Accounting


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To increase efficiency the Financial Accounting Foundation, which oversees and funds the Financial Accounting Standards Board, changes FASB’s voting requirement to a simple majority of four board members from a supermajority of five ( www.fasb.org/news/nr042402b.shtml ). After considering comment letters on related proposals made in March, FAF trustees decide to retain the seven-member board at its present size and take no action to shorten the exposure periods for draft standards, which typically vary with project requirements.

To update and clarify current accounting literature, FASB issues Statement no. 145, Rescission of FASB Statements no. 4, 44, and 64, Amendment of FASB Statement no. 13, and Technical Corrections ( www.fasb.org/news/nr043002.shtml ). The statement provides to the secondary lending market a fresh analysis of accounting for gains and losses related to debt extinguishment, a risk management technique lenders use on a day-to-day basis.

A FASB exposure draft, Amendment of Statement 133 on Derivative Instruments and Hedging Activities, clarifies the definition of a derivative and addresses accounting for beneficial interests in securitized credit card receivables and similarly structured financial assets ( www.fasb.org/news/nr050102.shtml ). FASB issued the ED to help reporting entities determine whether a given financial contract—option-based or not—is truly a derivative, as discussed in paragraph 6(b) of Statement no. 133. Comments are due July 1.

FEATURE

Maximizing the higher education tax credits

A counterintuitive strategy can save taxes by including otherwise excludable scholarships in gross income.

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