Derivatives Implementation Group

Summary of November 23, 1999 Board Meeting Discussion on Statement 133 Implementation Issues

Financial instruments: derivatives implementation: The Board decided not to object to the staff's issuing implementation guidance in a question-and-answer format (Q&A) for the following 14 implementation issues regarding FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities:

1. Issue A5—Penalties for Nonperformance That Constitute Net Settlement

2. Issue A6—Notional Amount of Commodity Contracts

3. Issue A7—Effect of Contractual Provisions on the Existence of a Market Mechanism That Facilitates Net Settlement

4. Issue A8—Asymmetrical Default Provisions

5. Issue E5—Complex Combinations of Options

6. Issue F3—Firm Commitments—Statutory Remedies for Default Constituting a Disincentive for Nonperformance

7. Issue F4—Interaction of Statement 133 and Statement 114

8. Issue F5—Basing the Expectation of Highly Effective Offset on a Shorter Period Than the Life of the Derivative

9. Issue G5—Hedging the Variable Price Component

10. Issue H6—Accounting for Premium or Discount on a Forward Contract Used as the Hedging Instrument in a Net Investment Hedge

11. Issue H7—Frequency of Designation of Hedged Net Investment

12. Issue J5—Floating-Rate Currency Swaps

13. Issue J6—Fixed-Rate Currency Swaps

14. Issue J7—Transfer of Financial Assets Accounted for Like Available-for-Sale Securities into Trading

The tentative guidance in the above 14 issues was based on the results of discussion by the Derivative Implementation Group (DIG) and had been posted on the FASB web site for at least four months.

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