Official releases: FASB No. 149 ... AICPA Council resolutions.Space considerations prevent publishing here the appendices ap·pen·di·ces n. A plural of appendix. to FASB Statement FASB Statement A standard set by the Financial Accounting Standards Board regarding a financial accounting and reporting method. Essentially, FASB statements determine the acceptable accounting practices that Certified Public Accountants use in reporting no. 149. Since the appendices often are important to understanding FASB statements, readers are advised to obtain complete copies. For additional copies of FASB statements and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. information on applicable prices and discount rates, contact the FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). order department, 401 Merritt Merritt is the name of several places in North America:
1 City (1990 pop. 94,279), Los Angeles co., S Calif.; settled in the 1850s, inc. 1957. With the arrival (1875) of the Southern Pacific RR, it became a center for the dairy and logging industries, but , Connecticut Connecticut, state, United States Connecticut (kənĕt`ĭkət), southernmost of the New England states of the NE United States. It is bordered by Massachusetts (N), Rhode Island (E), Long Island Sound (S), and New York (W). 06856-5116. Telephone: 800-748-0659. Statement of Financial Accounting Standards 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 hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. Activities SUMMARY This Statement amends AMENDS. A satisfaction, given by a wrong doer to the party injured for a wrong committed. 1 Lilly's Reg. 81. 2. By statute 24 Geo. II. c. 44, in England, and by similar statutes in some of the United States, justices of the peace, upon being notified of an and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded Inserted into. See embedded system. in other contracts (collectively referred to as derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. ) and for hedging activities under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. Reasons for Issuing This Statement This Statement amends Statement 133 for decisions made (1) as part of the Derivatives Implementation Group process that effectively required amendments to Statement 133, (2) in connection with other Board projects dealing with financial instruments, and (3) in connection with 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. raised in relation to the application of the definition of a derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. , in particular, the meaning of an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors, the meaning of underlying, and the characteristics of a derivative that contains financing components. How the Changes in This Statement Improve Financial Report The changes in this Statement improve financial reporting by requiring that contracts with comparable characteristics be accounted for similarly. In particular, this Statement (1) clarifies under what circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or a contract with an initial net investment meets the characteristic of a derivative discussed in paragraph 6(b) of Statement 133, (2) clarifies when a derivative contains a financing component, (3) amends the definition of an underlying to conform it to language used in FASB Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. of Others, and (4) amends certain other existing pronouncements. Those changes will result in more consistent reporting of contracts as either derivatives or hybrid hybrid (hī`brĭd), term applied by plant and animal breeders to the offspring of a cross between two different subspecies or species, and by geneticists to the offspring of parents differing in any genetic characteristic (see genetics). instruments. The Effective Date of This Statement This Statement is effective for contracts entered into or modified mod·i·fy v. mod·i·fied, mod·i·fy·ing, mod·i·fies v.tr. 1. To change in form or character; alter. 2. after June June: see month. 30, 2003, except as stated below and for hedging relationships designated after June 30, 2003. In addition, except as stated below, all provisions of this Statement should be applied prospectively. The provisions of this Statement that relate to Statement 133 Implementation Issues that have been effective for fiscal quarters that began prior to June 15, 2003, should continue to be applied in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with their respective effective dates. In addition, paragraphs 7(a) and 23(a), which relate to forward purchases or sales of when-issued when-issued Used to refer to a security that has not yet been issued but that will be issued in the future. Trading in when-issued securities often occurs between the time a new security is announced (for example, the time when a stock is split) and the time securities or other securities that do not yet exist, should be applied to both existing contracts and new contracts entered into after June 30, 2003.
CONTENTS
Introduction/1-2
Standards of Financial Accounting and
Reporting:
Amendments to Statement 133/3-29
Amendments to Existing Pronouncements
Relating to the Definition of Expected Cash
Flows in FASB Concepts Statement No. 7,
Using Cash Flow Information and Present
Value in Accounting Measurements/30-34
Amendments to Other Existing
Pronouncements/35-38
Effective Dates and Transition/39-40
Effective Date and Transition for Other
Amendments to Statement 133 That
Resulted Principally from the Derivatives
Implementation Group Process/40
Appendix A: Background Information and
Basis for Conclusion/A1-A45
Appendix B: Amended Paragraphs of
Statement 133 Marked to Show Changes
Made by This Statement/B1
INTRODUCTION 1. FASB Statements No. 133, Accounting for Derivative Instruments and Hedging Activities, and No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities, establish accounting and reporting standards for derivative instruments including derivatives embedded in other contracts (collectively referred to as derivatives) and for hedging activities. 2. This Statement amends Statement 133 for certain decisions made by the Board as part of the Derivatives Implementation Group (DIG See Digg. ) process. For those amendments that relate to Statement 133 implementation guidance, the specific Statement 133 Implementation Issue necessitating the amendment is identified. If the amendment relates to a cleared issue, the clearance CLEARANCE, com. law. The name of a certificate given by the collector of a port, in which is stated the master or commander (naming him) of a ship or vessel named and described, bound for a port, named, and having on board goods described, has entered and cleared his ship or vessel date also is noted. This Statement also amends Statement 133 to incorporate clarifications of the definition of a derivative. This Statement contains amendments relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc FASB Concepts Statement No. 7, Using Cash Flow Information and Present Value in Accounting Measurements, and FASB Statements No. 65, Accounting for Certain Mortgage Banking Activities, No. 91, Accounting for Nonrefundable Nonrefundable Not permitted, under the terms of an indenture, to be refundable. Fees and Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases, No. 95, Statement of Cash Flows, and No. 126, Exemption exemption n. 1) in income taxation, a credit given for each dependent, blindness or other disability, and age over 65, which result in a downward calculation in tax levels. from Certain Required Disclosures about Financial Instruments for Certain Nonpublic Adj. 1. nonpublic - not invested with or related to prominent position or status etc. private - confined to particular persons or groups or providing privacy; "a private place"; "private discussions"; "private lessons"; "a private club"; "a private secretary"; Entities STANDARDS OF FINANCIAL ACCOUNTING AND REPORTING Amendments to Statement 133 3. The following is added to paragraph 6 after subparagraph (c): Notwithstanding the above characteristics, loan commitments that relate to the origination of mortgage loans that will be held for sale, as discussed in paragraph 21 of FASB Statement No. 65, Accounting for Mortgage Banking Activities (as amended), shall be accounted for as derivative instruments by the issuer of the loan commitment (that is, the potential lender). Paragraph 10(i) provides a scope exception for the accounting for loan commitments by issuers of certain commitments to originate loans and all holders of commitments to originate loans (that is, the potential borrowers). 