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Debate on Consolidated Reporting Proposal Moves Forward

At its next weekly meeting, the FASB plans to discuss its proposed changes to the accounting standards for consolidated reporting. The board wants to discuss the costs and benefits of the planned amendment to U.S. GAAP, how it would apply to private companies and not-for-profit organizations, whether its recent decisions for the amendments require a second round of public comment, and when the final standard should become effective.

The FASB is planning to discuss its proposed changes to the accounting standards for consolidated reporting at its July 16, 2014, weekly meeting.

The accounting board wants to update Topic 810, Consolidation, with some of the draft guidance in Proposed Accounting Standards Update (ASU) No. 2011-220,Consolidation (Topic 810): Principal versus Agent Analysis, a proposal that was published nearly three years ago.

The board wants to discuss the costs and benefits of the planned amendment to U.S. GAAP, how it would apply to private companies and not-for-profit organizations, whether its recent decisions for the planned amendments require a second round of public comment, and when the final standard should become effective.

The board also plans to consider two decisions from its Emerging Issues Task Force (EITF), which decided in June to finalize amendments related to some off-balance sheet vehicles and troubled mortgages that are backed by government loans.

The amendments concern EITF Issue No. 12-G, “Measuring the Financial Assets and Financial Liabilities of a Consolidated Collateralized Financing Entity” and EITF Issue No. 13-F, “Accounting for the Effect of a Federal Housing Administration Guarantee.”

A draft of EITF Issue No. 12-G was released for public comment as Proposed ASU No. EITF-12Gr, Consolidation (Topic 810): Measuring the Financial Liabilities of a Consolidated Collateralized Financing Entity (a consensus of the FASB Emerging Issues Task Force). The proposal called for measuring an off-balance-sheet vehicle’s liabilities based upon the fair value of its financial assets and the carrying value of its nonfinancial assets.

The draft version of EITF Issue No. 13-F was published as Proposed ASU No. EITF-13F, Receivables—Troubled Debt Restructurings by Creditors (Subtopic 310-40) Classification of Certain Government-Guaranteed Residential Mortgage Loans upon Foreclosure, a consensus of the FASB Emerging Issues Task Force, and called for standardizing the accounting for some government-insured mortgages that have been foreclosed.

The meeting agenda also includes a discussion about the disclosure rules for short-term insurance contracts within the board’s insurance accounting project. Board members and FASB staffers have also been conducting meetings about reinsurance, and board members want to assess the findings from the meetings.

On July 15, the FASB is planning to meet with its Private Company Council (PCC) to discuss Issue No. 13-01A, “Accounting for Identifiable Intangible Assets in a Business Combination.”

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