FASB Adds New Projects, as Exposure Drafts On Hedge Accounting, Financial Statement Presentation Near

Mar 11th 2010
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As FASB proceeds toward releasing its Exposure Drafts on Hedge Accounting (expected this month) and Financial Statement Presentation (expected in April), the board is adding two new projects to its agenda, and a third project will be added to the agenda of FASB's Emerging Issues Task Force (EITF).

New projects

At FASB's board meeting earlier today, FASB Chairman Robert Herz noted that after consultation with his fellow board members and its Emerging Issues Task Force (EITF) agenda committee, two projects are being added to FASB's agenda on (1) investment properties and (2) balance sheet offsetting or netting. Separately, he noted a project is being added to the E, and a third project is being added to the EITF's agenda on multiple foreign currency exchange rates. Read more on the new projects here.

Hedge Accounting
At its board meeting earlier today, consistent with an earlier decision made at its February 17 board meeting, FASB agreed to permit bifurcation-by-risk for hedge accounting in its upcoming proposal on hedge accounting The Exposure Draft of the proposed standard is expected to be released for public comment in March, 2010. The proposal to permit bifircation-by-risk represents a change from FASB's previous earlier hedge accounting proposal released in June, 2008.

Among other key points in the upcoming Exposure Draft, entities would be required to perform a qualitative (rather than quantitative) test at inception to demonstrate that an economic relationship exists between the hedging instrument and the hedged item or forecasted transaction. However, board members emphasized, the Exposure Draft will explain that in some situations a quantitative test may still be necessary at inception.

The board also discussed how the proposed hedge accounting model would be applied by certain nonpublic entities for which the board tentatively decided to provide a delayed implementation date on certain aspects of its proposed financial instruments project, particularly relating to the valuation of core deposit intangibles, and loans (nonpublic entities with less than $1 billion consolidated total assets). Refer to FASB's Summary of Board Decisions for details.

Financial Statement Presentation
Additionally, at today's board meeting, FASB discussed various issues in its Financial Statement Presentation project, including reaffirming and in some cases modifying prior decisions, on subjects such as: what constitutes a complete set of financial statements, requirements for comparative reporting, treatment of extraordinary items, and more. Refer to FASB's Summary of Board Decisions for results of the meeting.FASB expects to release the Exposure Draft for public comment in April.


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