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FASB issued two staff positions (FSPs). One, Accounting for Life Settlement Contracts by Third-Party Investors, provides guidance on the investor’s initial and subsequent measurement, financial statement presentation and disclosure for such contracts ( www.fasb.org/fasb_staff_positions/fsp_ftb85-4-1.pdf ). The advisory covers settlement transactions between a policy owner and an investor, whether or not a facilitating broker is involved. It should be applied to fiscal years beginning after June 15, 2006. Earlier application is permitted as of the beginning of an investor’s fiscal year, provided the investor has not yet issued its first-quarter financial statements.

The other FSP, Determining the Variability to Be Considered in Applying FASB Interpretation No. 46(R), provides guidance that affects the determination of (a) whether the entity is a variable interest entity (VIE), (b) which interests are variable interests in the entity and (c) which party, if any, is the primary beneficiary of the VIE. It also affects any calculation of expected losses and expected residual returns, if such a calculation is necessary ( www.fasb.org/fasb_staff_positions/fsp_fin46r-6.pdf ). The FSP is effective the first day of the first reporting period beginning after June 15, 2006. Earlier application is permitted for periods for which financial statements have not yet been issued. Enterprises are permitted to implement the FSP retrospectively to the date they first applied Interpretation no. 46 (revised), Consolidation of Variable Interest Entities, provided they do so by the end of the first annual reporting period ending after July 15, 2006.

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