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Action Alert No. 07-27
July 5, 2007

NOTICE OF MEETINGS

OPEN BOARD MEETING
(Board meetings are available by audio webcast and telephone.)

Wednesday, July 11, 2007, 9:00 a.m.

1. Conceptual framework. The Board will discuss matters relating to the following three phases of the project:
   1. Elements and recognition (estimated 45-minute discussion). The Board will discuss next steps for this phase in light of the results of consultations on the working definition of an asset with the FASB’s Financial Accounting Standards Advisory Council, IASB’s Standards Advisory Council, national standards setters, and other technical experts. The discussion is administrative; decisions on technical issues are not expected.

   2. Measurement (estimated 75-minute discussion). The Board will discuss the concept of measurement, including a definition of measurement. The Board also will discuss measurement principles and terms related to measurement.

   3. Reporting entity (estimated 15-minute discussion). The Board will discuss the length of the comment period for the forthcoming Preliminary Views on the concept of a reporting entity.

2. Useful life and amortization of intangible assets (estimated 45-minute discussion). The Board will discuss alternatives for determining the useful life of intangible assets, specifically renewable intangible assets, and whether guidance should be provided on the subsequent amortization of intangible assets, both nonrenewable and renewable.

3. Open discussion. If necessary, the Board will allow time to discuss minor issues with staff members on technical projects or administrative matters. Those discussions are held following regular Board meetings as topics come up.

OPEN EDUCATION SESSION

Wednesday, July 11, 2007, following the Board meeting

The Board will hold an educational, non-decision-making session to discuss topics that are anticipated to be discussed at a future Board meeting. Those topics will be posted to the FASB calendar four days prior to the education session.

BOARD ACTIONS

The Board Actions are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions are included in an Exposure Draft for formal comment only after a formal written ballot. Decisions in an Exposure Draft may be (and often are) changed in redeliberations based on information provided to the Board in comment letters, at public roundtable discussions, and through other communication channels. Decisions become final only after a formal written ballot to issue a final Statement, Interpretation, FSP, or Statement 133 Implementation Issue.

June 27, 2007 Board Meeting

Conceptual framework: objectives and qualitative characteristics. The Board redeliberated issues related to the FASB Preliminary Views, Conceptual Framework for Financial Reporting: Objective of Financial Reporting and Qualitative Characteristics of Decision-Useful Financial Reporting Information.

With regard to the proposed chapter on the objective of financial reporting, the Board made the following decisions:

1. The Board affirmed its earlier decision that the objective in the proposed Framework should pertain to financial reporting as a whole, not just financial statements.

2. The Board decided that the proposed Framework should generally describe what is meant by financial reporting but that specific decisions on the scope of financial reporting should be dealt with in the phase on presentation and disclosure, including financial reporting boundaries (Phase E) of the conceptual framework project.

3. The Board affirmed its decision to adopt the entity perspective as proposed in the Preliminary Views. The Board agreed that adopting the entity perspective is intended to convey that an entity, not its owners and others having an interest in it, is the object of general purpose external financial reporting. The Board noted that it did not intend to prejudge the potential applicability of the proprietary theory or the entity theory of the reporting entity. That issue will be decided in the reporting entity phase (Phase D) of the project.

4. The Board affirmed its earlier decision to distinguish a primary user group in the proposed Statement. The Board decided that the primary user group should include both current and potential investors and creditors (capital providers).

5. The Board also affirmed its earlier decision that government and regulatory bodies are potential users of financial reporting.

Liabilities and equity. The Board modified the classification principle under the ownership approach. The Board decided that only instruments that meet the definition of a direct ownership instrument should be classified as equity. All perpetual instruments that do not meet the definition of a direct ownership instrument should be classified as liabilities.

Accounting for leases. The Board discussed a staff analysis of alternative approaches for the initial and subsequent measurement of a lessee’s liability for its obligation to make payments to the lessor arising under a simple lease contract. The Board directed the staff to further explore the following approaches:

1. The lessee would initially measure its obligation to pay for the right to use asset at fair value.

2. The lessee would subsequently measure that liability using the effective interest method; however, the lessee also would have an option to subsequently measure the liability at fair value.

The Board discussed a staff analysis of alternative approaches for the initial and subsequent measurement of a lessee’s right to use asset arising under a simple lease contract. The Board generally agreed with the staff’s view that a lessee’s right to use asset is neither an intangible asset nor an asset that is similar in nature to the leased item. For that reason, the existing guidance for the initial measurement of an intangible or tangible asset may not be the most relevant measure of a lessee’s right to use asset. The Board directed the staff to develop an approach for the initial and subsequent measurement of a lessee’s right to use asset for consideration at a future meeting.

The Board also discussed whether assets and liabilities arising in a lease contract should be recognized upon signing of the lease contract or upon access to or delivery of the leased item but did not reach any tentative conclusions.

FASB ratification of EITF consensuses and tentative conclusions. The Board considered and ratified consensuses reached at the June 14, 2007 EITF meeting on Issues No. 06-11, "Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards," and No. 07-3, "Accounting for Nonrefundable Advance Payments for Goods or Services Received for Use in Future Research and Development Activities."

The Board did not consider for ratification the tentative conclusion reached at the June 14, 2007 EITF meeting on Issue No. 07-1, "Accounting for Collaborative Arrangements." That tentative conclusion is expected to be considered at a future Board meeting. If that tentative conclusion is ratified, the Board will decide on the length of the comment period.

FUTURE OPEN MEETINGS

The following is a list of open meetings tentatively scheduled through August. Because schedules may change, please check the FASB calendar before finalizing your plans. Revisions to this list since the last issue of Action Alert are highlighted in bold.

Wednesday, July 18, 2007—FASB Board Meeting
Wednesday, July 18, 2007—FASB Education Session
Wednesday, July 25, 2007—FASB Board Meeting
Wednesday, July 25, 2007—FASB Education Session
Wednesday, August 1, 2007—FASB Board Meeting
Wednesday, August 1, 2007—FASB Education Session
Wednesday, August 8, 2007—FASB Board Meeting
Wednesday, August 8, 2007—FASB Education Session
Wednesday, August 15, 2007—FASB Board Meeting
Wednesday, August 15, 2007—FASB Education Session
Wednesday, August 22, 2007—FASB Board Meeting
Wednesday, August 22, 2007—FASB Education Session
Wednesday, August 29, 2007—FASB Board Meeting
Wednesday, August 29, 2007—FASB Education Session

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