FASB issues proposals on consolidations and foreign currency matters

  • FASB (old) Image

11 Oct 2012

The US Financial Accounting Standards Board (FASB) has issued Proposed Accounting Standards Update — Consolidation (Topic 810): Accounting for the Difference between the Fair Value of the Assets and the Fair Value of the Liabilities of a Consolidated Collateralized Financing Entity (a consensus of the FASB Emerging Issues Task Force) and Proposed Accounting Standards Update — Foreign Currency Matters (Topic 830): Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity (a consensus of the FASB Emerging Issues Task Force).

The objective of Proposed Accounting Standards Update — Consolidation (Topic 810) is “to resolve the diversity in practice in the accounting by a reporting entity for the difference between the fair value of the financial assets and the fair value of the financial liabilities of a consolidated collateralized financing entity and to arrive at the amount a reporting entity would ultimately expect to realize.” Currently, IFRS does not have any specific guidance on collateralised financing entities.

The objective of Proposed Accounting Standards Update — Foreign Currency Matters (Topic 830) is “to resolve the diversity in practice about whether Subtopic 810-10, Consolidation — Overall, or Subtopic 830-30, Foreign Currency Matters — Translation of Financial Statements, applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a consolidated foreign entity.” The amendments proposed in this exposure draft do not eliminate any of the existing differences between US GAAP and IFRS.

Comments are due by 12 December 2012.

Background information on the consensuses reached at FASB Emerging Issues Task Force meeting are available in our EITF Snapshot newsletter.

Click for (links to FASB website):

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.