KPMG LLP FASB Update Presented by: John Lathrop, Partner KPMG LLP September 15, 2009 American Public...

KPMG LLP

FASB Update

Presented by:

John Lathrop, Partner KPMG LLP

September 15, 2009American Public Power Association

2009 Business & Financial Conference

© 2009 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in the U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.

JOHN F. LATHROPPartnerKPMG LLP1000 WalnutSuite 1000Kansas City, MO 64106

Tel 816-802-5882Fax [email protected] and SpecializationJohn is an audit partner with substantial SEC and international experience.Professional Associations

• Member, American Institute of Certified Public Accountants (AICPA)

• Member, Kansas Society of Certified Public Accountants

• Member, Missouri Society of Certified Public Accountants

Education, Licenses & Certifications• BS, University of Missouri-Columbia.• Licensed Certified Public Accountant in Missouri,

Kansas, Ohio, and Vermont.

BackgroundJohn is a partner in the Audit practice in the Kansas City office of KPMG LLP. He has more than 28 years of public accounting experience providing audit services.

Professional and Industry ExperienceJohn has served as the lead engagement partner for numerous clients in the energy, transportation, agribusiness and service industries. He has substantial SEC related experience serving as the lead engagement partner for numerous SEC registrants. This experience includes initial public offerings, debt and equity registration statements, comfort letters and responding to SEC comment letters. John has also considerable experience in accounting for business acquisitions and related purchase price allocations, income tax accounting, restructuring, derivatives and coordination and execution of complex multi-location engagements involving significant international coordination and travel. John also has experience in drafting testimony and filing testimony used in regulatory proceedings.

Technical SkillsAccounting and audit, SEC regulations, S-X rules, and FERC regulations, business combinations, and business restructurings, accounting for income taxes and derivatives.

Corporate tax provisions Publications and Speaking Engagements• Has instructed several firm-wide training sessions including:

• Rate regulated training - Rate Case School• Accounting for taxes

• Has made various presentations on accounting matters impacting utility and energy companies at various energy industry conferences.

• Co-authored training and audit used for transportation clients• Testified before the Kansas Corporation Commission.

Other Activities• Board member, Children’s Center for the Visually Impaired• Advisory Board member (1997-2002), University of Missouri School of Accounting)

John Lathrop – Résumé

© 2009 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in the U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. 3

Agenda

Welcome and Introduction

FAS 141R – Business Combinations andFAS 160 – Noncontrolling Interests

FASB Projects (Shorter Term) – Guidance Expected Within the Next Year

FASB Projects (Longer Term) – Guidance Expected After One Year

Recent Accounting Developments

FAS 157 – Fair Value Measurements

Impairments

Update on IFRS


Overview of Changes in Accounting for

Business Combinationsand Noncontrolling Interests:

The Implications of FASB No.141Rand FASB No. 160


Significant Changes to Current Accounting

FAS 141 FAS 141R

Definition of a business

Self-sustaining and providing a return to investors

Expanded definition – only needs to be capable of generating revenue stream

Measuring equity issued

Few days before and after terms are agreed to and announced

Fair value on the acquisition date

Acquisition-related costs

Direct costs included in purchase price

Direct costs generally expensed as incurred


Significant Changes to Current Accounting (Cont.)

FAS 141 FAS 141R

Contingent consideration

Adjustment to purchase price when contingency resolved

Fair value on the acquisition date Subsequent changes in liability recognized in earnings

Restructuring costs Recorded as a liability in purchase accounting if criteria in EITF 95-3 are met

Not recorded as a liability unless criteria in Statement 146 are met

In-process research and development (IPR&D)

Determine fair value but expensed at the acquisition date

Capitalized at fair value as indefinite-lived intangible asset not subject to amortization until completion or abandonment



FAS 141 FAS 141R

Taxes Change in valuation allowance and tax uncertainties is adjustment to purchase price

Change in valuation allowance and tax uncertainties is recognized through earnings

Measurement period changes

Generally recognize prospectively as a change in estimate

Retrospective revision

Control obtained in stages

Apply purchase method – no gain or loss recorded

Remeasure NCI amount to FV on date control is obtained and record gain or loss



FAS 141 FAS 160

Acquiring control, but less than 100%

Only the controlling interest is recorded at FV

Record at 100% FV

Initial measurement of noncontrolling interest (NCI)

