2009-04-15 Closing the GAAP: New US GAAP Pronouncements Affecting 2008 Financial Statements (includes developments to April 1, 2009)

This Newsletter presents a summary of new US GAAP pronouncements relevant to financial statements prepared for 2008 (includes developments to April 1, 2009).

The following summarizes US GAAP pronouncements that must be applied, if applicable, for the first time in 2008 to a company with a calendar year-end that either is preparing financial statements in accordance with US GAAP or reconciling its Canadian GAAP financial statements to US GAAP.

The listing includes the following pronouncements:

FASB Statement of Financial Accounting Standards (“FAS”)
FASB Interpretations (“FIN”)
Consensus Opinions of the FASB Emerging Issues Committee (“EITF”)
FASB Staff Positions (“FSP”)
AICPA Statement of Positions ("SOP")
Derivatives Implementation Group ("DIG")
SEC Staff Accounting Bulletin ("SAB")

Effective date information should be considered with care. The effective dates set out below are those specified in the standard. In situations where a company is reconciling its Canadian GAAP financial statements to US GAAP, the effective date in certain situations will depend on the frequency with which the company provides US GAAP information. For example, if a pronouncement specifies that it is effective for the first "reporting period" or "fiscal period" beginning after June 15, 2008, it would not apply to a company that provides an annual US GAAP reconciliation until 2009. This is because 2009 annual information constitutes the first "reporting period" or "fiscal period" for that company under US GAAP.

This R&Q Newsletter will be updated quarterly. R&Q Newsletter 2009-01-06 is superseded by this Newsletter. Developments since the previous Newsletter, if any, are highlighted in grey below.

Reference	Pronouncement and effective date
FAS 157	Fair value measurements Defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. Effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years.
FAS 159	Fair value option for financial assets and liabilities (including amendment to FAS 115) Permits entities to choose to measure many financial instruments and certain other items at fair value, effective for years beginning after November 15, 2007.
FAS 162	Hierarchy of generally accepted accounting principles Identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements by non-governmental entities that are presented in accordance with US GAAP. Effective November 13, 2008.
FAS 163	Accounting for financial guarantee insurance contracts Requires recognition of a claim liability prior to an event of default when there is evidence that credit deterioration has occurred in an insured financial obligation. Clarifies how FAS 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities. Requires expanded disclosures about financial guarantee insurance contracts. Effective for years beginning after December 15, 2008, and interim periods within those years, except for certain disclosure requirements which are effective for the first period (including interim periods) beginning after May 23, 2008.
EITF 98-5	Convertible securities with beneficial conversion features or contingently adjustable conversion ratios Amended to make conforming changes relating to EITF 00-27, Application of EITF 98-5 to Certain Convertible Instruments , and FAS 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity . Effective for financial statements issued for years ending after December 15, 2008.

Reference	Pronouncement and effective date
EITF 06-01	Consideration given by a service provider to a manufacturer or reseller of equipment Addresses the accounting for consideration given by a service provider to a manufacturer or reseller of equipment necessary for an end-customer to receive service from the service provider. Effective for years beginning after June 15, 2007.
EITF 06-04	Endorsement split-dollar life insurance arrangements Considers the accounting for postretirement benefits associated with endorsement split-dollar life insurance arrangements. Effective for fiscal years beginning after December 15, 2007.
EITF 06-08	Assessment of a buyer's continuing investment under FAS 66 Addresses the issue of whether, in a sale of an individual condominium unit, an entity needs to evaluate the adequacy of the buyer’s continuing investment pursuant to FAS 66, Accounting for Sales of Real Estate , paragraph 12, to recognize profit under the percentage-of-completion method. Effective for years beginning after March 15, 2007.
EITF 06-10	Accounting for collateral assignment split-dollar life insurance arrangements Addresses (i) whether an entity should recognize a liability for the postretirement benefit associated with a collateral assignment split-dollar life insurance arrangement in accordance with either FAS 106 or APB Opinion 12 depending on the substantive agreement with the employee, and (ii) how an employer should recognize and measure the asset in a collateral assignment split-dollar life insurance arrangement. Effective for fiscal years beginning after December 15, 2007, including interim periods within those fiscal years.
EITF 06-11	Income tax benefits of dividends on share-based payment awards Addresses how a company should recognize income tax benefits received on dividends (a) paid to employees holding equity-classified nonvested shares, equity-classified nonvested share units, or equity-classified outstanding share options, and (b) charged to retained earnings under FAS 123(R), Share-Based Payment . Applies to income tax benefits of dividends on equity-classified employee share-based payment awards that are declared in fiscal years beginning after December 15, 2007.
EITF 07-3	Non-refundable advance payments for goods/services to be used in future R&D activities Addresses whether non-refundable advance payments for goods or services that will be used or rendered for research and development activities should be expensed when the advance payment is made or when the research and development activity has been performed. Effective for fiscal years beginning after December 15, 2007, including interim periods within those fiscal years.

