Asset-Backed Commercial Paper
The staff believes that existing authoritative literature, while not explicitly addressing increasing rate preferred stocks, implicitly calls for the accounting described in this bulletin. Furthermore, recognition of the effective cost of unstated rights and privileges is well-established in accounting, and is specifically called for by FASB ASC SubtopicInterest — Imputation of Interest, and Topic 3.
C of this codification for unstated interest costs of debt capital and unstated dividend costs of redeemable preferred stock capital, respectively. The staff believes that the requirement to recognize the effective periodic cost of capital applies also to nonredeemable preferred stocks because, for that purpose, the distinction between debt capital and preferred equity capital whether redeemable 19 or nonredeemable is irrelevant from the standpoint of common stock interests.
Would the accounting for discounts on increasing rate preferred stock be affected by variable stated dividend rates?
If stated dividends on an increasing rate preferred stock are variable, computations of initial discount and subsequent amortization should be based on the value of the applicable index at date of issuance and should not be affected by subsequent changes in the index.
However, the fluctuations would be due solely to the impact of changes in the index on the stated dividends for those periods. Will the staff expect retroactive changes by registrants to comply with the accounting described in this bulletin? All registrants will be expected to follow the accounting described in this bulletin for increasing rate preferred stocks issued after December 4, Removed by SAB S.
The company desires to eliminate the deficit by reclassifying amounts from paid-in-capital. In addition, the company anticipates adopting a discretionary change in accounting principles 21 that will be recorded as a cumulative-effect type of accounting change.
May the company reclassify its capital accounts to eliminate the accumulated deficit without satisfying all of the conditions enumerated in Section 22 of the Codification of Financial Reporting Policies for a quasi-reorganization? The staff believes a deficit reclassification of any nature is considered to be a quasi-reorganization.
As such, a company may not reclassify or eliminate a deficit in retained earnings unless all requisite conditions set forth in Section 23 for a quasi-reorganization are satisfied.
Must the company implement the discretionary change in accounting principle simultaneously with the quasi-reorganization or may it adopt the change after the quasi-reorganization has been effected? The staff has taken the position that the company should adopt the anticipated accounting change prior to or as an integral part of the quasi-reorganization.
Any such accounting change should be effected by following GAAP with respect to the change.
In connection with a quasi-reorganization, may there be a write-up of net assets? The staff believes that increases in the recorded values of specific assets or reductions in liabilities to fair value are appropriate providing such adjustments are factually supportable, however, the amount of such increases are limited to offsetting adjustments to reflect decreases in other assets or increases in liabilities to reflect their new fair value.
In other words, a quasi-reorganization should not result in a write-up of net assets of the registrant. The interpretive response to question 1 indicates that the staff believes that a deficit reclassification of any nature is considered to be a quasi-reorganization, and accordingly, must satisfy all the conditions of Section How should the company reflect the tax benefits of operating loss or tax credit carryforwards for financial reporting purposes that existed as of the date of the quasi-reorganization when such tax benefits are subsequently recognized for financial reporting purposes?
The staff believes FASB ASC SubtopicReorganizations — Income Taxes, requires that any subsequently recognized tax benefits of operating loss or tax credit carryforwards that existed as of the date of a quasi-reorganization be reported as a direct addition to paid-in capital.
A principal stockholder 34 of the company transfers a portion of his shares to the plaintiff to settle such litigation. If the company had settled the litigation directly, the company would have recorded the settlement as an expense.
The staff believes that the problem of separating the benefit to the principal stockholder from the benefit to the company cited in FASB ASC Topic is not limited to transactions involving stock compensation.
Some registrants and their accountants have taken the position that since FASB ASC TopicRelated Party Disclosures, applies to these transactions and requires only the disclosure of material related party transactions, the staff should not analogize to the accounting called for by FASB ASC paragraph for transactions other than those specifically covered by it.
The staff notes, however, that FASB ASC Topic does not address the measurement of related party transactions and that, as a result, such transactions are generally recorded at the amounts indicated by their terms.
The transactions for which FASB ASC Topic requires disclosure generally are those in which a company receives goods or services directly from, or provides goods or services directly to, a related party, and the form and terms of such transactions may be structured to produce either a direct or indirect benefit to the related party.
The staff believes that the substance of such transactions is the payment of an expense of the company through contributions by the stockholder.
Therefore, the staff believes it would be inappropriate to account for such transactions according to the form of the transaction. Removed by SAB V. Certain Transfers of Nonperforming Assets Facts: The financial institution, as consideration for transferring the nonperforming assets, may receive a the cash proceeds of debt issued by the new entity to third parties, b a note or other redeemable instrument issued by the new entity, or c a combination of a and b.
The financial institution typically will manage the assets for a fee, providing necessary services to liquidate the assets, but otherwise does not have the right to appoint directors or legally control the operations of the new entity.
Because FASB ASC Topic does not apply to distributions of financial assets to shareholders or a contribution of such assets to unrelated third parties, the interpretive guidance provided in response to Questions 1 and 2 of this SAB would apply to such conveyances. What factors should be considered in determining whether such transfer of nonperforming assets can be accounted for as a disposition by the financial institution?
The staff believes that determining whether nonperforming assets have been disposed of in substance requires an assessment as to whether the risks and rewards of ownership have been transferred.
Additionally, the staff believes that the accounting for the transfer as a sale or disposition generally is not appropriate where the financial institution retains rewards of ownership through the holding of significant residual equity interests or where third party holders of such interests do not have a significant amount of capital at risk.
If the transaction is accounted for as a sale to an unconsolidated party, at what value should the transfer be recorded by the financial institution? The staff believes that the transfer should be recorded by the financial institution at the fair value of assets transferred or, if more clearly evident, the fair value of assets received and a loss recognized by the financial institution for any excess of the net carrying value 40 over the fair value.
If no active market exists, but one exists for similar assets, the selling prices in that market may be helpful in estimating the fair value.
If no such market price is available, a forecast of expected cash flows, discounted at a rate commensurate with the risks involved, may be used to aid in estimating the fair value. In situations where discounted cash flows are used to estimate fair value of nonperforming assets, the staff would expect that the interest rate used in such computations will be substantially higher than the cost of funds of the financial institution and appropriately reflect the risk of holding these nonperforming assets.Justifications.
Austerity measures are typically pursued if there is a threat that a government cannot honour its debt obligations. This may occur when a government has borrowed in foreign currencies (that it has no right to issue), or if it has been legally forbidden from issuing its own currency.
False Statements and Fraudulent Debt Collection Practices. A federal statute known as the Fair Debt Collection Practices Act (often called the "FDCPA"), 15 USC , gives you specific legal rights to sue debt collector who in the course of collecting a debt, unlawfully threatens, berates, intimidates or harasses you; calls you during odd hours, makes false representations about the debt or.
Find A+ essays, research papers, book notes, course notes and writing tips. Millions of students use StudyMode to jumpstart their assignments. Commercial paper is an unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts payable and inventories, and meeting short-term liabilities.
James Poterba, president James Poterba is President of the National Bureau of Economic Research. He is also the Mitsui Professor of Economics at M.I.T.
During 20X4 and thereafter, the stated dividend of $8 measured against the carrying amount of $ 18 would reflect dividend cost of 8%, the market rate at time of issuance.. The staff believes that existing authoritative literature, while not explicitly addressing increasing rate preferred stocks, implicitly calls for the accounting described in this bulletin.