FASB issues reports on asset impairment and not-for-profit field tests.

In order to give CPAs guidance and examples of how some organizations have applied the provisions of Financial Accounting Standards Board exposure drafts, the board published special reports on the results of two field tests.

Impairment. The ED on Accounting for the Impairment of Long-Lived Assets proposed guidance for recognizing and measuring these losses. Since mid-1994 the board has added capital leases of lessees to the scope of the final statement and required regulated enterprises to recognize as assets costs subject to recovery through rates that were previously disallowed. The board is still deliberating other changes, including the effective date of the final statement.

Ten companies participated in the field test, detailing the accounting policies and procedures they used in recognizing and measuring previous impairment losses and adjustments to carrying amounts of assets to be disposed of and then showing what the effects would have been had they applied the ED provisions. The participants considered impairment assets whose carrying amounts totaled $6.4 billion. They found the proposed statement accelerated recognition or increased the dollar amount of impairment losses, compared with the impairment losses they actually recognized. The Financial Executives Institute's committee on corporate reporting collaborated on designing and conducting the test.

Not-for-profit. In the FASB's special report on the Results of the Field Test of the Proposed Standards for Financial Statements of Not-for-Profit Organizations and Accounting for Contributions, which became Statement no. 116, Accounting for Contributions Received and Contributions Made, and Statement no. 117, Financial Statements of Not-for-Profit Organizations, the board included examples of financial statements prepared by the 20 participants and a discussion of the statements. The participants applied the requirements of the two EDs to their most recent financial statements.

The field test provided "real-life" examples of how the proposed statements would be implemented and identified problems and possible misunderstandings. The report can help not-for-profit organizations, their auditors and users of their financial statements as they implement Statement nos. 116 and 117, the board said. This test was a joint effort of the FASB and KPMG Peat Marwick.

Copies of the special reports on the field tests on asset impairment (product code SRIMP) and on not-for-profit organizations (product code SRNP) are available for $11 each from the FASB Order Department, 401 Merritt 7, P.O. Box 5116, Norwalk, Connecticut 06856; telephone [phone], ext. 555.