4. The phrase (including the occurrence or nonoccurrence Noun 1. nonoccurrence - absence by virtue of not occurring absence - the state of being absent; "he was surprised by the absence of any explanation" of a specified spec·i·fy tr.v. spec·i·fied, spec·i·fy·ing, spec·i·fies 1. To state explicitly or in detail: specified the amount needed. 2. To include in a specification. 3. event such as a scheduled payment under a contract) is added at the end of the first sentence in paragraph 7. [FASB Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others] 5. The following sentence and footnote Text that appears at the bottom of a page that adds explanation. It is often used to give credit to the source of information. When accumulated and printed at the end of a document, they are called "endnotes." are added at the end of paragraph 8: If the initial net investment in the contract (after adjustment for the time value of money) is less, by more than a nominal amount, than the initial net investment that would be commensurate with the amount that would be exchanged either to acquire the asset related to the underlying or to incur the obligation related to the underlying, the characteristic in paragraph 6(b) is met. The amount of that asset acquired or liability incurred should be comparable to the effective notional amount * of the contract. * The effective notional amount The notional amount (or notional principal amount or notional value) on a financial instrument is the nominal or face amount that is used to calculate payments made on that instrument. This amount generally does not change hands and is thus referred to as notional. is the stated notional amount adjusted for any leverage factor. 6. In the first sentence of paragraph 9(a), or is replaced by and between that is associated with the underlying and that has a principal amount. [Statement 133 Implementation Issue No. A17, "Contracts That Provide for Net Share Settlement," cleared March 21, 2001] 7. Paragraph 10 is amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. as follows: a. Subparagraph (a) is replaced by the following: "Regular-way" security trades. Regular-way security trades are contracts that provide for delivery of a security within the time generally established by regulations or conventions in the marketplace or exchange in which the transaction is being executed. However, a contract for an existing security does not qualify for the regular-way security trades exception if it requires or permits net settlement (as discussed in paragraphs 9(a) and 57(c)(1)) or if a market mechanism to facilitate net settlement of that contract (as discussed in paragraphs 9(b) and 57(c)(2)) exists, except as provided in the following sentence. If an entity is required to account for a contract to purchase or sell an existing security on a trade-date basis, rather than a settlement-date basis, and thus recognizes the acquisition (or disposition) of the security at the inception of the contract, then the entity shall apply the regular-way security trades exception to that contract. A contract for the purchase or sale of when-issued securities or other securities that do not yet exist is addressed in paragraph 59(a). [Statement 133 Implementation Issue No. C18, "Shortest Period Criterion
b. Subparagraph (b), as amended by Statement 138, is replaced by the following: Normal purchases and normal sales. Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold by the reporting entity over a reasonable period in the normal course of business. The following guidance should be considered in determining whether a specific type of contract qualifies for the normal purchases and normal sales exception: (1) Forward contracts (non-option-based contracts). Forward contracts are eligible to qualify for the normal purchases and normal sales exception. However, forward contracts that contain net settlement provisions as described in either paragraph 9(a) or paragraph 9(b) are not eligible for the normal purchases and normal sales exception unless it is probable PROBABLE. That which has the appearance of truth; that which appears to be founded in reason. at inception INCEPTION. The commencement; the beginning. In making a will, for example, the writing is its inception. 3 Co. 31 b; Plowd. 343. Vide Consummation; Progression. and throughout the term of the individual contract that the contract will not settle net and will result in physical delivery.* Net settlement (as described in paragraphs 9(a) and 9(b)) of contracts in a group of contracts similarly designated as normal purchases and normal sales would call into question the classification of all such contracts as normal purchases or normal sales. Contracts that require cash settlements of gains or losses or are otherwise settled net on a periodic basis, including individual contracts that are part of a series of sequential One after the other in some consecutive order such as by name or number. contracts intended to accomplish ultimate acquisition or sale of a commodity, do not qualify for this exception. (2) Freestanding free·stand·ing adj. Standing or operating independently of anything else: a freestanding bell tower; a freestanding maternity clinic. option contracts. Option contracts that would require delivery of the related asset at an established price under the contract only if exercised are not eligible to qualify for the normal purchases and normal sales exception, except as indicated in paragraph 10(b)(4) below. (3) Forward contracts that contain optionality features. Forward contracts that contain optionality features that do not modify the quantity of the asset to be delivered under the contract are eligible to qualify for the normal purchases and normal sales exception. Except for power purchase or sales agreements addressed in paragraph 10(b)(4), if an option component permits modification A change or alteration in existing materials. Modification generally has the same meaning in the law as it does in common parlance. The term has special significance in the law of contracts and the law of sales. of the quantity of the assets to be delivered, the contract is not eligible for the normal purchases and normal sales exception, unless the option component permits the holder only to purchase or sell additional quantities at the market price at the date of delivery. In order for forward contracts that contain optionality features to qualify for the normal purchases and normal sales exception, the criteria criteria (krītēr´ē  ),n. discussed in paragraph 10(b)(1) must be met. (4) Power purchase or sales agreements. Not withstanding the criteria in paragraphs 10(b)(1) and 10(b)(3), a power purchase or sales agreement (whether a forward contract, option contract, or a combination of both) that is a capacity contract also qualifies for the normal purchases and normal sales exception if it meets the criteria in paragraph 58(b). However, contracts that have a price based on an underlying that is not clearly and closely related to the asset being sold or purchased (such as a price in a contract for the sale of a grain commodity based in part on changes in the S&P index) or that are denominated in a foreign currency that meets none of the criteria in paragraphs 15(a)-15(d) shall not be considered normal purchases and normal sales. For contracts that qualify for the normal purchases and normal sales exception, the entity shall document the designation DESIGNATION, wills. The expression used by a testator, instead of the name of the person or the thing he is desirous to name; for example, a legacy to. the eldest son of such a person, would be a designation of the legatee. Vide 1 Rop. Leg. ch. 2. 2. of the contract as a normal purchase or normal sale. For contracts that qualify for the normal purchases and normal sales exception under paragraphs 10(b)(1) and 10(b)(3), the entity shall document the basis for concluding that it is probable that the contract will not settle net and will result in physical delivery. For contracts that qualify for the normal purchases and normal sales exception under paragraph 10(b)(4), the entity shall document the basis for concluding that the agreement meets the criteria in paragraph 58(b). The documentation requirements can be applied either to groups of similarly designated contracts or to each individual contract. Failure to comply with the documentation requirements precludes application of the normal purchases and normal sales exception to contracts that would otherwise qualify for that exception. * Contracts that are subject to unplanned netting (referred to as a "book out" in the electric utility industry) do not qualify for this exception except as specified in paragraph 58(b). [Statement 133 Implementation Issue No. C10, "Can Option Contracts and Forward Contracts with Optionality Features Qualify for the Normal Purchases and Normal Sales Exception," cleared March 21, 2001, revised June 27, 2001; Statement 133 Implementation Issue No. C15, "Normal Purchases and Normal Sales Exception for Certain Option-Type Contracts and Forward Contracts in Electricity," cleared June 27, 2001, revised December December: see month. 