FASB Publishes Exposure Draft on the Rescission of FASB Statements No. 4, 44 and 64 and Technical Corrections

Norwalk, CT, November 15, 2001—Today the Financial Accounting Standards Board (FASB) issued an Exposure Draft that rescinds FASB Statement No. 4, Reporting Gains and Losses from Extinguishment of Debt, and an amendment of that Statement, FASB Statement No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements. In addition, this proposed Statement would rescind FASB Statement No. 44, Accounting for Intangible Assets of Motor Carriers, as well as amend other existing authoritative pronouncements to make various technical corrections. The Exposure Draft can be accessed from the FASB website. Download the Exposure Draft.


Since Statement 4 was issued in 1975, the use of debt extinguishment has become part of the risk management strategy of many companies—particularly those operating in the secondary lending market. In response to that change, the FASB has proposed that Statement 4 be rescinded. Statement 64 amended Statement 4 and would no longer be necessary if Statement 4 were rescinded.

Under Statement 4, all gains and losses from the extinguishment of debt are required to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect. The proposed Statement would eliminate Statement 4 and, thus, the exception to applying APB Opinion 30 to all gains and losses related to extinguishment of debt.

"Under the proposed change, companies would be allowed to classify gains and losses in connection with the extinguishment of debt within the conceptual framework of Opinion 30," commented Cathy Coburn, FASB Research Associate. She added, "This would distinguish transactions that are part of an entity’s recurring operations from those that are unusual or infrequent, or that could be classified as an extraordinary item. The technical corrections, while nonsubstantive in nature, may, in some cases, change current accounting practice."

Statement 44 was issued to establish accounting requirements for the effects of transition to the provisions of the Motor Carrier Act of 1980. Those transitions have been completed and, therefore, Statement 44 is no longer needed.

Comments on the Exposure Draft must be received in writing by the FASB by January 14, 2001.

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