New proposals on stock compensation, asset securitization, consolidations, and more

✍ Scribed by Munter, Paul

• Publisher: John Wiley and Sons
• Year: 1999
• Tongue: English
• Weight: 105 KB
• Volume: 11
• Category: Article
• ISSN: 1044-8136
• DOI: 10.1002/(sici)1097-0053(199923)11:1<133::aid-jcaf12>3.0.co;2-0

✦ Synopsis

I n a very active first half of the year, the Financial Accounting Standards Board (FASB) has issued proposals on several fronts, including consolidations, stock compensation, asset securitizations, and interest method computations. Additionally, the FASB delayed, for one year, the mandatory adoption date for Financial Accounting Standard (FAS) No. 133, Accounting for Derivative Instruments and Hedging Activities. In this issue's expanded column we will briefly examine each of these proposals.

DELAY IN ACCOUNTING FOR DERIVATIVES

As you know, the topic of accounting for derivatives has been very controversial. In June 1998, after many years of deliberation on the subject, the FASB issued FAS No. 133, which establishes the accounting and reporting standards for derivative instruments. Included in the provisions of this standard are the requirements for free-standing derivatives as well as certain derivative instruments that are embedded in other contracts. Additionally, FAS No. 133 specifies what constitutes hedging activities and the accounting for those activities. However, as you may also know, there have been continuing concerns about the implementation of FAS No. 133. In response to calls from industry, the FASB decided that the mandatory effective date of FAS No. 133 should be delayed for one year. Thus, with the issuance of FAS No. 137, Accounting for Derivative Instruments and Hedging Activities-Deferral of the Effective Date of FASB Statement No. 133, the FASB delayed the effective date of FAS No. 133 to fiscal periods beginning after June 15, 2000.