On The Horizon - December 18, 2012

Author:Ms Grant Thornton's Audit Practice Group
Profession:Grant Thornton LLP
 
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CURRENT PRACTICE ISSUE

Tangible property (repair) regulations amended

The IRS released technical amendments on December 17, changing the applicability date of the tangible property repair regulations from January 1, 2012 to January 1, 2014. The December 11, 2012 On the Horizon noted the IRS's intention to make these amendments. Taxpayers are permitted to apply the temporary regulations for taxable years beginning on or after January 1, 2012. For additional information, see Tax Flashes and Legislative Updates.

FASB MEETING HELD DECEMBER 12

All decisions reached at Board meetings are tentative and may be changed at future meetings. Decisions are included in an Exposure Draft only after a formal written ballot. Decisions reflected in Exposure Drafts are often changed in redeliberations by the Board based on information received in comment letters, at public roundtable discussions, and from other sources. Board decisions become final after a formal written ballot to issue a final Accounting Standards Update.

At its December 12 meeting, the FASB discussed its projects on the classification and measurement of financial instruments, the scope of FASB Accounting Standards Codification® (ASC) 946, Financial Services – Investment Companies, the liquidation basis of accounting, the reporting of discontinued operations, and transfers and servicing of repurchase agreements and similar transactions. Highlights of the Board's discussion on those topics are summarized below.

Financial instruments: classification and measurement

The Board considered the effects on financial reporting complexity of its tentative decisions reached on financial instrument classification and measurement, and directed the FASB staff to draft a proposed Accounting Standards Update (ASU) for ballot vote.

Investment companies

In a reversal of its previous tentative decision, the Board tentatively decided to retain the existing scope exception in ASC 946 that excludes all real estate investment trusts (REITs) from the scope of investment company guidance. The previous tentative decision would have required mortgage REITs meeting the investment company criteria to follow investment company guidance. The Board also decided to address real estate property investment accounting, as well as revisit mortgage REIT accounting, in the future.

Liquidation basis of accounting

Redeliberations of the Exposure Draft, The Liquidation Basis of Accounting, continued with a discussion of...

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