Record NCI share at carrying value and no goodwill allocated

Record NCI at FV including its allocated share of goodwill

Balance sheet classification of NCI

Liability or mezzanine Separate component of equity



FAS 141 FAS 160

Increase or decrease in ownership with control retained

Apply purchase method for increases; record gain or loss on sale for decreases

Record as equity transaction – no gain or loss recorded

Control is lost, but retain NCI

No remeasurement of retained interest

Retained NCI is remeasured to FV on the date control is lost

Accumulated net losses attributable to NCI

Limited to original carrying amount of NCI

NCI could have a negative carrying value


FASB FAS 160 Scope Project

FASB project evolved from the EITF’s Issue 08-10, Selected Statement 160 Implementation IssuesProposed scope:

Decreases in ownership apply to the following:A subsidiary that is a business or nonprofit activity and is not in-substance real estate (Issue 1 of EITF 08-10)A subsidiary that is a business or nonprofit activity and is not in-substance real estate that is transferred to an equity method investee or joint venture (Issue 2 and 3 from EITF 08-10)An exchange of a group of assets that constitute a business or nonprofit activity that is not in-substance real estate for a noncontrolling interest in an entity

When an entity has a controlling financial interest in a subsidiary, apply the provisions of FAS 160 for any increases in ownership regardless of whether the subsidiary is a business, nonprofit activity, or in-substance real estate (i.e., adjustment of equity)

Effective for periods beginning after December 15, 2009, but applied retrospectively to the date FAS 160 first adopted


Guidance Expected in the Next Year


Going Concern

Accounting requirements previously in auditing standards Accounting requirements previously in auditing standards (AU Section 341)(AU Section 341)

Management is responsible for going concern assessmentManagement is responsible for going concern assessmentBetter alignment with IFRS (IAS 1)Better alignment with IFRS (IAS 1)

Comparison to existing auditing literatureComparison to existing auditing literatureConsistencies—definition of going concern, example conditions and events Consistencies—definition of going concern, example conditions and events that may indicate that there is substantial doubt, example considerations that may indicate that there is substantial doubt, example considerations relating to management’s plans, and disclosure requirementsrelating to management’s plans, and disclosure requirementsChanges—time period for which the assessment is required, additional Changes—time period for which the assessment is required, additional requirement for disclosure if FS not prepared on a going-concern basisrequirement for disclosure if FS not prepared on a going-concern basis

No reference to “not to exceed one year beyond FS date”No reference to “not to exceed one year beyond FS date”Time frame beyond one year is limited to a “practical time thereafter” Time frame beyond one year is limited to a “practical time thereafter”

Status – Original effective date was for interim and annual periods Status – Original effective date was for interim and annual periods ending after June 15, 2009ending after June 15, 2009

FASB currently discussing potential change to clarify the term “substantial FASB currently discussing potential change to clarify the term “substantial doubt”—could cause re-exposure of standarddoubt”—could cause re-exposure of standardNo estimated effective date for final standard—goal is 2009No estimated effective date for final standard—goal is 2009


Proposed Statement – Disclosure of Certain Loss Contingencies

Exposure Draft issued June 2008Would expand the disclosure requirements for certain loss contingencies within the scope of Statements 5 and 141R by

Expanding the population of loss contingencies that are required to be disclosedRequiring disclosure of specific quantitative and qualitative information Requiring a tabular reconciliation of recognized loss contingenciesProviding an exemption from disclosing certain required information if “prejudicial” to an entity’s position in dispute

No disclosures would be required for loss contingencies that are assessed as remoteWould be effective no sooner than for fiscal years ending after December 15, 2009


FSP FAS 144–d, Amending the Criteria for Reporting a Discontinued Operation

Discontinued operation defined as:Discontinued operation defined as:

An operating segment (per Statement 131) that has been An operating segment (per Statement 131) that has been disposed of or classified as held for sale, ordisposed of or classified as held for sale, or

A business as defined by Statement 141R, that meets A business as defined by Statement 141R, that meets criteria to be classified as held for sale criteria to be classified as held for sale on acquisitionon acquisition

This would be the only criteria for determining This would be the only criteria for determining whether a component is reported as whether a component is reported as discontinued operationsdiscontinued operations



