FASB Ratifies EITF Consensuses

Published on: 02 Dec 2011

On Wednesday, the FASB ratified the EITF consensus on Issue No. 10-E, “Derecognition of In Substance Real Estate” (as reported in Deloitte’s November issue of EITF Snapshot). On the basis of recommendations by the EITF and further consideration, the FASB chairman added a research project to the Board’s agenda that would potentially address whether nonfinancial assets that have been placed in a legal entity should be considered an in-substance asset or an entity. This project could affect current practice about what is in-substance real estate. The Board also clarified that the guidance in Issue 10-E does not address derecognition accounting by a lender (e.g., a lender that obtains a controlling financial interest in a subsidiary that is in-substance real estate as a result of default by the subsidiary on its nonrecourse debt).

Also at the November 30, 2011, meeting, the FASB ratified the EITF’s consensus-for-exposure on Issue No. 11-A, “Parent’s Accounting for the Cumulative Translation Adjustment (CTA) Upon the Sale or Transfer of a Group of Assets Within a Consolidated Foreign Entity That Meets the Definition of a Business” (also reported in the November issue of EITF Snapshot). The comment period will be 60 days.

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