2008-04-03 Closing the GAAP: New US GAAP Pronouncements Affecting 2008 Financial Statements (includes developments to March 31, 2008)

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This following presents a summary of new US GAAP pronouncements relevant to financial statements prepared for 2008 (includes developments to March 31, 2008). It 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 newsletter will be updated quarterly. 2008–01–11 Closing the GAAP: New US GAAP Pronouncements Affecting 2008 Financial Statements (includes developments to December 31, 2007) is superseded by this newsletter.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.
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.

Reference	Pronouncement and effective date
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	Nonrefundable advance payments for goods/services to be used in future R&D activities Addresses whether nonrefundable 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.
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.
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.

Reference	Pronouncement and effective date
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.
FSP FIN 48–2	Effective date of FIN 48 for nonpublic enterprises Defers the effective date of FIN 48, Accounting for Uncertainty in Income Taxes, for certain nonpublic enterprises to annual financial statements for years beginning after December 15, 2007.
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.
FSP FAS 157–2	Effective date of FAS 157 Delays the effective date of FAS 157, Fair Value Measurements,for certain nonfinancial assets and nonfinancial liabilities to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years.
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.

Reference

Pronouncement and effective date

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

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.