DisclosuresDisclosures

Objective: Enable users to assess effect of disposalObjective: Enable users to assess effect of disposal

Achieved by:Achieved by:

Disclosures required by Statement 144 paras. 47 & 48 (as amended), and Disclosures required by Statement 144 paras. 47 & 48 (as amended), and

Incremental disclosures as required by the FSPIncremental disclosures as required by the FSP

Required regardless of whether component disposed of or Required regardless of whether component disposed of or classified as held for sale is reported in disc ops or continuing opsclassified as held for sale is reported in disc ops or continuing ops

Effective for financial statements issued for FY Effective for financial statements issued for FY beginning after December 15, 2009beginning after December 15, 2009

Retrospective applicationRetrospective application

Early application permittedEarly application permitted

© 2009 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in the U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.


Recent FASB WebcastAgreed that disc ops should continue to be presented on the face (users surveyed said they use the face to identify further analysis on their part)Leaning toward defining a disc op as a component of the business (separable cash flows) and including a qualitative overlay that the component disposal represents a strategic shift and an effect on trendsDid not like the notion of operating segment as it was too broad, and it would lead to very few disc ops being reportedAssuming the board can get the right level of presentation on the face, it will lead to less disclosure

16


FASB/IASB Joint Project on Revenue

Recognition


Background and Timetable

Joint project between the FASB and the IASB

Objective of project:Develop a single, principles-based standard to deal with all types of contracts and business sectors

Converge IFRS and U.S. GAAP

Single revenue recognition standard would replace the ~180 pieces of U.S. GAAP revenue recognition literature and IFRS revenue-related standards

Discussion Paper Issued December 19, 2008

Comments Due to FASB June 19, 2009

Exposure Draft 1H 2010

Final Standard 2011

Effective Date 2012 ?


Scope

All contracts with customersContract – an agreement between two or more parties that creates enforceable rights and obligations, not necessarily in writingCustomer – the party that has contracted with an entity to obtain a good or a service that represents an output of the entity’s ordinary activities

Areas potentially considered for exclusion but no decisions yet

Financial instruments and some nonfinancial instrument contracts under scope of IAS 39 and related U.S. GAAP (e.g., FAS 133)Insurance contracts Leasing contracts


Summary of Potential Changes to Current Practice

“All” performance obligations identifiedPostdelivery services separated, e.g., warrantySales incentives separatedPotentially other customer “rights,” e.g. right of return, upgrade rights, right to purchase at a discountSegmentation of a construction contract not required

More estimatesAllocation to “all” performance obligationsVSOE or other third-party evidence is not required – EITF 00-21 and SOP 97-2



Long-term Contract Accounting – SOP 81-1Recognition of revenue during the construction phase may not be accepted in many casesCost-to-cost method and single margin recognition may not be acceptable

Costs are expensed unless capitalizable in accordance with other standards

Revenue standards would be superseded; cost capitalization guidance could be eliminatedCurrently accepted analogies to other standards that allow for cost capitalization (e.g., FAS 91) may not be permittedContract origination costs would be expensed as incurred



CollectibilityConsideration of collectibility would not be a criterion for recognitionCollectibility would be considered in the measurement of rights under the contractEffect on measurement of rights is under discussion

No revenue in the absence of a contractE.g., biological assets at fair value – SOP 85-3Precious minerals – ARB 43


FASB/IASB Joint Project on Leases


Leases

Joint FASB/IASB Discussion Paper issued in MarchStandard expected to be exposed in first half of 2010, with final issuance mid-2011

Unlikely that accounting for existing leases would be grandfathered

Focuses on lessee accounting

Proposed changes to current practice:Right to use the leased property and obligations incurred by a lessee meet the definitions of assets and liabilities

Lease finance liability to be measured at present value of the most likely amounts to be paid over the lease term using incremental borrowing rate

Offsetting amount for right-of-use asset, plus any upfront payments

Initial measurement of uncertain cash flows for:Contingent lease payments at present value of the most likely amounts to be paid over the most likely lease term

The two boards have reached different conclusions on the measurement of contingencies


Leases (continued)

Proposed changes to current practice, continued:

Reassessment each reporting period of most likely lease term and uncertain cash flows

