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Journal Entry — Investment Companies — FASB Discusses Next Steps

Published on: Jan 24, 2013

At its meeting yesterday, the FASB continued deliberating its investment company exposure draft (ED) and tentatively decided on certain disclosure and transition requirements as well as an effective date for the final standard.

Disclosures

The Board decided that the proposed disclosure requirements related to financial support provided by an investment company to its investees should be limited to financial support that was (1) provided during the reporting period, disaggregated by support contractually required and support not contractually required, and (2) contractually required but not yet provided. In addition, the Board decided to remove the proposed disclosure requirements related to restrictions on an investee’s ability to transfer funds to the investment company.

The FASB also discussed the threshold it established at its August 2012 meeting for additional disclosures related to investments in other investment companies1 and decided that these disclosures should be required when such investments represent 5 percent of the reporting investment company’s net assets rather than a “significant portion” of its net assets. In addition, the FASB decided that the disclosures should include the most recently available audited information. The FASB will perform additional outreach to determine whether these disclosure requirements are operational.

Transition and Effective Date

The Board decided to retain the ED’s proposed transition requirements and agreed that the final guidance would be effective for interim and annual periods in fiscal years that begin on or after December 15, 2013, for both public and nonpublic entities. Early adoption would be prohibited.

Next Steps

After concluding the additional outreach it plans to perform on the proposed disclosure requirements related to investments in other investment companies, the FASB plans to issue a final standard in the first half of 2013 or early in the second half.

 


[1] See Deloitte’s August 30, 2012, journal entry for additional information.

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