2009-10-20 Closing the GAAP: New US GAAP Pronouncements Affecting 2010 Financial Statements (includes developments to September 30, 2009)

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The following summarizes US GAAP pronouncements that must be applied, if applicable, for the first time in 2010 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 Accounting Standard Updates ("ASU")
  • 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, 2010, it would not apply to a company that provides an annual US GAAP reconciliation until 2011. This is because 2011 annual information constitutes the first "reporting period" or "fiscal period" for that company under US GAAP.

This newsletter will be updated quarterly. Newsletter 2009-07-03 Closing the GAAP: New US GAAP Pronouncements Affecting 2010 Financial Statements (includes developments to June 30, 2009) is superseded by this newsletter. Developments since the previous newsletter, if any, are highlighted in grey below.

Reference  Pronouncement and effective date
FAS 164
 Not-for-profit entities — mergers and acquisitions

Establishes new principles for how a not-for-profit entity: (i) determines whether a combination is a merger or an acquisition; (ii) applies the carryover method in accounting for a merger: (iii) applies the acquisition method in accounting for an acquisition, including determining which of the combining entities is the acquirer, and (d) determines what information to disclose to enable users of financial statements to evaluate the nature and financial effects of a merger or an acquisition.

Effective for (i) mergers for which the merger date is on or after the beginning of an initial reporting period beginning on or after December 15, 2009, and (ii) acquisitions for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2009.
FAS 166
 Accounting for transfers of financial assets

Amends FAS 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, significantly changing how companies account for transfers of financial assets. Key changes include (i) elimination of the QSPE concept; (ii) introduction of a new "participating interest" definition that must be met for transfers of portions of financial assets to be eligible for sale accounting; (iii) clarification and amendments to the derecognition criteria for a transfer to be accounted for as a sale; (iv) a change to the amount of recognized gain/loss on a transfer accounted for as a sale when beneficial interests are received by the transferor, and (v) extensive new disclosures.

Effective for transfers of financial assets occurring in years beginning after November 15, 2009, and in interim periods within those years. All entities are required to provide the disclosures in the first interim or annual reporting period ending after November 15, 2009.
Disclosures are required for all transfers, including those entered into before the effective date.
FAS 167
 New consolidation guidance for variable interest entities (VIEs)

Amends the consolidation guidance for VIEs under FIN 46(R), Consolidation of Variable Interest Entities, including (1) the elimination of the exemption for qualifying special purpose entities, (2) a new approach for determining who should consolidate a variable-interest entity, and (3) changes to when it is necessary to reassess who should consolidate a variable-interest entity. Effective for years beginning after November 15, 2009, for interim periods within those years, and for interim and annual reporting periods thereafter.
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).

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.


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