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Activity on the FASRI website has been suspended as of June 1, 2014.  New posts are no longer accepted. Read more > >

FASRI Roundtable: Rules vs. Principles-Based Standards

On February 26, FASRI will host a Roundtable discussing issues related to rules vs. principles-based standards.  Professor Rick Mergenthaler from the University of Iowa will lead a discussion based on his research into rules vs. principles-based standards and how they relate to litigation, earnings management, and other earnings attributes. For background you can read Professor [...] Read more > >

Background for 1/29/2013 Roundtable

I hope people can “attend” the upcoming roundtable.  Roundtable attendees or others might benefit from seeing some of the materials sent to conference attendees teeing up the issues.  You are welcomed but not required to browse through the materials.  The roundtable will focus primarily on two issues: How and when is the concept of control [...] Read more > >

FASRI Roundtable: 2012 FASB/IASB Financial Reporting Issues Conference

On January 29, FASRI will host a Roundtable covering issues discussed at the 2012 FASB/IASB Financial Reporting Issues Conference.  Professor Bob Lipe will lead a discussion on issues of control (both of assets and entities) and on derecognition of both assets and liabilities.  In the conference, participants attempted to develop a consistent set of principles [...] Read more > >

Can fair value accounting lead to dysfunctional hedging decisions?

In a forthcoming issue of the Journal of Accounting Research, I co-author a study (titled “Fair Value Accounting and Managers’ Hedging Decisions”) that investigates how fair value accounting affects managers’ real economic decisions. The controversial impact of fair value accounting has been long debated, and the recent financial crisis further accentuates opponents’ concerns on its role [...] Read more > >

Revenue recognition when product return and pricing adjustment uncertainties exist

My forthcoming paper in Accounting Horizons (Rasmussen 2013; “Revenue Recognition, Earnings Management, and Earnings Informativeness in the Semiconductor Industry”) examines the implications of revenue recognition for companies with product return and pricing adjustment uncertainties. Although these uncertainties are typically minimal for sales to end customers, they can pose large risks for sales to distributors. The [...] Read more > >

New Proposed ASU on Reclassifications of AOCI

On August 16, the Board issued a proposed ASU, which addresses the manner in which companies are to present the effects of reclassifications out of accumulated OCI.  This proposed update was necessitated last December when the Board issued ASU 2011-12, which deferred the effective date for the reclassification adjustments requirement in ASU 2011-05.  (For a [...] Read more > >

Ball and Brown and the Usefulness of EPS

At the AAA meeting in DC, I attended a presidential address by Ray Ball and Phil Brown regarding their seminal research paper (JAR 1968).  They described the motivation for their study as a test of existing scholarly research that painted a dim picture of reported earnings. The earlier writers noted that earnings were based on [...] Read more > >

Toward a Measurement Framework for Financial Reporting by Profit-oriented Entities

I have completed a paper Toward a Measurement Framework for Financial Reporting by Profit-oriented Entities (132 pages) that has been published by the Canadian Institute of Chartered Accountants (CICA) at the request of the Canadian Accounting Standards Board (AcSB). The paper proposes a measurement framework that is reasoned from fundamental premises about economic business purposes, [...] Read more > >

Consensus for Leases is Difficult to Find

I’m going into my last week as a FASB Research Fellow.  The past year has been very educational for me as I’ve observed up close the process that the Board goes through in promulgating standards.  I’ve developed a better understanding as to why some projects proceed at a painstakingly slow pace.  I’ve also gained a [...] Read more > >

Introducing “Approach Y”: A Better Lease-Accounting Model for Lessees (Part 6)

(Previous Posts: Part 1, Part 2, Part 3, Part 4, Part 5) Here is the sixth in a series of working papers that I am preparing to explain “Approach Y”—a lease-accounting model for entities that are lessees. The new working paper provides additional evidence that the “Interest and Amortization” (I&A) model (formerly known as “Approach A” [...] Read more > >

FASRI Roundtable: FASB Projects on Leases

On July 24, FASRI will host a Roundtable on the latest developments for the FASB/IASB joint project on leases.  Leasing is a significant source of financing in the economy, but the current capital/operating lease accounting treatment has long been criticized as not meeting the needs of financial statement users and resulting in non-GAAP adjustments by [...] Read more > >

Introducing “Approach Y”: A Better Lease-Accounting Model for Lessees (Part 5)

(Previous Posts: Part 1, Part 2, Part 3, Part 4) Here is the fifth in a series of working papers that I am preparing to explain “Approach Y”—a lease-accounting model for entities that are lessees. The new working paper focuses on the significant implications of Approach Y’s terminology, i.e., the specific words and phrases that are integral [...] Read more > >

Introducing “Approach Y”: A Better Lease-Accounting Model for Lessees (Part 4)

(Previous Posts: Part 1, Part 2, Part 3) Here is the fourth in a series of working papers that I am preparing to explain “Approach Y”—a lease-accounting model for entities that are lessees. The new working paper summarizes the structural aspects of financial-statement presentation and disclosure under Approach Y and three other approaches. The summary supports the [...] Read more > >

Insurance Accounting: More evidence on the viability of true convergence

In a report this past April to the Financial Stability Board, the FASB makes this statement about accounting convergence: The FASB believes that the ultimate goal of convergence is a single set of high-quality, international accounting standards that companies worldwide would use for both domestic and cross-border financial reporting. The statement is explicit that the [...] Read more > >

The IASB and FASB Decide on Lease Accounting

The IASB and FASB are meeting in London this week where leases is on the agenda.  At the meeting, the Boards proposed a standards update that will require all leases with a term in excess of one year to be capitalized on the balance sheet.  No surprise there; that has been the Boards’ position since it released [...] Read more > >

Introducing “Approach Y”: A Better Lease-Accounting Model for Lessees (Part 3)

(Previous Posts: Part 1, Part 2) Here is the third in a series of working papers that I am preparing to explain “Approach Y”—a lease-accounting model for entities that are lessees. The new working paper evaluates the conceptual bases of Approach Y and three other approaches with regard to subsequently measuring right-of-use (RoU) assets. The results of this evaluation [...] Read more > >

Introducing “Approach Y”: A Better Lease-Accounting Model for Lessees (Part 2)

(Previous Posts: Part 1) Here is the second in a series of working papers that I am preparing to explain “Approach Y”—a lease-accounting model for entities that are lessees. The new working paper, which compares the measurement outcomes of Approach Y and other approaches, is attached. Also attached is the Excel file to which the new working paper [...] Read more > >

Introducing “Approach Y”: A Better Lease-Accounting Model for Lessees (Part 1)

To date, the Financial Accounting Standards Board (FASB), the International Accounting Standards Board (IASB), and the Boards’ constituents have not reached a consensus on how lessees should account for leases. Several approaches to lessee accounting have been identified and debated, but so far none of them has been widely embraced as the clear solution to [...] Read more > >

What are the Needs of Private Company Financial Statement Users?

With the recent FAF Board of Trustees vote to establish the Private Company Council (PCC), the next step in this process of developing rules for private companies is for the PCC (together with the FASB) to develop a framework that will determine when it is justified to have GAAP exceptions and modifications for private companies.  With [...] Read more > >