Printer Friendly

FASB Amends the Definition of a Derivative and Statement 133 to Provide for More Consistent Accounting.

Business Editors

NORWALK, Conn.--(BUSINESS WIRE)--May 1, 2002

Today the Financial Accounting Standards Board (FASB) issued an Exposure Draft, Amendment of Statement 133 on Derivative Instruments and Hedging Activities.

The Exposure Draft amends Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, to clarify the definition of a derivative. A copy of the Exposure Draft is available on the FASB's website at The comment period concludes on July 1, 2002.

In connection with Statement 133 Implementation Issue No. D1, "Application of Statement 133 to Beneficial Interests in Securitized Financial Assets," the Board addressed issues related to the accounting for beneficial interests in securitized financial assets, such as beneficial interests in securitized credit card receivables. In resolving those issues, the FASB decided that an amendment was needed to clarify the definition of a derivative, as set forth in Statement 133.

The purpose of the Exposure Draft is to improve financial reporting by requiring that financial contracts with comparable characteristics be accounted for in the same way. The Statement would clarify under what circumstances a financial contract -- either an option-based or non-option-based contract -- with an initial net investment would meet the characteristic of a derivative discussed in paragraph 6(b) of Statement 133. The FASB believes the proposed change will produce more consistent reporting of financial contracts as either derivatives or hybrid financial instruments.

The proposed effective date for the accounting change is the first day of the first fiscal period beginning after November 15, 2002, which, for calendar year end companies, will be January 1, 2003.

About the Financial Accounting Standards Board

Since 1973, the Financial Accounting Standards Board has been the designated organization in the private sector for establishing standards of financial accounting and reporting. Those standards govern the preparation of financial reports and are officially recognized as authoritative by the Securities and Exchange Commission and the American Institute of Certified Public Accountants. Such standards are essential to the efficient functioning of the economy because investors, creditors, auditors and others rely on credible, transparent and comparable financial information. For more information about the FASB, visit our website at

The Financial Accounting Standards Board

Serving the investing public through transparent information resulting from high-quality financial reporting standards, developed in an independent, private-sector, open due process.
COPYRIGHT 2002 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2002, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Publication:Business Wire
Date:May 1, 2002
Previous Article:Innovest 2002 Presenters Selected--Companies Have $33MM in Sales and are Seeking $133MM in Capital Investment.
Next Article:Quent Finkelson, Nortech Systems' Top Executive, Dies at 69.

Related Articles
Practical issues in implementing FASB 133.
FASB issues statement 133 implementation guidance for employee benefit plan contracts. (accounting & auditing news).
FASB amends derivative definition, Statement 133. (Domestic).
FASB moves to simple majority vote; releases ED on derivatives; issues Statement 145. (accounting & auditing news).
Proposed SOP on derivatives, hedging released by AcSEC. (accounting & auditing news).
Official releases: FASB No. 148 ... SOP 02-2 ... ethics interpretations and rulings.
FASB issues Statement on Derivative Instruments.
Official releases: FASB No. 149 ... AICPA Council resolutions.
GASB issues Technical Bulletin no. 2003-1, Disclosure Requirements for Derivatives Not Reported at Fair Value on the Statement of Net Assets, which...
FASB issues proposal on fair value reporting options, standard on reporting of hybrid financial instruments.

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters