Taking ED 42 through into the 1990s

Article Abstract:

The Accounting Standards Committee's (ASC) exposure draft 42, Accounting for Special Purpose Transactions, is a response to off balance sheet financial problems. The purpose of ED 42 is to assess aggregate indebtedness and a company's resources by retaining the exposure of all assets and liabilities separately on the balance sheet. Criticism of ED 42 includes: objections to disclosure requirements that are too broad; objections to a lack of detailed guidance; and objections to confusion in the concept of special purpose transactions. Various revisions of ED 42 are in the works by the ASC, including: developing detailed applications of the standard; developing detailed disclosure requirements; and directing a shift in emphasis away from special purpose transactions towards a definition of assets and liabilities.

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ED 42: central to the concept of true and fair

Article Abstract:

The Institute of Chartered Accountants of England and Wales' Accounting Standards Committee has released Exposure Draft 42, Accounting for Special Purpose Transactions, in response to growing concern about the implications of off balance sheet financing schemes. ED 42 defines a special purpose transaction as one which 'combines or divides up the benefits and obligations flowing from it in such a way that they fall to be accounted for differently or in different periods depending on whether the elements are taken step by step or whether the transaction is viewed as a whole'. The transactions's substance must then be determined, in terms of its commercial effects.

Institute of Chartered Accountants in England and Wales

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A fair statement without goodwill

Article Abstract:

The Accounting Standards Committee (ASC) has considered the public commentary on its discussion paper, Fair Value in the Context of Acquisition Accounting, and is preparing an exposure draft for October 1990 on fair value accounting. The revised proposal will contain provisions for: discounting at an appropriate borrowing rate; discounting long-term receivables at a rate based on the estimation of accrued risk; and discounting fixed assets whose fair value is referenced to value in use at a rate reflecting the risk of the asset to the company.

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