19, 2001; and Statement 133 Implementation Issue No. C16, "Applying the Normal Purchases and Normal Sales Exception to Contracts That Combine a Forward Contract and a Purchased Option Contract," cleared September September: see month. 19, 2001, revised December 19, 2001] c. Subparagraph (d) is replaced by the following: Financial guarantee contracts. Financial guarantee contracts are not subject to this Statement only if: (1) They provide for payments to be made solely to reimburse re·im·burse tr.v. re·im·bursed, re·im·burs·ing, re·im·burs·es 1. To repay (money spent); refund. 2. To pay back or compensate (another party) for money spent or losses incurred. the guaranteed party for failure of the debtor One who owes a debt or the performance of an obligation to another, who is called the creditor; one who may be compelled to pay a claim or demand; anyone liable on a claim, whether due or to become due. to satisfy its required payment obligations under a nonderivative contract, either at pre-specified payment dates or accelerated payment dates as a result of the occurrence of an event of default (as defined in the financial obligation covered by the guarantee contract) or notice of acceleration acceleration, change in the velocity of a body with respect to time. Since velocity is a vector quantity, involving both magnitude and direction, acceleration is also a vector. In order to produce an acceleration, a force must be applied to the body. being made to the debtor by the creditor An individual to whom an obligation is owed because he or she has given something of value in exchange. One who may legally demand and receive money, either through the fulfillment of a contract or due to injury sustained as a result of another's Negligence . (2) Payment under the financial guarantee contract is made only if the debtor's obligation to make payments as a result of conditions as described in (1) above is past due. (3) The guaranteed party is, as a precondition pre·con·di·tion n. A condition that must exist or be established before something can occur or be considered; a prerequisite. tr.v. in the contract (or in the back-to-back back-to-back adj. Consecutive; successive: back-to-back performances; back-to-back home runs. Adj. 1. arrangement, if applicable) for receiving payment of any claim under the guarantee, exposed to the risk of nonpayment Non`pay´ment n. 1. Neglect or failure to pay. Noun 1. nonpayment - act of failing to meet a financial obligation nonremittal, default failure - an act that fails; "his failure to pass the test" both at inception of the financial guarantee contract and throughout its term either through direct legal ownership of the guaranteed obligation or through a back-to-back arrangement with another party that is required by the back-to-back arrangement to maintain direct ownership of the guaranteed obligation. In contrast, financial guarantee contracts are subject to this Statement if they do not meet all of the above three criteria, for example, if they provide for payments to be made in response to changes in another underlying such as a decrease in a specified debtor's creditworthiness Creditworthiness The condition in which the risk of default on a debt obligation by that entity is deemed low. Creditworthiness Eligibility of an individual or firm to borrow money. . d. The following subparagraph is added after subparagraph (f): g. Investments in lift insurance. A policyholder's investment in a life insurance contract that is accounted for under FASB Technical Bulletin No. 85-4, Accounting for Purchases of Life Insurance, is not subject to this Statement. The exception in this subparagraph affects only the accounting by the policyholder Policyholder An individual who owns an insurance policy. ; it does not affect the accounting by the issuer of the life insurance contract. [Statement 133 Implementation Issue No. B31, "Accounting for Purchases of Life Insurance," cleared July July: see month. 11, 2001] e. The following subparagraphs are added after subparagraph (g): h. Certain investment contracts. A contract that is accounted for under either paragraph 4 of FASB Statement No. 110, Reporting by Defined Benefit Pension Plans of Investment Contracts, or paragraph 12 of FASB Statement No. 35, Accounting and Reporting by Defined Benefit Pension Plans, as amended by Statement 110, is not subject to this Statement. Similarly, a contract that is accounted for under either paragraph 4 or paragraph 5 of AICPA AICPA See American Institute of Certified Public Accountants (AICPA). Statement of Position 94-4, Reporting of Investment Contracts Held by Health and Welfare Benefit Plans and Defined-Contribution Pension Plans defined-contribution pension plan A pension plan in which an employer's periodic payments into the plan, rather than eventual retirement benefits to employees, are specified. , is not subject to this Statement. Those exceptions apply only to the party that accounts for the contract under Statement 35, Statement 110, or SOP 94-4. [Statement 133 Implementation Issue No. C19, "Contracts Subject to Statement 35, Statement 110, or Statement of Position 94-4"] 110. or Statement of Position 94-4"] i. Loan commitments. The holder of any commitment to originate o·rig·i·nate v. 1. To bring into being; create. 2. To come into being; start. a loan (that is, the potential borrower BORROWER, contracts. He to whom a thing is lent at his request. 2. The contract of loan confers rights, and imposes duties on the borrower' 1. In general, he has the right to use the thing borrowed, during the time and for the purpose intended between the ) is not subject to the requirements of this Statement. Issuers of commitments to originate mortgage loans that will be held for investment purposes, as discussed in paragraphs 21 and 25 of Statement 65, are not subject to this Statement. In addition, issuers of loan commitments to originate other types of loans (that is, other than mortgage loans) are not subject to the requirements of this Statement. [Statement 133 Implementation Issue No. C13, "When a Loan Commitment Is Included in the Scope of Statement 133," guidance previously cleared on March 15, 2002, and subsequently revised by the Board] 8. Paragraph 13 is amended as follows: a. The following footnote is added at the end of subparagraph (a): * The condition in paragraph 13(a) does not apply to a situation in which the terms of a hybrid instrument permit, but do not require, the investor to settle the hybrid instrument in a manner that causes it not to recover substantially all of its initial recorded investment, provided that the issuer does not have the contractual right to demand a set-element that causes the investor not to recover substantially all of its initial net investment. [Statement 133 Implementation Issue No. B5, "Investor Permitted, but Not Forced, to Settle without Recovering Substantially All of the Initial Net Investment," cleared July 28, 1999] b. Subparagraph (b) is replaced by the following: The embedded derivative meets both of the following conditions: (1) There is a possible future interest rate scenario A scenario (from Italian, that which is pinned to the scenery) is a synthetic description of an event or series of actions and events. In the Commedia dell'arte (even though it may be remote) under which the embedded derivative would at least double the investor's initial rate of return on the host contract. (2) For each of the possible interest rate scenarios under which the investor's initial rate of return on the host contract would be doubled (as discussed under paragraph 13(b)(1)), the embedded derivative would at the same time result in a rate of return that is at least twice what otherwise would be the then-current market return (under each of those future interest rate scenarios) for a contract that has the same terms as the host contract and that involves a debtor with a credit quality similar to the issuer's credit quality at inception. 9. Paragraph 15 is amended as follows: a. In item (a) of the first sentence, functional is inserted in·sert tr.v. in·sert·ed, in·sert·ing, in·serts 1. To put or set into, between, or among: inserted the key in the lock. See Synonyms at introduce. 