FASB Issues EDs on financial instruments.In October October: see month. FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). released two proposed statements dealing with financial instruments. One, Accounting for Financial Instruments with Characteristics of Liabilities, Equity, or Both, would provide guidance on accounting for the noncontrolling interest in a consolidated subsidiary, for costs incurred in issuing a financial instrument that has liability or equity characteristics and for repayments and conversions of convertible debt. FASB developed the exposure draft in response to concerns of preparers, auditors AUDITORS, practice. Persons lawfully appointed to examine and digest accounts referred to them, take down the evidence in writing, which may be lawfully offered in relation to such accounts, and prepare materials on which a decree or judgment may be made; and to report the whole, together , and regulators who could not determine whether certain financial instruments were to be classified as liabilities or as equities. The other, Proposed Amendment to FASB Concepts Statement No. 6 to Revise the Definition of Liabilities, addresses inconsistencies between certain provisions of the first-mentioned ED and the distinction in FASB Concepts Statement no. 6 between liabilities and equity. It would revise the definition of liabilities to include certain obligations that require or Permit settlement by issuance of the entity's equity shares, but which do not establish a relationship as that of an owner. Diana Diana, in Roman religion Diana (dīăn`ə), in Roman religion, goddess of the moon, forests, animals, and women in childbirth. She was probably originally a forest goddess and a special patroness of women. Willis Wil·lis , Thomas 1621-1675. English anatomist and physician known for his studies of the nervous system and the brain. He discovered the circle of Willis at the base of the brain. , a senior project manager at FASB, said, reporting entities have had difficulty dealing with financial instruments that blur blur (blur) indistinctness, clouding, or fogging. spectacle blur the indistinct vision with spectacles occurring after removal of contact lenses, especially non–gas-permeable lenses; it is the line between debt and equity--for example, a compound instrument like convertible debt, which combines components of both. "Some obligations that normally would be considered equity instruments could be settled by issuing equity shares and would become liabilities: That is because their value doesn't change in the same direction as the value of the underlying common stock of the company. An example of this is a written put option that becomes a liability." The board requests comments on the EDs by March 31, 2001. Details are available at www.fasb.org. |
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion