Evaluation of the FASB's proposed Accounting and Disclosure Requirements for Guarantors. (Commentary).

Accounting Horizons,  March, 2003  by Laureen A. Maines

Tags: accounting, Financial Accounting Standards Board

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INTRODUCTION

The May 22, 2002 FASB Exposure Draft, Guarantor's Accounting and Disclosure Requirements, Including Indirect Guarantees of Indebtedness of Others (hereafter ED), addresses initial recognition, initial measurement, and disclosure issues related to guarantees. Although it undertook the guarantee project in conjunction with its project on consolidation guidance related to special-purpose entities (SPEs), the FASB addressed guarantees in a separate project because guarantees also arise in situations other than those associated with SPEs.

The ED calls for recognition and increased disclosure of the liability associated with a guarantor's obligations under guarantees. It takes the position that a guarantee obligates ...