2. between the and currency and the primary economic environment in which and operates (that is, its functional currency) or are deleted Deleted A security that is no longer included on a specified market. Sometimes referred to as "delisted". Notes: Reasons for delisting include violating regulations, failing to meet financial specifications set out by the stock exchange and going bankrupt. . b. In item (b) of the first sentence, the following footnote is added after (for example, the U.S. dollar for crude oil transactions): * If similar transactions for a certain product or service are routinely denominated in international commerce in various different currencies, the transaction does not qualify for the exception. c. The following is added at the end of the first sentence: , (c) the local currency of any substantial party to the contract, or (d) the currency used by a substantial party to the contract as if it were the functional currency because the primary economic environment in which the party operates is highly inflationary (as discussed in paragraph 11 of Statement 52). The evaluation of whether a contract qualifies for the exception in this paragraph should be performed only at inception of the contract. [Statement 133 Implementation Issue No. B21, "When Embedded Foreign Currency Derivatives Warrant Separate Accounting," cleared Jure JURE. By law; by right; in right; as, jure civilis, by the civil law; jure gentium, by the law of nations; jure representationis, by right of representation; jure uxoris, in right of a wife. JURE, WRIT OF, Engl. law. 28, 2000] 10. In the fourth sentence of paragraph 17, the following footnote is added after expected cash flows: * This Statement was issued prior to FASB Concepts Statement No. 7, Using Cash Flow Information and Present Value in Accounting Measurements, and therefore the term expected cash flows does not necessarily have the same meaning as that term does in Concepts Statement 7. 11. Paragraph 19 is deleted. 12. In the first sentence of paragraph 20(c), or an unrecognized firm commitment is added after a recognized asset or liability. 13. Footnote 8 to paragraph 21 is amended as follows: a. In the first sentence, (as defined in paragraph 540) is added after A firm commitment. b. The following sentence is added at the end of the footnote: A supply contract for which the contract price is fixed only in certain circumstances (such as when the selling price is above an embedded price cap or below an embedded price floor) meets the definition of a firm commitment for purposes of designating the hedged item in a fair value hedge. Provided the embedded price cap or floor is considered clearly and closely related to the host contract and therefore is not accounted for separately under paragraph 12, either party to the supply contract can hedge the fair value exposure arising from the cap or floor. [Statement 133 Implementation Issue No. F10, "Definition of Firm Commitment in Relation to Long-Term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. Supply Contracts with Embedded Price Caps or Floors," cleared June 27, 2001] 14. In paragraph 21(a)(2)(c), A put option, a call option, an interest rate cap, or an interest rate floor is replaced by A put option or call option (including an interest rate or price cap or an interest rate or price floor). [Implementation Issue F10] 15. In paragraphs 27, 34, 64, 65(c), 94, 96, and 97, the following footnote is added after expected cash flows, and in paragraphs 95, 99, and 143, the following footnote is added after the first mention of expected cash flows: ([dagger]) Refer to footnote * to paragraph 17 of Statement 133. 16. In the first sentence of paragraph 28(c), or an unrecognized firm commitment is added after recognized asset or liability. 17. Paragraph 30(d), which was added by Statement 138, is replaced by the following: If a non-option-based contract is the hedging instrument in a cash flow hedge of the variability of the functional-currency-equivalent cash flows for a recognized foreign-currency-denominated asset or liability that is remeasured at spot exchange rates under paragraph 15 of Statement 52, an amount that will offset the related transaction gain or loss arising from that remeasurement shall be reclassified each period from other comprehensive income to earnings if the assessment of effectiveness and measurement of ineffectiveness are based on total changes in the non-option-based instrument's cash flows. If an option contract is used as the hedging instrument in a cash flow hedge of the variability of the functional-currency-equivalent cash flows for a recognized foreign-currency-denominated asset or liability that is remeasured at spot exchange rates under paragraph 15 of Statement 52 to provide only one-sided offset against the hedged foreign exchange risk, an amount shall be reclassified each period to or from other comprehensive income with respect to the changes in the underlying that result in a change in the hedging option's intrinsic value. In addition, if the assessment of effectiveness and measurement of ineffectiveness are also based on total changes in the option's cash flows (that is, the assessment will include the hedging instrument's entire change in fair value--its entire gain or loss), an amount that adjusts earnings for the amortization of the cost of the option on a rational basis shall be reclassified each period from other comprehensive income to earnings.* * The guidance in this subparagraph is limited to foreign currency hedging relationships because of their unique attributes. That accounting guidance is an exception for foreign currency hedging relationships. [Statement 153 Implementation Issue No. G20, "Assesing and Measuring the Effectiveness of a Purchased Option Used in a Cash Flow Hedge A cash flow hedge is a hedge of the exposure to the variability of cash flow that
18. The following heading and paragraph are added after paragraph 45: Reporting Cash Flows of Derivative Instruments That Contain Financing Elements 45A. An instrument accounted for as a derivative under this Statement that at its inception includes off-market terms, or requires an up-front up-front or up·front Informal adj. 1. Straightforward; frank. 2. Paid or due in advance: up-front cash. adv. cash payment, or both often contains a financing element. Identifying a financing element within a derivative is a matter of judgment that depends on facts and circumstances. If an other-than-insignificant financing element is present at inception, other than a financing element inherently included in an at-the-market derivative instrument Noun 1. derivative instrument - a financial instrument whose value is based on another security derivative legal document, legal instrument, official document, instrument - (law) a document that states some contractual relationship or grants some right with no prepayments Prepayments Payments made in excess of scheduled mortgage principal repayments. (that is, the forward points in an at-the-money At-the-money An option is at the money if the strike price of the option is equal to the market price of the underlying security. For example, if xyz stock is trading at 54, then the xyz 54 option is at the money. forward contract), * then the borrower shall report all cash inflows and outflows associated with that derivative instrument in a manner consistent with financing activities as described in paragraphs 18-20 of FASB Statement No. 95, Statement of Cash Flows. * An at-the-money plain-vanilla plain-vanilla Of or relating to the uncomplicated version of a particular type of security. For example, a plain-vanilla derivative is typically exchange-traded and void of bells and whistles. interest rate swap Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. that involves no payments between the parties at inception would not be considered as having a financing element present at inception even though, due to the implicit forward rates derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. from the yield curve, the parties to the contract have an expectation that the comparison of the fixed and floating legs will result in payments being made by one party in the earlier periods and being made by the counterparty Counterparty The other participant, including intermediaries, in a swap or contract. in the later periods of the swap's term. If a derivative instrument is an at-the-money or out-of-the-money option Out-of-the-money option A call option is "out of the money" if the strike price is greater than the market price of the underlying security. That is, you have the right to purchase a security at a price higher than the market price, which is not valuable. contract or contains an at-the-money or out-of-the-money option contract, a payment made at inception to the writer of the option for the option's time value by the counterparty should not be viewed as evidence that the derivative instrument contains a financing element. In contrast, if the contractual terms A contractual term is "[a]ny provision forming part of a contract"[1] Each term gives rise to a contractual obligation, breach of which will can give rise to litigation. of a derivative have been structured to ensure that net payments will be made by one party in the earlier periods and subsequently returned by the counterparty in the later periods of the derivative's term, that derivative instrument should be viewed as containing a financing element even if the derivative has a fair value of zero at inception. 