Reference	Pronouncement and effective date
EITF 07-6	FAS 66 and sale of real estate when the agreement includes a buy-sell clause Addresses whether a buy-sell clause represents a prohibited form of continuing involvement that would preclude partial sale and profit recognition pursuant to FAS 66, Accounting for Sales of Real Estate . Effective for new arrangements entered into in years beginning after December 15, 2007, and interim periods within those years.
EITF 08-4	Transition guidance for conforming changes to EITF 98-5 Provides transition guidance for conforming changes to EITF 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios , relating to EITF 00-27, Application of Issue No. 98-5 to Certain Convertible Instruments , and FAS 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity . Effective for years ending after December 15, 2008.
SAB 109	Written loan commitments recorded at fair value under GAAP Provides guidance on the accounting for written loan commitments recorded at fair value under US GAAP. Revises and rescinds portions of SAB 105, Application of Accounting Principles to Loan Commitments . Applies on a prospective basis to derivative loan commitments issued or modified in fiscal quarters beginning after December 15, 2007
SOP 07-1	Investment companies and the AICPA Audit and Accounting Guide Provides guidance on the application of the AICPA Audit and Accounting Guide, Investment Companies. Applies for fiscal years beginning on/after December 15, 2007. Refer also to FSP FIN 46(R)-7 below.
FSP FIN 39-1	Amendment to FIN 39 Addresses (i) certain modifications to FIN 39, Offsetting Amounts Related to Certain Contracts and (ii) whether a reporting entity that is party to a master netting arrangement can offset fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral against fair value amounts recognized for derivative instruments that have been offset under the same master netting arrangement. Effective for fiscal years beginning after November 15, 2007.
FSP FIN 46(R)-7	Application of FIN 46(R) to investment companies Addresses the application of FIN 46(R), Consolidation of Variable Interest Entities by an entity that accounts for its investments in accordance with the specialized accounting guidance in the AICPA Audit and Accounting Guide, Investment Companies. Applies for fiscal years beginning on/after December 15, 2007. Refer also to SOP 07-1 above.

Reference	Pronouncement and effective date
FSP FIN 48-2	Effective date of FIN 48 for non-public enterprises Defers the effective date of FIN 48, Accounting for Uncertainty in Income Taxes, for certain non-public enterprises to annual financial statements for years beginning after December 15, 2007.
FSP FAS 132R-1	Disclosures about postretirement benefit plan assets Provides guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. Includes a technical amendment to FAS 132R, Employers’ Disclosures about Pensions and Other Postretirement Benefits that requires a non-public entity to disclose net periodic benefit cost for each annual period for which a statement of income is presented. The requirements related to disclosures about plan assets are required for years ending after December 15, 2009. The technical amendment to FAS 132R is effective upon issuance of this FSP on December 30, 2008.
FSP FAS 133-1 and FIN 45-4	Disclosures about credit derivatives and certain guarantees, and clarification of the effective date of FAS 161 Amends FAS 133, Accounting for Derivative Instruments and Hedging Activities, to require disclosures by sellers of credit derivatives, including credit derivatives embedded in a hybrid instrument. Amends FIN 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, to require an additional disclosure about the current status of the payment/performance risk of a guarantee. Clarifies the effective date of FAS 161, Disclosures about Derivative Instruments and Hedging Activities.
FSP FAS 140-4 and FIN 46(R)-8	Disclosures by public entities about transfers of financial assets and interests in VIEs Requires public entities to provide additional disclosures about transfers of financial assets as well as about their involvement with VIEs. Effective for interim and annual periods ending after December 15, 2008.
FSP FAS 157-1	Fair value measurements and leases Amends FAS 157, Fair Value Measurements, to scope out fair value measurements used in the application of FAS 13, Accounting for Leases, and other requirements that address fair value measurements for purposes of lease classification or measurement under FAS 13. Effective upon the initial adoption of FAS 157.

Reference

Pronouncement and effective date

FSP
FAS 157-2

Effective date of FAS 157

Delays the effective date of FAS 157, Fair Value Measurements, for certain non-financial assets and non-financial liabilities to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years.

FSP
FAS 157-3

Determining fair value when no active market exists

Clarifies the application of FAS 157, Fair Value Measurements, in a market that is not active and provides an example to illustrate key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. Effective upon issuance, including prior periods for which financial statements have not been issued.

FSP
EITF 99-20-1

Amendments to impairment guidance of EITF 99-20

Amends the impairment guidance in EITF 99-20, Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests That Continue to Be Held by a Transferor in Securitized Financial Assets , related to determination of whether an other-than-temporary impairment has occurred.

Effective for interim and annual reporting periods ending after December 15, 2008.

FSP
SOP 07-1-1

Effective date of SOP 07-1

Delays indefinitely the effective date of SOP 07-1, Clarification of the Scope of the Audit and Accounting Guide Investment Companies and Accounting by Parent Companies and Equity Method Investors for Investments in Investment Companies. Effective as of December 15, 2007.

FSP
SOP 90-7-1

Amendment to SOP 90-7

Resolves the conflict between the guidance requiring early adoption of new accounting standards for entities required to follow fresh-start reporting under AICPA SOP 90-7, Financial Reporting by Entities in Reorganization Under the Bankruptcy Code, and other authoritative accounting standards that expressly prohibit early adoption.

Effective for financial statements issued subsequent to April 24, 2008.

DIG

The following new (N) or revised (R) DIGs were issued during the period:

E23	(R) Issues involving application of the shortcut method under paragraph 68
I1	(R) Interaction of the disclosure requirements of FAS 133 and FAS 47
K4	(R) Income statement classification of hedge ineffectiveness and the component of a derivative's gain or loss excluded from the assessment of hedge effectiveness

While we have attempted to make this Newsletter as complete as possible, it may not include all changes or modifications to existing authoritative literature that may affect a particular enterprise.