At its meeting yesterday, the FASB decided to proceed with its investment company project in two phases. During the first phase, the Board will finalize (1) the revised definition of an investment company and (2) the additional disclosure requirements for such companies. In the second phase, the Board will address issues related to accounting for real estate investments.

The FASB also reversed its previous tentative decision and decided to retain the scope exception in FASB Accounting Standards Codification Topic No. 946, Financial Services — Investment Companies, for all real estate investment trusts (REITs) (i.e., both equity and mortgage REITs). The Board intends to revisit the accounting for mortgage REITs as part of the second phase of the project.

In January, the FASB will discuss the remaining issues related to the first phase of the project: disclosure requirements, transition requirements, and an effective date for the final standard. The Board expects to conclude the first phase of the project in the first quarter of 2013.