19. The following footnote is added at the end of paragraph 49: * If immediately prior to the application of Statement 133 an entity has a fair value or cash flow hedging relationship in which an intercompany interest rate swap is the hedging instrument and if that relationship would have qualified for the shortcut method under the criteria in paragraph 68 had that swap not been an intercompany transaction, that entity may qualify for applying the shortcut method to a newly designated hedging relationship that is effectively the continuation of the preexisting hedging relationship provided that (a) the post-Statement 133 hedging relationship is hedging the same exposure to interest rate risk (that is, exposure to changes in fair value of the same hedged item or exposure to changes in variable cash flows for the same forecasted transaction) and (b) the hedging instrument is a third-party interest rate swap whose terms exactly match the terms of the intercompany swap with respect to its remaining cash flows. In that case, if the shortcut method is applied to the new hedging relationship upon adoption of Statement 133, the transition adjustment should include the appropriate adjustments at the date of adoption to reflect the retroactive application of the shortcut method. [Statement 133 Implementation Issue No. J12, "Intercompany Derivatives and the Shortcut (1) In Windows, a shortcut is an icon that points to a program or data file. Shortcuts can be placed on the desktop or stored in other folders, and double clicking a shortcut is the same as double clicking the original file. Method," cleared June 28, 2000] 20. The following sentence is added at the end of paragraph 57(c)(2): The evaluation of whether a market mechanism exists and whether items to be delivered under a contract are readily convertible to cash must be performed at inception and on an ongoing basis throughout a contract's life. 21. Paragraph 57(c)(3) is amended as follows: a. The following footnote is added at the end of the first sentence: * The evaluation of readily convertible to cash shall be applied to a contract throughout its life. b. The following is added at the end of the paragraph: Shares of stock in a publicly traded company to be received upon the exercise of a stock purchase warrant do not meet the characteristic of being readily convertible to cash if both of the following conditions exist: (a) the stock purchase warrant is issued by an entity for only its own stock (or stock of its consolidated subsidiaries) and (b) the sale or transfer of the issued shares is restricted (other than in connection with being pledged as collateral) for a period of 32 days or more from the date the stock purchase warrant is exercised. In contrast, restrictions imposed by a stock purchase warrant on the sale or transfer of shares of stock that are received from the exercise of that warrant issued by an entity for other than its own stock (whether those restrictions are for more or less than 32 days) do not affect the determination of whether those shares are readily convertible to cash. The accounting for restricted stock to be received upon exercise of a stock purchase warrant should not be analogized to any other type of contract. [Statement 133 Implementation Issue No. A14, "Derivative Treatment of Stock Purchase Warrants Issued by a Company for Its Own Shares of Stock Where the Subsequent Sale or Transfer Is Restricted," cleared December 6, 2000, and revised May 8, 2002] 22. Paragraph 58 is amended as follows: a. Subparagraph (a) is amended as follows: (1) At the end of the first sentence after the reference to footnote 16, except (1) as provided in paragraph 59(a) for a contract for the purchase or sale of when-issued securities or other securities that do not yet exist and (2) for contracts that are required to be accounted for on a trade-date basis by the reporting entity is added. (2) In the fourth sentence, both references to regular-way exception are replaced by regular-way security trades exception, and unless the reporting entity is required to account for the contract on a trade-date basis is added at the end of that sentence. (3) The last sentence is deleted. (4) Footnote 16 is amended as follows: (a) The parenthetical phrase (and thus do not permit net settlement) is added after not readily convertible to cash. (b) The parenthetical phrase (as described in paragraphs 9(b) and 57(c)(2)) is added at the end of the sentence. b. The following is added at the end of sub-paragraph (b) (as amended by Statement 138): Power purchase or sales agreements (whether a forward contract, an option contract, or a combination of both) for the purchase or sale of electricity qualify for the normal purchases and normal sales exception in paragraph 10(b)(4) if all of the following applicable criteria are met: (1) For both parties to the contract: (a) The terms of the contract require physical delivery of electricity. That is, the contract does not permit net settlement, as described in paragraphs 9(a) and 57(c)(1). For an option contract, physical delivery is required if the option contract is exercised. (b) The power purchase or sales agreement is a capacity contract.* Differentiating between a capacity contract and a traditional option contract (that is, a financial option on electricity) is a matter of judgment that depends on the facts and circumstances. (2) For the seller of electricity: The electricity that would be deliverable under the contract involves quantities that are expected to be sold by the reporting entity in the normal course of business. (3) For the buyer of electricity: (a) The electricity that would be deliverable under the contract involves quantities that are expected to be used or sold by the reporting entity in the normal course of business. (b) The buyer of the electricity under the power purchase or sales agreement is an entity that is engaged in selling electricity to retail or wholesale customers and is statutorily or otherwise contractually con·trac·tu·al adj. Of, relating to, or having the nature of a contract. con·trac  tu·al·ly adv.Adv. 1. obligated ob·li·gate tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates 1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force. 2. To cause to be grateful or indebted; oblige. to maintain sufficient capacity to meet electricity needs of its customer base. (c) The contracts are entered into to meet the buyer's obligation to maintain a sufficient capacity, including a reasonable reserve margin established by or based on a regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. commission, local standards, regional reliability councils, or regional transmission organizations  This August 2006 is in need of attention from an expert on the subject.Please help recruit one or [ improve this article] yourself. See the talk page for details. . Power purchase or sales agreements that meet only the above applicable criteria in paragraph 58(b) qualify for the normal purchases and normal sales exception even if they are subject to being booked out or are scheduled to be booked out. Forward contracts for the purchase or sale of electricity that do not meet the above applicable criteria are nevertheless eligible to qualify for the normal purchases and normal sales exception by meeting the criteria in paragraph 10(b) other than paragraph 10(b)(4). * As defined in paragraph 540. [Implementation Issues C10, C15, and C16, cleared March 21, 2001; June 27, 2001; and September 19, 2001, respectively] 23. Paragraph 59 is amended as follows: a. Subparagraph (a) is replaced by the following: a. Forward purchases or sales of when-issued securities or other securities that do not yet exist. Contracts for the purchase or sale of when-issued securities or other securities that do not yet exist are excluded from the requirements of this Statement as a regular-way security trade only if (1) there is no other way to purchase or sell that security, (2) delivery of that security and settlement will occur within the shortest period possible for that type of security, and (3) it is probable at inception and throughout the term of the individual contract that the contract will not settle net and will result in physical delivery of a security when it is issued. A contract for the purchase or sale of when-issued securities or other securities that do not yet exist is eligible to qualify for the regular-way security trades exception even though that contract permits net settlement (as discussed in paragraphs 9(a) and 57(c)(1)) or a market mechanism to facilitate net settlement of that contract (as discussed in paragraphs 9(b) and 57(c)(2)) exists. The entity shall document the basis for concluding that it is probable that the contract will not settle net and will result in physical delivery. Net settlement (as described in paragraphs 9(a) and 9(b)) of contracts in a group of contracts similarly designated as regular-way security trades would call into question the continued exemption of such contracts. In addition, if an entity is required to account for a contract for the purchase or sale of when-issued securities or other securities that do not yet exist on a trade-date basis, rather than a settlement-date basis, and thus recognizes the acquisition or disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of of the securities at the inception of the contract, that entity shall apply the regular-way security trades exception to those contracts. b. Subparagraph (c) is amended as follows: (1) The following footnote is added at the end of the second sentence: * In certain circumstances, a take-or-pay contract may represent or contain a lease that should be accounted for in accordance with FASB Statement No. 13, Accounting for Leases. (2) In the fourth sentence, item (3) little or no initial net investment in the contract is required is replaced by the contract requires no initial net investment or an initial net investment that is smaller by more than a nominal Trifling, token, or slight; not real or substantial; in name only. Nominal capital, for example, refers to extremely small or negligible funds, the use of which in a particular business is incidental. NOMINAL. Relating to a name. amount than would be required for other types of contracts that would be expected to have a similar response to changes in market factors. (Refer to paragraph 8.) c. In the fifth sentence following the list in sub-paragraph (d), little or no initial net investment, is not present is replaced by no initial net investment or an initial net investment that is smaller by more than a nominal amount than would be required for other types of contracts that would be expected to have a similar response to changes in market factors, is not present. (Refer to paragraph 8.) 24. Paragraph 61 is amended as follows: a. In item 2 of subparagraph (a), also is replaced by at the same time and then-current is inserted between would be the and market return. b. Subparagraph (d) is amended as follows: (1) At the end of the first sentence,, provided the call options (or put options) are also considered to be clearly and closely related to the debt host contract under paragraph 13 is added. (2) In the last sentence, after the amendment by Statement 138, and would be separated from the host contract is deleted. c. Subparagraph (e) is amended as follows: (1) At the end of the second sentence, if the criteria in paragraphs 12(b) and 12(c) are also met is added. (2) In the last sentence,, if the criteria in paragraphs 12(b) and 12(c) were met, is inserted between equity instrument and and should be separated. d. Subparagraph (f) is replaced by the following: Interest rate floors, caps, and collars. Floors or caps (or collars, which are combinations of caps and floors) on interest rates and the interest rate on a debt instrument are considered to be clearly and closely related unless the conditions in either paragraph 13(a) or paragraph 13(b) are met, in which case the floors or the caps are not considered to be clearly and closely related. e. In the second sentence of subparagraph (g), must be separated from the host contract and accounted for as a derivative instrument is replaced by is not clearly and closely related to the host contract. 25. Paragraph 68 is amended as follows: a. In the second sentence, as amended by Statement 138, (or a compound hedging instrument composed of an interest rate swap and a mirror-image call or put option as discussed in paragraph 68(d) below) is inserted between interest rate swap and if all of the applicable. b. In subparagraph (a), being hedged hedge n. 1. A row of closely planted shrubs or low-growing trees forming a fence or boundary. 2. A line of people or objects forming a barrier: a hedge of spectators along the sidewalk. is added at the end of the sentence. [Statement 133 Implementation Issue No. E10, "Application of the Shortcut Method to Hedges of a Portion of an Interest-Bearing Adj. 1. interest-bearing - of financial obligations on which interest is paid Asset or Liability (or Its Related Interest) or a Portfolio of Similar Interest-Bearing Assets or Liabilities," cleared June 28, 2000, and revised September 25, 2000] c. Subparagraph (b), as amended by Statement 138, is replaced by the following: If the hedging instrument is solely an interest rate swap, the fair value of that swap at the inception of the hedging relationship is zero. If the hedging instrument is a compound derivative composed of an interest rate swap and mirror-image call or put option as discussed in paragraph 68(d), the premium for the mirror-image call or put option must be paid or received in the same manner as the premium on the call or put option embedded in the hedged item. That is, the reporting entity must determine whether the implicit premium for the purchased call or written put option embedded in the hedged item was principally paid at inception-acquisition (through an original issue discount or premium) or is being paid over the life of the hedged item (through an adjustment of the interest rate). If the implicit premium for the call or put option embedded in the hedged item was principally paid at inception-acquisition, the fair value of the hedging instrument at the inception of the hedging relationship must be equal to the fair value of the mirror-image call or put option. In contrast, if the implicit premium for the call or put option embedded in the hedged item is principally being paid over the life of the hedged item, fair value of the hedging instrument at the inception of the hedging relationship must be zero. d. Subparagraph.(d), as amended by Statement 138, is amended as follows: (1) In the second sentence, the hedging interest rate swap contains an embedded mirror-image call option is replaced by the hedging instrument is a compound derivative composed of an interest rate swap and a mirror-image call option. (2) In the third sentence, embedded in the swap is deleted. (3) In the last sentence, the hedging interest rate swap contains an embedded mirror-image put option is replaced by the hedging instrument is a compound derivative composed of an interest rate swap and a mirror-image put option. e. In subparagraph (g), ceiling is replaced by cap. 26. The first sentence of paragraph 95 is replaced by the following: In assessing hedge effectiveness on an ongoing basis, Company G also must consider the extent of offset between the change in expected cash flows ([dagger]) on its Colombian coffee forward contract and the expected net change in expected cash flows for the forecasted purchase of Brazilian coffee. ([dagger]) Refer to footnote * to paragraph 17 of Statement 133. 27. In the first sentence of paragraph 154, interest payments on is replaced by quarterly interest payments on the company's 5-year $5 million borrowing program, initially expected to be accomplished by. 28. Paragraph 176 is replaced by the following: The following examples in Section 2 discuss instruments that contain a variety of embedded derivative instruments. They illustrate how the provisions of paragraphs 12-16 of this Statement would be applied to contracts with the described terms. If the terms of a contract are different from the described terms, the application of this Statement by either party to the contract may be affected. Furthermore, if any contract of the types discussed in Section 2 meets the definition of a derivative instrument in its entirety under paragraphs 6-9 and related paragraphs, the guidance in this section for the application of the provisions of paragraphs 12-16 to embedded derivative instruments does not apply. The illustrative instruments and related assumptions in Examples 12-27 are based on examples in Exhibit 96-12A of EITF Issue No. 96-12, "Recognition of Interest Income and Balance Sheet Classification of Structured Notes." 