Financial Accounting Standards Research Initiative

In the old IAS 39, Financial Instruments: Recognition and Measurement, unrealized gains and losses in available-for-sale securities were recognized in OCI. However, if an impairment loss occurred for that AFS security, the cumulative loss recognized in OCI was reclassified from equity to profit and loss (paragraphs 55(b) and 67-70). Moreover, impairment losses recognized in profit and [...] Read more > >

Video Link to Recording here:   http://dl.dropbox.com/u/31770485/Research%20on%20private%20companies-20111108%202104-1.wmv  To participate in the Roundtable, please follow these instructions.  1)  Go to http://intercall.webex.com anytime after 3:00 pm (New York time) on Tuesday, November 8.  2)  Type in the following meeting number: 598 987 887 and click “Join Now”. 3)  On the next page, fill in your name, email address, and the password “Fasri001” (case [...] Read more > >

Read more > >

prior post, the FASB adopted a new presentation requirement for Other Comprehensive Income (OCI).  The move basically eliminated one of the previously acceptable ways to present OCI.  No big deal, right? What I missed was that the FASB required a “roll forward” on OCI, which had not been required before.  ASU No. 2011-05 requires line items [...] Read more > >

Link to Video Recording here: http://dl.dropbox.com/u/31770485/Standard-setting%20for%20private%20companies.wmv To participate in the Roundtable, please follow these instructions. 1)  Go to http://intercall.webex.com anytime after 3:00 pm (New York time) on Tuesday, November 1.  2)  Type in the following meeting number: 599 285 948 and click “Join Now”. 3)  On the next page, fill in your name, email address, and the password “Fasri001” (case [...] Read more > >

“Lease payments should include amounts expected to be payable under residual value guarantees… The Boards discussed the subsequent measurement of residual value guarantees by lessees … and tentatively decided that: The amounts expected to be payable under residual value guarantees included in the measurement of the lessee’s right-of-use asset should be amortized consistently with how other [...] Read more > >

The AICPA’s response to the FAF’s proposal for the creation of a Private Company Standards Improvement Council (PCSIC) has been predictably unsupportive.  The organization has made its preference for a separate private company standards-setting board widely known, and intends to organize another letter-writing campaign among its membership expressing this view.  A similar campaign by the [...] Read more > >

Read more > >

This is the 'own credit risk' problem. Gains from fair value accounting on your liabilities because your own discount rate has increased because your credit worthiness has deteriorated. (So the fair value of your liabilities decreases (debit the debt) and an unrealized holding gain is recognized (credit gain).) Debit valuation adjustment?? Ay Ay [...] Read more > >

 Even if you were unable to attend Hal’s session last week, please plan to join us for the upcoming Roundtable with Doron.       Participation (PLEASE NOTE DIRECTIONS FOR PARTICIPATION HAVE CHANGED):  To participate in the FASB Roundtable, 1)  go to http://intercall.webex.com anytime after 2:00 pm (New York time) on Tuesday, October 7.  2)  Type in the following meeting number: [...] Read more > >

Plan to Establish the Private Company Standards Improvement Council. The plan “calls for the establishment of a new council with the authority to identify, propose and vote on specific improvements to US accounting standards for private companies.” As stated in this press release, the council, if established, would “identify, propose, deliberate and formally vote on [...] Read more > >

Read more > >

As I prepared for class, i searched for examples and found a number that had done the treatment incorrectly. I saw a lot of the incorrect treatment on the asset side. I emailed Dan Gode who said the same issue applies to the asset side (i.e., no reason why treatment should be different [...] Read more > >

So in this post, I’ll provide the mechanics of the issue. In my next post, I’ll provide “empirical data.” Bond issued at a discount. Say a bond is issued for $90 and face value is $100. Say interest payments are $5 each period for five periods, and then the bond is repaid. [...] Read more > >

Roundtable discussion reminded me of a post by Cathy Shakespeare on good vs bad book.  Just this week, some groups in my Theory class were assigned to analyze the FASB and IASB “Supplemental Document” that she cites.  One group is to explain the proposal.  The other group is to highlight the comment letters.  I will [...] Read more > >

9/6 and 8/30. Enjoy! International Convergence Round Table with Joachim Gassen from 9/6 Russell Golden Round Table from 8/30 ]]> Read more > >

Journal of Accounting and Economics. The paper is entitled, “Accounting standards and debt covenants: Has the ‘Balance Sheet Approach’ led to a decline in the use of balance sheet covenants?” My first reaction was to question what the author meant by a “balance sheet approach” because I’ve never heard a good explanation of what the alternative [...] Read more > >

The FASB is currently engaged in deliberations on accounting for impairments of financial instruments. The title of Hal’s Roundtable discussion will be “Accounting for Impairment: The Next Generation.”  His discussion promises to provide unique insights into the economic implications of the various accounting alternatives.  Academics should be aware of the issues surrounding the financial instruments [...] Read more > >

First China Pharmaceutical Group, Inc.  The company acquired XYT, and in doing so, ended up with a note receivable from the CEO and Chairman of XYT.  The company recorded the note as an asset.  Upon further review, the SEC “requested the Company remove the note as an asset and restate it against retained earnings.”  After [...] Read more > >

As I've been considering this, I've thought about the different ways in which standard-relevant research can be conducted. I've realized there are implementation studies and there are theory-based studies. I'll demonstrate using papers we discussed in a PhD seminar this past spring. Obviously each paper contains elements of each category, but I focus on them [...] Read more > >