Derivatives Implementation Group
Summary of June 23, 1999
Board Meeting Discussion
Deferral of Statement 133. The Board discussed
comments received on the May 20, 1999 FASB Exposure Draft,
Accounting for Derivative Instruments and Hedging
Activities-Deferral of the Effective Date of FASB Statement No.
133, and approved the issuance of a final Statement to defer
the effective date of Statement 133 for one year. Consequently,
Statement 133 will now be effective for all fiscal quarters of all
fiscal years beginning after June 15, 2000. The Board also decided
to defer by one year the transition date regarding embedded
derivatives in Statement 133. The new final Statement will not
require entities to account separately for derivatives embedded in
contracts entered into prior to 1999, rather than prior to 1998 (as
previously stipulated).
Financial instruments: derivatives
implementation. The Board decided not to object to the staff's
issuing implementation guidance in a question-and-answer format on
the following three implementation issues regarding FASB Statement
No. 133, Accounting for Derivative Instruments and Hedging
Activities:
- Issue No. A1, "Definition of a Derivative:
Initial Net Investment "
- Issue No. B1, "Embedded Derivatives:
Separating the Embedded Derivative from the Host Contract"
- Issue No. B7, "Embedded Derivatives: Variable Annuity Products
and Policyholder Ownership of the Assets"
The tentative guidance in the above issues was based
on the results of discussion by the Derivatives Implementation
Group and had been posted at this website for over two months.
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