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

View this page in: Français

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

The following summarizes US GAAP pronouncements that must be applied, if applicable, for the first time in 2009 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, 2009, it would not apply to a company that provides an annual US GAAP reconciliation until 2010. This is because 2010 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 R&Q Newsletter 2009-01-06 is superseded by this Newsletter.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 141(R)	Business combinations Retains the fundamental requirements in FAS 141 that the acquisition method of accounting be used for all business combinations and for an acquirer to be identified for each business combination. The following are some of the significant changes this new statement makes to how the acquisition method is applied: Measuring the assets acquired, the liabilities assumed, and any non-controlling interest at their fair values Recognizing assets acquired and liabilities assumed arising from contingencies Recognizing contingent consideration at the acquisition date, measured at its fair value Recognizing a gain in the event of a bargain purchase (i.e. previously negative goodwill) Applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. May not be applied before that 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 date for certain non-financial assets and non-financial liabilities deferred (refer to FSP FAS 157-2 below) to years beginning after November 15, 2008, and interim periods within those years.
FAS 160	Non-controlling interests in consolidated financial statements Amends ARB 51 to establish accounting and reporting standards for a non-controlling interest in a subsidiary and for deconsolidation of a subsidiary. Applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. May not be applied before that date.
FAS 161	Disclosures about derivative instruments and hedging activities Revises disclosure requirements for derivative instruments and hedging activities. Effective for financial statements issued for years beginning after November 15, 2008 and interim periods within those years.

Reference	Pronouncement and effective date
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 07-1	Accounting for collaborative arrangements Applies to participants in collaborative arrangements that are conducted without the creation of a separate legal entity. Addresses appropriate income statement presentation and classification for these activities and payments between the participants, as well as the sufficiency of the disclosures related to these arrangements. Effective for years beginning after December 15, 2008, and interim periods within those fiscal years.
EITF 07-4	Master limited partnerships ("MLPs") and the two-class method under FAS 128 Provides guidance on the application of the two-class method under FAS 128, Earnings per Share, and how current period earnings of an MLP should be allocated to the general partner, limited partners and, when applicable, incentive distribution rights. Effective for years beginning after December 15, 2008, and interim periods within those years.
EITF 07-5	Whether an instrument or embedded feature is indexed to an entity's own stock Addresses the determination of whether an instrument (or an embedded feature) is indexed to an entity's own stock. Effective for years beginning after December 15, 2008 and interim periods within those years.
EITF 08-3	Accounting by lessees for non-refundable maintenance deposits Provides guidance on whether lessees should account for maintenance deposits that may not be refunded (if the lessee does not perform the specified maintenance activities) as a deposit or as contingent rental expense. Effective for years beginning after December 15, 2008 and interim periods within those years.
EITF 08-5	Liabilities measured at fair value with a third-party credit enhancement Provides guidance on the effect of a third-party credit enhancement when measuring the related liability at fair value under FAS 157, Fair Value Measurements. Effective in the first reporting period beginning on or after December 15, 2008.
EITF 08-6	Equity method investment accounting considerations Considers issues related to application of the equity method in light of the issuance of FAS 141(R), Business Combinations , and FAS 160, Non-controlling Interests in Consolidated Financial Statements . Effective in years beginning on or after December 15, 2008, and interim periods within those years.

Reference	Pronouncement and effective date
EITF 08-7	Accounting for defensive intangible assets Considers how defensive intangible assets (intangible assets acquired in a business combination or an asset acquisition that an entity does not intend to actively use) should be accounted for subsequent to their acquisition, including the estimated useful life that should be assigned to such assets. Effective for intangible assets acquired on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.
EITF 08-8	Accounting for instruments with a settlement amount based on the stock of an entity's consolidated subsidiary Clarifies whether a financial instrument for which the payoff to the counterparty is based on the stock of an entity's consolidated subsidiary is indexed to the reporting entity's own stock and therefore should not be precluded from qualifying for the first part of the scope exception in paragraph 11(a) of FAS 133, Accounting for Derivative Instruments and Hedging Activities, or from being within the scope of EITF 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock . Effective for years beginning on or after December 15, 2008, and interim periods within those years.
EITF Topic D-98	Classification and measurement of redeemable securities Amended to clarify certain SEC staff's views related to financial statement classification and measurement of securities subject to mandatory redemption requirements or whose redemption is outside the control of the issuer. SEC staff views applicable as follows: (i) paragraphs 16A, 17A, and footnote 9 applicable no later than years beginning on/after December 15, 2008; (ii) a change in a registrant's application of the two-class method should be accounted for in accordance with FAS 154; and (iii) paragraphs 17B and 19A on non-controlling interests should be applied following the effective date of Statement 160 (i.e. years beginning on/after December 15, 2008).
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 140-3	Transfers of financial assets and repurchase financing transactions Provides guidance on accounting for a transfer of a financial asset and a repurchase financing. Effective for financial statements issued for years beginning after November 15, 2008, and interim periods within those years.

Reference	Pronouncement and effective date
FSP FAS 141(R)-1	Accounting for assets acquired and liabilities assumed in a business combination that arise from contingencies Amends and clarifies FAS 141(R), Business Combinations, to address application issues raised with respect to initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. Effective for business combinations with an acquisition date on/after the beginning of the first annual reporting period beginning on or after December 15, 2008.
FSP FAS 142-3	Determination of the useful life of intangible assets Amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FAS 142, Goodwill and Other Intangible Assets. Effective for years beginning after December 15, 2008, and interim periods within those years.
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 years beginning after November 15, 2008, and interim periods within those years.
FSP EITF 03-6-1	Participating securities and instruments granted in share-based payment transactions Addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting that should be included in the earnings allocation in computing earnings per share under the two-class method described FAS 128, Earnings per Share. Effective for years beginning after December 15, 2008, and interim periods within those years.
FSP FIN 48-3	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, including non-public not-for-profit organizations, to years beginning after December 15, 2008.
FSP SOP 94-3-1	Not-for profit organizations and consolidation and equity method accounting Amends guidance related to not-for-profit organizations and requirements on consolidation and the equity method of accounting in AICPA SOP 94-3, Reporting of Related Entities by Not-for-Profit Organizations , and the AICPA Audit and Accounting Guide, Health Care Organizations. Applies for years beginning after June 15, 2008, and to interim periods therein.

Reference

Pronouncement and effective date

FSP
APB 14-1

Accounting for convertible debt instruments that may be cash settled upon conversion

Clarifies the accounting for convertible debt instruments that may be settled in cash upon conversion; specifies that issuers of such instruments should separately account for the liability and equity components of those instruments by allocating the proceeds from issuance between the liability component and the embedded conversion option.

Effective for years beginning after December 15, 2008, and interim periods within those years.

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.