Most likely lease term

No agreement on whether discount rate should change

Remeasurement offset against right-of-use asset

No immediate effect on the income statement

Uncertain cash flows

Boards have differing views when adjustments occur due to updated expectations

FASB view that adjustments recognized in P&L

IASB view that adjustments to liability recorded with offset against right-of-use asset


Leases (continued)

Proposed changes to current practice, continued:

Subsequent accounting

Right-of-use asset amortized over the shorter of most-likely lease term or the economic life of the asset

Lease payments apportioned between interest expense and the obligation

Presentation

Liability included as financial liability on balance sheet

Differing views on whether presented separately

Right-of-use asset separately stated based upon nature (e.g., PP&E, land)

Amortization expense classified in P&L based upon nature


Leases (continued)

Lessor-accounting issues when applying the right-to-use model

Two approaches mentioned in Discussion Paper:

Finance lease

Performance-obligation approach

Discussion paper does not address:

Sale-leaseback transactions

Subleases

Impairment model for right-of-use assets

Accounting for payments of services within the lease payments

Whether initial direct costs of lease should be capitalized

Disclosure requirements


Recent Accounting Developments


What is the Codification?

The Codification brings together and organizes all GAAP previously in Levels A through D of GAAP Hierarchy that was issued by a standard-setter

SFAS 168 (issued June 29, 2009) designates the Codification as the single source of authoritative U.S. GAAP for nongovernmental entities

Effective for interim and annual periods ending after September 15, 2009

SFAS 168 eliminates the previous GAAP hierarchy and designates GAAP into two levels – authoritative and nonauthoritative

Codification intended to retain existing U.S. GAAP without changing it


Standard-Setting After Codification is Effective

New standards issued after the Codification’s release will serve to update the Codification (no longer authoritative themselves)

Will be referred to as “Accounting Standards Updates” (ASUs)ASUs will be subject to same due process procedures currently in place for new accounting pronouncements

ASUs will consist of a standard, a basis for conclusions, and Codification update instructionsASUs will be identified by year of issuance and sequence of guidance within that year

For example, the first update in 2010 would be referred to as “Accounting Standards Update No. 2010-01”


References in Financial Statements

Financial statements for interim and annual periods ending after September 15, 2009 should use Codification references, not “legacy” GAAP references

Financial statements issued before may use legacy GAAP referencesGrandfathered guidance not included in the Codification would continue to be referenced to legacy GAAP

Acceptable referencing alternatives when those financial statements are issued after Codification is effective:

Dual-references to Codification and legacy GAAP, orCodification references only

Registrants should not use Codification references for SEC content

Refer to applicable SEC rule or regulation (for example, Regulation S-X or a Staff Accounting Bulletin)


SFAS 165 Subsequent Events

SFAS 165 incorporated the related requirements from auditing literature into the accounting literature without significant modification

Responsibility on management; not only on auditors

Companies will be required to disclose the date through which subsequent events have been evaluated

Evaluate subsequent events through the date the financial statements are either issued or available to be issued, depending on the company’s expectation of whether it will widely distribute its financial statements to its shareholders and other financial statement users

Effective for interim or annual financial periods ending after June 15, 2009 and should be applied prospectively


Amends Statement 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of LiabilitiesStatement 166 eliminated the following:

Qualifying Special Purpose Entity (QSPE) concept and criteria Exemption from consolidation of QSPEs in the transferor’s financial statements

ImpactAll former QSPEs are subject to consolidationMost are expected to be consolidated by transferor, servicer, or guarantor

Overview of Statement 166


Overview of Statement 167

Amends FIN 46R, Consolidation of Variable Interest EntitiesMajor Changes

Eliminates QSPE-related scope exceptionsProvides new criteria for determining the primary beneficiary (PB) of a variable interest entity (VIE)Adds a reconsideration event for determining whether an entity is a VIEIncreases frequency of required reassessments to determine the PB of a VIERequires additional interim and annual disclosures

Objectives Address concerns raised as a result of current market conditions (e.g., primary beneficiary determination and reconsideration events)Improve financial reporting by entities involved with VIEs


Effective as of the beginning of the first fiscal year that begins after November 15, 2009, and for interim and annual reporting periods thereafter

January 1, 2010 for calendar-year-end companiesEarly application is prohibitedFormer QSPEs will need to be evaluated for consolidation

