the Financial Accounting Standards Board (FASB), companies would have to expense merger-related costs as they happen, rather than using one-time reserve funds, the Wall Street Journal reported.In some cases, companies that dip in later to improve their earnings picture have used the reserve funds improperly. Reserve liabilities are often set up at the time of merger and are used for expenses such as firing staff or closing the factories of the acquired company, the Journal reported.FASB, which writes U.S. accounting rules through the authority of the U.S.
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CPA Candidates, Educators can get Access to Free Professional Literature

The Uniform CPA Examination consists of multiple-choice questions and condensed case studies called simulations. Within the simulations, candidates must do an online search of professional literature databases to answer questions. Here are some ways that candidates, students, educators, and schools can get access to helpful online resources. CPA exam candidates can get a free six-month subscription to professional literature used in the computerized CPA Examination. This online package includes AICPA Professional Standards, FASB Current Text, and FASB Original Pronouncements.
A&A

FASB Begins Final Draft of Stock Options Expensing Rule

Despite opposition, the Financial Accounting Standards Board is moving ahead with a rule that would require companies to book stock options as a business expense.The accounting rule-maker decided last week to begin the final draft of the rule, which was first proposed in March and sparked a deluge of response, the Wall Street Journal reported. Supporters, which include the Securities and Exchange Commission, say the rule would give a truer picture of the company’s finances.
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FASB's Plan Could Mean ‘Major Hit’ to Earnings

Update: 7-28-04 - second paragraph: Multinational corporations may be looking at a big increase in reported liabilities and a deep cut to profits if a change in deferred-tax accounting is adopted by the Financial Accounting Standards Board.The FASB staff is expected on Tuesday to recommend further study of the feasibility of requiring companies to book a liability for taxes payable on profits earned and held overseas, the Wall Street Journal reported. Increasing companies’ reserves for tax liabilities, which would be a result of the requirement, would chip away at earnings.
A&A

House Limits Stock Option Expensing to Top 5 Officers

A much-discussed proposal to require public companies to treat all stock options as business expenses has been put on hold by the House of Representatives.In a 312-111 vote Tuesday, the House approved a bill that delays new rules pending an economic study, the Wall Street Journal reported. The move rejects the recommendation of the independent Financial Accounting Standards Board and supports technology companies that objected to the proposal.The bill would not prevent companies from treating stock options as expenses if they wish – that’s no change from the current rules.
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GAO Supports FASB’s Action on Stock Option Expense Rules

In a letter this week to the Financial Accounting Standards Board (FASB), David M. Walker, Comptroller General of the United States gave full support to the proposed statement requiring companies to record share-based payment as an expense. Mr. Walker said, “In our view, stock options and other forms of share-based payment have economic value and represent a form of compensation expense.
A&A

FASB Issues Proposal on Fair Value Measurements

In response to requests from constituents to improve the current guidance for measuring fair value, the Financial Accounting Standards Board (FASB) has published an Exposure Draft, Fair Value Measurements. The Exposure Draft seeks to establish a framework for measuring fair value that would apply broadly to financial and nonfinancial assets and liabilities, improving the consistency, comparability, and reliability of the measurements.
A&A

FASB Offers Guidance for Conditional Asset Retirement Obligations

The Financial Accounting Standards Board (FASB) has published an Exposure Draft, Accounting for Conditional Asset Retirement Obligations, an Interpretation of FASB Statement No. 143, in response to the diverse accounting practices that have developed with respect to the timing of liability recognition for conditional asset retirement obligations.
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FAF Issues Statement Opposing Legislative Proposals to Curb FASB Independence

Source: Financial Accounting Foundation The Financial Accounting Standards Board (FASB), after extensive analysis and with careful public due process, issued a proposal on March 31, 2004 regarding accounting for employee stock options and other equity-based compensation. As Trustees of the Financial Accounting Foundation (FAF) we do not take positions on the FASB's standards-setting proposals; we leave the complex task of accounting standards setting to the experts who comprise the FASB.
A&A

House Committee Votes to Restrict Expensing of Stock Options

A House committee has greatly narrowed the scope of a proposal requiring U.S. companies to count stock options as business expenses.The House of Representatives’ Financial Services Committee on Tuesday approved a bill that would require companies to count as an expense only the cost of options offered to their top five executives, Reuters reported.
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FAF Chairman Responds to 'The Stock Option Accounting Reform Act'

Robert Denham, Chairman and President of the Financial Accounting Foundation (FAF), expressed grave concern over the approval of H.R. 3574 “The Stock Option Accounting Reform Act,” by the Capital Markets, Insurance and Government Sponsored Enterprises Subcommittee of the Committee on Financial Services.“Advancing this bill in the legislative process harms the credibility of America's system for providing transparent and unbiased financial information to investors,” Denham said. “By inserting Congress into the setting of standards for accounting by publicly traded companies, H.R.
A&A

FASB Issues Rule on Accounting for Medicare Subsidy

Companies are barred from booking a federal Medicare subsidy as a one-time boost to their earnings under a new rule issued Wednesday.The Financial Accounting Standards Board’s (FASB) final guideline requires companies to record the amount of federal subsidy they expect to receive as an "actuarial gain," to be amortized into income over the average working life of their employees, the Wall Street Journal reported.
A&A

House Subcommittee Votes to Dilute Stock Option Rule

Congress may once again stymie the Financial Accounting Standards Board (FASB) efforts to require companies to show stock options as an expense on company financial statements. A decade ago Congress forced the accounting standards setting board to settle for footnotes in the financial statements addressing stock options. This time, Congress may end up requiring that only the options paid to a company’s top five executives be shown as an expense.The controversial FASB proposal was considered last week by a House Financial Services Subcommittee, taking up a bill sponsored by Rep.
Tax

Stock Options Accounting Legislation Clears House Subcommittee

On Wednesday, the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, chaired by Rep. Richard H. Baker (LA), approved legislation that would preserve broad-based employee stock option plans and improve American competitiveness.H.R. 3574, the Stock Option Accounting Reform Act, introduced by Rep. Baker on Nov. 21, was agreed to by a voice vote with two amendments.
A&A

FASB Considers Costs to Small Businesses in Stock Option Issue

When final rules are adopted requiring expensing of stock options, small businesses may get different treatment than big corporations, according to the chair of the Financial Accounting Standards Board.At a congressional hearing Tuesday, FASB Chairman Robert Herz defended the board's March recommendation for mandatory expensing, but noted that the board is concerned about a "cost-effective" approach to small businesses.

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