FASB revises derivatives guidance. (Highlights).In April the Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). issued Statement no. 149, Amendment of Statement 133 on Derivative Instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. and Hedging Activities (www.fasb.org/news/nr043003.shtml). FASB changed and clarified the earlier statement by requiring companies to account similarly for derivatives contracts with comparable characteristics. The board said it expected the amendment to foster greater consistency of financial reporting for contracts that were composed entirely of derivatives or that included embedded Inserted into. See embedded system. derivatives which call for separate accounting. Specifically, the new statement clarifies the circumstances under which a contract with an initial net investment has the characteristics of a derivative as defined in paragraph 6(b) of Statement no. 133. It also describes the situations in which a derivative contains a financing component that warrants special reporting in the statement of cash flows. With the following exceptions, Statement no. 149 is effective for contracts entered into or modified--and for hedging relationships designated--after June 30, 2003: * Those of its provisions relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc Statement no. 133 implementation issues In the Business world, companies frequently set-up a connection between which they transfer data. When the connection is being set-up, it is referred to as implementation. When issues occur during this phase, they are known as implementation issues. that have been effective for fiscal quarters that began before June 15, 2003, should continue to be applied according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. their respective effective dates as specified in Statement no. 133. * Paragraphs 7(a) and 23(a) of the new statement, which relate to forward purchases or sales of when-issued, or other not-yet-created, securities should be applied to existing contracts as well as new ones entered into after June 30, 2003. Copies of the statement are available from FASB's order department at 800-748-0659 or http://store.yahoo.com./fasbpubs. |
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