FASB Moves To Finalize GAAP Hierarchy, Guidance On Convertible Debt

March 26, 2008

FEI Summary

At its March 26, 2008 board meeting, the Financial Accounting Standards Board (FASB) voted to move to finalize its standard, The Hierarchy of Generally Accepted Accounting Principles (GAAP Hierarchy). FASB staff indicated that after the board approves the ballot draft of a final standard, they will coordinate release of the final standard with the PCAOB's related standard, which is currently awaiting SEC approval.

Additionally, FASB voted to proceed to a final FASB Staff Position (FSP) on convertible debt, FSP APB 14-a, Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement).  FASB staff noted that 46 of 57 comment letters received on proposed FSP APB 14-a, Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement). disagreed with issuance of the FSP. Some of those comment letters, such as the comment letter filed by FEI, requested that the project be dealt with as part of FASB’s liability-equity project. Although FASB voted to proceed in finalizing the FSP, as detailed further below, it did vote to extend the effective date by one year, which was one of the points made in the FEI letter.

Further details on the two issues above can be found in this FEI summary.