Statements 166 and 167


Fair ValueMeasurements


Historical contextSFAS 157, Fair Value Measurements, issued in September 2006

Defines fair valueEstablishes a framework for measuring fair valueExpands disclosures

Statement 157 did not require any new fair value measurementsCommon fair value applications – nonfinancial

SFAS 107, SFAS 115, SFAS 133, SFAS 140, SFAS 141R, SFAS 142, SFAS 143, SFAS 144, SFAS 146

Statement 157, Fair Value Measurements


Expiration of FSP FAS 157-2 Deferral

FASB previously granted a one-year deferral to non-recurring measurements of nonfinancial assets and liabilitiesSFAS 157 is applicable to those fair value measurements for fiscal years beginning after November 15, 2008 and interim periods within those fiscal years

Accordingly, the deferral has now expired for many entities, including those with a calendar year-end


Definition of Fair Value

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price)

Price in hypothetical transaction to sell an asset or transfer a liability (exit price) NOT price in actual transaction to acquire an asset or assume a liability (entry price) NOT adjusted for transaction costs

This definition applies regardless of the type of asset that is being measured at fair value, including nonfinancial items


FSP FAS 157-4 – Scope and Overview

ScopeFair value measurements under Statement 157Does not change requirements on the use of Level 1 inputs

Provides additional guidance related to: The use of judgment in evaluating the relevance of inputs like transaction pricesEstimating fair value when the volume and level of activity for the asset or liability have significantly decreased Identifying transactions that are not orderly

Reaffirms that the measurement objective is fair value as defined in Statement 157

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions


Proposed FSP FAS 157-f, Measuring Liabilities under SFAS 157

ScopeFair value measurements of liabilitiesComment period ended 6/1/09

Proposed Effective DateFirst reporting period (including interim periods) beginning after issuanceRedeliberations

Proposed TransitionProspective applicationChanges resulting from guidance should be accounted for as a change in accounting estimate


Proposed FSP FAS 157-f, Measuring Liabilities under SFAS 157

Liabilities are rarely “transferred” in the marketplace; however, they may be traded as assetsIf a quoted price in an active market for an identical liability is not available, use one of following approaches:

Quoted price of identical liabilities traded as assets in active markets (Level 1 measurements)Quoted price of identical liabilities (or identical liabilities traded as assets) in inactive marketsQuoted price of similar liabilities (or similar liabilities traded as assets) in active marketsAnother valuation technique consistent with SFAS 157’s principles

Should not adjust for a restriction on transfer for the liability


FAS 141 vs. 141RFAS 141 vs. 141R

Asset FAS 141 141R

Receivable PV of amounts to be received at appropriate current interest rates. Allowances, if necessary, are separately recognized.

FV

Raw materials Current replacement cost FV

WIP Estimated selling prices of finished goods less the sum of (a) costs to complete, (b) costs of disposal, and (c) a reasonable profit allowance for the completing and selling effort based on profit for similar finished goods

FV

Finished goods Estimated selling prices less (a) costs of disposal and (b) a reasonable profit allowance for the selling effort of the acquiring entity

FV

Intangibles Fair value FV


FAS 141 vs. 141R (continued)FAS 141 vs. 141R (continued)

Asset FAS 141 141R

Other assets, including land, natural resources, and nonmarketable securities

Appraised value FV

Property, plant and equipment

To be used – current replacement cost for similar capacity unless the expected future use of the assets indicates a lower value to the acquiring entity

To be sold – at fair value less cost to sell

FV

Accounts payable, debt, accruals

PV of amounts to be paid determined at appropriate current interest rates

FSP 157-c


FAS 141 vs. 141R (continued)FAS 141 vs. 141R (continued)

Asset FAS 141 141R

IPR&D FV as part of purchase price allocation (expensed Day 2)

FV

Defensive asset Generally, not recognized in practice EITF 08-7

Contingent Consideration

Generally, when contingency is resolved, and consideration is issued or issuable.