29. Paragraph 540 is amended as follows: a. The following definition is added to the glossary A term used by Microsoft Word and adopted by other word processors for the list of shorthand, keyboard macros created by a particular user. See glossaries in this publication and The Computer Glossary. : Capacity contract An agreement by an owner of capacity to sell the right to that capacity to another party so that it can satisfy its obligations. For example, in the electric industry, capacity (sometimes referred to as installed capacity) is the capability to deliver electric power to the electric transmission system of an operating control area. A control area is a portion of the electric grid grid: see electron tube. (1) Any interconnected set of nodes such as the electric power network or a communications network. (2) "The Grid" is a nickname for Internet2. See Internet2. that schedules, dispatches, and controls generating resources to serve area load (ultimate users of electricity) and coordinates coordinates of a point on a graph or grid map, the points on the horizontal and vertical axes which identify the location of the point on the graph/map. scheduling of the flow of electric power over the transmission system to neighboring neigh·bor n. 1. One who lives near or next to another. 2. A person, place, or thing adjacent to or located near another. 3. A fellow human. 4. Used as a form of familiar address. v. control areas. A control area requires entities that serve load within the control area to demonstrate ownership or contractual rights A contractual right is a claim, on other persons, that is acknowledged and perhaps reciprocated among the principals associated with that claim. Specialized contractual rights exist as part of a "contract" or agreement between persons to whom these rights belong. to capacity sufficient to serve that load at time of peak demand and to provide a reserve margin to protect the integrity of the system against potential generating unit outages in the control area. b. The phrase (including the occurrence or nonoccurrence of a specified event such as a scheduled payment under a contract) is added at the end of the first sentence under the definition of underlying. Amendments to Existing Pronouncements Relating to the Definition of Expected Cash Flows in FASB Concepts Statement No. 7, Using Cash Flow Information and Present Value in Accounting Measurements 30. FASB Statement No. 15, Accounting by Debtors and Creditors for Troubled Debt Restructurings troubled debt restructuring See debt restructuring. . In the last sentence of paragraph 13, the following footnote is added after the first mention of expected cash flows: * This pronouncement was issued prior to FASB Concepts Statement No. 7, Using Cash Flow Information and Present Value in Accounting Measurements, and therefore the term expected cash flows does not necessarily have the same meaning as that term in Concepts Statement 7. 31. FASB Statement No. 35, Accounting and Reporting by Defined Benefit Pension Plans. In the last sentence of paragraph 11, the following footnote is added after the first mention of expected cash flows: * This pronouncement was issued prior to FASB Concepts Statement No. 7, Using Cash Flow Information and Present Value in Accounting Measurements, and therefore the term expected cash flows does not necessarily have the same meaning as that term in Concepts Statement 7. 32. FASB Statement No. 60, Accounting and Reporting by Insurance Enterprises. In the second sentence of paragraph 19, the following footnote is added after the first mention of expected cash flows: * This pronouncement was issued prior to FASB Concepts Statement No. 7, Using Cash Flow Information and Present Value in Accounting Measurements, and therefore the term expected cash flows does not necessarily have the same meaning as that term in Concepts Statement 7. 33. FASB Statement No. 87, Employers' Accounting for Pensions. In the last sentence of paragraph 49, the following footnote is added after the first mention of expected cash flows: * This pronouncement was issued prior to FASB Concepts Statement No. 7, Using Cash Flow Information and Present Value in Accounting Measurements, and therefore the term expected cash flows does not necessarily have the same meaning as that term in Concepts Statement 7. 34. FASB Statement No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions. In the last sentence of paragraph 65, the following footnote is added after the first mention of expected cash flows: * This pronouncement was issued prior to FASB Concepts Statement No. 7, Using Cash Flow Information and Present Value in Accounting Measurements, and therefore the term expected cash flows does not necessarily have the same meaning as that term in Concepts Statement 7. Amendments to other Existing Pronouncements 35. FASB Statement No. 65, Accounting for Certain Mortgage Banking Activities. The following sentence is added at the end of paragraph 3: In addition, this Statement does not apply to commitments related to the origination of mortgage loans to be held for sale, or fees and costs related to commitments to sell or purchase loans ,that are accounted for as derivatives under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. 36. FASB Statement No. 91, Accounting for Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases. The following sentence is added at the end of paragraph 3: In addition, this Statement does not apply to fees and costs related to commitments to originate, sell, or purchase loans that are accounted for as derivatives under FASB Statement No. 133, Accounting for Derivatives Instruments and Hedging Activities. 37. FASB Statement No. 95, Statement of Cash Flows, is amended as follows: a. Footnote 4 of paragraph 14, as amended by Statements 104 and 133, is replaced by the following: Generally, each cash receipt or payment is to be classified according to its nature without regard to whether it stems from an item intended as a hedge of another item. For example, the proceeds of a borrowing are a financing cash inflow even though the debt is intended as a hedge of an investment, and the purchase or sale of a futures contract is an investing activity even though the contract is intended as a hedge of a firm commitment to purchase inventory. However, cash flows from a derivative instrument that is accounted for as a fair value hedge or cash flow hedge may be classified in the same category as the cash flows from the items being hedged provided that the derivative instrument does not include an other-than-in-significant financing element at inception, other than a financing element inherently included in an at-the-market derivative instrument with no prepayments (that is, the forward points in an at-the-money forward contract) and that the accounting policy is disclosed. If the derivative instrument includes an other-than-insignificant financing element at inception, all cash inflows and outflows of the derivative instrument shall be considered cash flows from financing activities by the borrower. If for any reason hedge accounting for an instrument that hedges an identifiable transaction or event is discontinued, then any cash flows subsequent to the date of discontinuance shall be classified consistent with the nature of the instrument. b. The following is added after paragraph 19(c), as added by FASB Statement No. 117, Financial Statements of Not-for-Profit Not-for-profit An organization established for charitable, humanitarian, or educational purposes that is exempt from some taxes and in which no one in profits or losses. Organizations: d. Proceeds received * from derivative instruments that include financing elements [dagger] at inception. * Whether at inception or over the term of the derivative instrument. ([dagger]) Other than a financing element inherently included in an at-the-market derivative instrument with no prepayments. c. The following is added after paragraph 20(c): d. Distributions * to counterparties Counterparties The parties on either side of an interest rate swap or a currency, equity or commodity swap, or to an options or futures position. of derivative instruments that include financing elements [dagger] at inception. * Whether at inception or over the term of the derivative instrument. ([dagger]) Other than a financing element inherently included in an at-the-market derivative instrument with no prepayments. d. The following sentences are added at the end of paragraph 24: Another example where cash receipts and payments include more than one class of cash flows involves a derivative instrument that includes a financing element [dagger] at inception because the borrower's cash flows are associated with both the financing element and the derivative. For that derivative instrument, all cash inflows and outflows shall be considered cash flows from financing activities by the borrower. ([dagger]) Other than a financing element inherently included in an at-the-market derivative instrument with no prepayments. 38. FASB Statement No. 126, Exemption from Certain Required Disclosures about Financial Instruments for Certain Nonpublic Entities. In paragraph 2(c), as amended by Statement 133, other than commitments related to the origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real of mortgage loans to be held for sale is added before during the reporting period. Effective Dates and Transition 39. This Statement shall be effective for contracts entered into or modified after June 30, 2003, except as stated in paragraph 40. This Statement also is effective for hedging relationships designated after June 30, 2003, except as stated in paragraph 40. Except as stated below, all provisions of this Statement shall be applied prospectively. Effective Date and Transition for Other Amendments to Statement 133 That Resulted Principally from the Derivatives Implementation Group Process 40. Paragraphs 6, 7(b), 7(d), 8(a), 9, 13, 14, 17, 19, 21(b), 22(b), and 25(b) of this Statement, which relate to guidance in Statement 133 Implementation Issues that have been cleared by the Board and have been effective for fiscal quarters that began prior to June 15, 2003, shall continue to be applied in accordance with their respective effective dates. Because Implementation Issues C7 and C13 have been modified in accordance with the decisions made as part of the amendment process, entities should apply the guidance in those Issues as revised in this amendment prospectively to contracts entered into after June 30, 2003. In addition, paragraphs 7(a) and 23(a), which relate to forward purchases or sales of when-issued or other securities that do not yet exist, shall be applied to both existing contracts and new contracts entered into after June 30, 2003. The provisions of this Statement need not be applied to immaterial Not essential or necessary; not important or pertinent; not decisive; of no substantial consequence; without weight; of no material significance. immaterial adj. items. This Statement was adopted by the unanimous vote of the seven members of the Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). : Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. H. Herz Herz is a German surname meaning heart. Famous Herzes:
G. Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. Crooch John M. Foster Gary Gary, city (1990 pop. 116,646), Lake co., NW Ind., a port of entry on Lake Michigan; inc. 1909. Gary was founded by the U.S. Steel Corporation, which purchased the land in 1905 and landscaped it for a city. S. Schieneman Katherine Katherine “intolerably curst and shrewd and froward.” [Br. Lit.: The Taming of the Shrew] See : Shrewishness Schipper Edward Edward killed his father at his mother’s instigation. [Br. Balladry: Edward in Benét, 302] See : Patricide W. Trott John K. Wulff Revisions ReVisions is a 2004 anthology of alternate history short-stories. It is edited by Julie E. Czerneda and Isaac Szpindel. Contents Title Author The Resonance of Light James Alan Gardner Out of China Julie E. to AICPA Council Resolutions On April 28, 2003, at its spring meeting, the AICPA Council adopted revisions to Council resolutions under bylaw by·law n. 1. A law or rule governing the internal affairs of an organization. 2. A secondary law. [Middle English bilawe, body of local regulations; akin to Danish sections 3.6.2.2 and 7.4 related to settlement agreements. The revisions, which are set forth below, establish an admonishment sanction sanction, in law and ethics, any inducement to individuals or groups to follow or refrain from following a particular course of conduct. All societies impose sanctions on their members in order to encourage approved behavior. that would allow the professional ethics professional ethics, n the rules governing the conduct, transactions, and relationships within a profession and among its publics. professional ethics liability, n 1. executive committee, where warranted, to publicly admonish an AICPA member who has violated vi·o·late tr.v. vi·o·lat·ed, vi·o·lat·ing, vi·o·lates 1. To break or disregard (a law or promise, for example). 2. To assault (a person) sexually. 3. the Code of Professional Conduct where other sanctions Sanctions is the plural of sanction. Depending on context, a sanction can be either a punishment or a permission. The word is a contronym. Sanctions involving countries: suspension, in automobiles, system of springs used to suspend the frame, body, engine, and power train above the wheels. Its principal purpose is to lessen the jarring of the automobile that is caused by irregularities in the roads of membership or the issuance of a private letter of required corrective action A corrective action is a change implemented to address a weakness identified in a management system. Normally corrective actions are instigated in response to a customer complaint, abnormal levels if internal nonconformity, nonconformities identified during an internal audit or , are not appropriate to the circumstances. [New language is underscored: Deleted language is struck through.] IMPLEMENTING RESOLUTION UNDER BY LAW SECTION 3.62.2: Professional Ethics Division [BL Section 360R] Further Resolved: .06 That in cases where there is prima facie evidence prima facie evidence n. Law Evidence that would, if uncontested, establish a fact or raise a presumption of a fact. of one or more actions by or with respect to a member as described in subparagraphs 7.4.1 through and including 7.4.6 of bylaw section 7.4, the professional ethics executive committee may decide to offer the member or members concerned the opportunity to avoid further investigation and a possible hearing before the trial board by entering into a settlement agreement under such terms and conditions as the committee deems appropriate including but not limited to agreement by the member or members (a) to resign from membership or (b) to complete specified continuing professional education courses and/or to submit to independent preissuance review of some or all financial statements and accountant's reports and/or submit to an accelerated quality or peer review, and/or to perform other remedial REMEDIAL. That which affords a remedy; as, a remedial statute, or one which is made to supply some defects or abridge some superfluities of the common law. 1 131. Com. 86. The term remedial statute is also applied to those acts which give a new remedy. Esp. Pen. Act. 1. or corrective action as the committee may determine and/or (c) to submit to disciplinary action [begin strikethrough Strikethrough (also called strikeout) is a typographical presentation of words with a horizontal line through the center of them. It signifies one of two meanings. ]termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. or suspension of membership[end strikethrough] with publication [begin strikethrough]in a membership periodical periodical, a publication that is issued regularly. It is distinguished from the newspaper in format in that its pages are smaller and are usually bound, and it is published at weekly, monthly, quarterly, or other intervals, rather than daily. of[end strikethrough] by the Institute [begin strikethrough]of the name of the member or members and the terms and conditions of the agreement[end strikethrough] as provided in Council resolutions under bylaw section 7.6. The committee shall monitor compliance with the settlement agreement and may initiate INITIATE. A right which is incomplete. By the birth of a child, the husband becomes tenant by the curtesy initiate, but his estate is not consummate until the death of the wife. 2 Bouv. Inst. n. 1725. an investigation where it finds there has been noncompliance noncompliance failure of the owner to follow instructions, particularly in administering medication as prescribed; a cause of a less than expected response to treatment. noncompliance . IMPLEMENTING RESOLUTION UNDER BYLAW SECTION 7.4: Disciplining of Members by Trial Board [BL Section 740R] Resolved: .04 (4) In the case of a settlement agreement between a member and the professional ethics executive committee that provides for disciplinary, action [begin strikethrough]suspension or termination of membership[end strikethrough] pursuant to the Council resolution implementing bylaw section 3.6.2.2, the matter shall be referred to a panel of the trial board which, upon finding that there has been a waiver The voluntary surrender of a known right; conduct supporting an inference that a particular right has been relinquished. The term waiver is used in many legal contexts. of the member's rights under Article 7.4, shall recognize such settlement agreement and arrange for publication of such disciplinary action under section 7.6 of the bylaws The rules and regulations enacted by an association or a corporation to provide a framework for its operation and management. Bylaws may specify the qualifications, rights, and liabilities of membership, and the powers, duties, and grounds for the dissolution of an . |
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