The Financial Accounting Standards Board has issued FASB Staff Position (FSP) No. SOP 07-1-1, Effective Date of AICPA Statement of Position 07-1, which indefinitely defers the effective date of AICPA Statement of Position (SOP) 07-1, Clarification of the Scope of the Audit and Accounting Guide, “Investment Companies,” and Accounting by Parent Companies and Equity Method Investors for Investments in Investment Companies. The deferral is intended to allow the FASB time to consider a number of issues related to the implementation of SOP 07-1. SOP 07-1 provides guidance for determining whether (a) an entity is within the scope of the AICPA Audit and Accounting Guide, Investment Companies, and (b) investment company accounting should be retained by a parent company in consolidation or by an equity method investor. Investment company accounting provides that investment companies report their investments at fair value. SOP 07-1 was effective for financial statements issued for years beginning on or after December 15, 2007 and early application was encouraged. The FSP is effective as of December 15, 2007.
An entity that early adopted SOP 07-1 is permitted, but not required, to continue to apply the provisions of the SOP. An entity that did not early adopt SOP 07-1 before December 15, 2007 may not adopt the SOP, with the following exception. If a parent entity that early adopted the SOP chooses not to rescind its early adoption, an entity consolidated by that parent entity that is formed or acquired after that parent entity’s adoption of the SOP must apply the provisions of the SOP in its stand-alone financial statements. If an entity that early adopted the provisions of SOP 07-1 voluntarily rescinds its early adoption as permitted by FSP No. SOP 07-1-1, that entity must account for that change according to the provisions of FASB Statement No. 154, Accounting Changes and Error Corrections.
The FSP is available in full at http://www.fasb.org/pdf/fsp_sop07-1-1.pdf.
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