FV

Preacquisition contingencies

Two Steps:(1) FV – If fair value can be determined, or(2) FAS 5 – If fair value cannot be determined

FSP 141R-1


Impairment Considerations


Annual Goodwill Impairment Test – Step #1

Multiple reporting units –

Various valuation techniques may be used

Market capitalization, if RU is publicly traded

Income approach

Market approach

Combination

Implications of current environment:

Appropriate assumptions and sensitivity of changes in assumptions

Decline in projected cash flows compared to previous years (or year end)

Increase in discount rate to give effect to increased risk and uncertaintiesof economy, industry, business

Consider implications of restructuring plans, closures, sales of businesson goodwill allocation to RUs

Reconciliation of adjusted market capitalization to aggregate of FV of RUs


Annual Goodwill Impairment Test – Step #2

Compare the implied FV of the reporting unit goodwill with the carrying amount of that reporting unit

Measurement of residual goodwill as a result of Bus Com purchase price allocation

Items with an effect on amount of implied goodwillUnrecognized intangiblesFair value of long-lived assets where carrying value is > than fair value, but passes undiscounted cash flows of testUnrecorded liabilities


Current Valuation Trends

Calculating fair value of RU and intangible assets more frequently, not necessarily just on an annual basis

FAS 144 – Step 2FAS 142 – Step 2

Increasing discount ratesHigher cost of equityHigher cost of debt

Lower long-term growth rates


Long-Lived Assets

Trigger-based test – examples:Significant decrease in market price of a LL assetSignificant adverse change in extent or manner in which LL asset is being used or in physical conditionSignificant adverse change in legal factors, business climate or adverse action by regulatorSignificant costs in excess of amount originally expected for acquisition or construction of LL assetCurrent and historical cash flow losses or projection of continuing losses associated with use of LL assetMore likely than not expectation that LL asset will be sold or disposed of significantly before end of its useful life


Long-Lived Assets (continued)

Impairment test – Long-lived assets (asset groups) to be held and usedLL assets are grouped at the lowest level for which cash flows can be identified that are largely independent of cash flows of other asset groupsDetermine recoverability by estimating future cash flows of LL asset group

Cash flows incorporate company’s own assumptions about use of LL asset (asset group)

Compare undiscounted cash flows to carrying amountIf carrying amount exceeds undiscounted cash flows, must determine the fair value of the LL asset (asset group)

Fair value determined using FAS 157 principles

Impairment loss is measured as the amount by which the carrying amount of LL asset (asset group) exceeds its fair value


Long-Lived Assets (continued)

Impairment test – Long-lived assets (disposal groups) classified as held-for-sale

A fair value measurement is performed every reporting period (to measure at lower of carrying amount or fair value less cost to sell)

Long-lived assets (disposal groups) classified as held-for-sale are not depreciated or amortized; they are measured at the lower of

Carrying amount, or Fair value less cost to sell

FAS 157 applies to fair value measurements of long-lived assets (disposal groups) classified as held-for-sale


Long-Lived Assets – Challenges

Interaction of FAS 142 and FAS 144Timing/order of testing

Completion of FAS 144 test

Impairment triggers

Projected cash flowsUseful life vs. terminal value

Corporate costs

Interim review considerations

Carrying value considerationsInclusion/exclusion of liabilities

Goodwill

Corporate assets and liabilities


Indefinite-Lived Intangible Assets

Intangibles with an indefinite useful life are not amortized under FAS 142

Each reporting period, evaluate whether the intangible continues to have an indefinite useful life

Indefinite-lived intangibles are tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset may be impaired

Refer to impairment indicators in FAS 144Impairment loss recognized if carrying amount exceeds fair value

FAS 157 applies to these fair value measurements


IFRS Adoption and SEC Roadmap


Next Steps

2009:Potential adoption of IFRS by limited number of companies meeting the “screens”Potential study by the SEC

2009–2011:SEC staff monitor progress against milestones

2011 or earlier:SEC to consider whether to require use of IFRS by all U.S. public companies

2014–2016:Potential phased-in implementation requirements

2014 for large accelerated filers


Potential Scenarios for U.S. Issuers

1) Maintain U.S. GAAP and not allow IFRS

2) Maintain U.S. GAAP and continue convergence

3) Choice between U.S. GAAP and IFRS with reconciliation

4) IFRS plus an SEC overlay that provides additional guidance and disclosure requirements

5) Unrestricted free choice between U.S. GAAP and IFRS

6) Date-certain timetable to fully adopt IFRS


Questions ?

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate

and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information

without appropriate professional advice after a thorough examination of the particular situation.

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