Emerging Accounting Issues (E) Working Group
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Summer 2009 Meeting Summaries Index

The Emerging Accounting Issues (E) Working Group of the Accounting Practices and Procedures (E) Task Force met June 13, 2009.

During this meeting, the Working Group:

•  Adopted as final the following Interpretations:

• INT 09-04—Application of the Fair Value Definition (INT 09-04)

This interpretation clarifies the application of the current definition of “fair value” within the Glossary to the NAIC Accounting Practices and Procedures Manual in situations when the volume and level or activity for the asset or liability have significantly decreased and transactions which are forced or liquidation sales.

• INT 09-03—EITF 08-7: Accounting for Defensive Intangible Assets  (INT 09-03)

This interpretation adopts with modification EITF 08-7, and clarifies that defensive intangible assets are recognized as assets, but are nonadmitted for statutory accounting and reporting purposes.

• Adopted as final the following Interpretations Rejecting GAAP Guidance as Not Applicable:  

• INT 09-01—EITF 07-4: Application of the Two-Class Method under FAS 128 to Master Limited Partnerships 
• INT 09-02—EITF 07-5: Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entity’s Own Stock 

• Exposed the following tentative Interpretations:

• EITF 08-3: Accounting by Lessees for Maintenance Deposits (EITF 08-3):

The Working Group exposed a tentative consensus adopting, with modification, EITF 08-3. This tentative interpretation clarifies that refundable maintenance deposits shall be accounted for as a nonadmitted asset. Costs that do not increase the value or the usefulness of the leased asset shall continue to be expensed when incurred.

• EITF 08-8: Accounting for an Instrument (or an embedded feature) with a Settlement Amount That is Based on the Stock of an Entity’s Consolidated Subsidiary (EITF 08-8)

The Working Group exposed a tentative consensus rejecting EITF 08-8 as not applicable to statutory accounting.  

• Conducted the following actions and discussions:

• Goodwill of a Merged Entity

The Statutory Accounting Principles Working Group adopted related revisions in SSAP No. 68—Business Combinations and Goodwill in 2008 related to this Working Groups referral of the issue. As a result, the Working Group moved this item to the Other Listing.

• ReRemics

The Working Group discussed accounting for re-securitization of residential mortgage backed securities. SSAP No. 91R—Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (SSAP No. 91R) and SSAP No. 25—Accounting for and Disclosures about Transactions with Affiliates and Other Related Parties (SSAP No. 25) provide the required accounting guidance. Although individual facts and circumstances may vary somewhat, the Working Group generally believes that these types of transactions or transfers should be based on the fair value of the transferred assets rather than amortized cost, as they do not qualify for sale treatment under SSAP No. 91R and are determined to be a non-economic under SSAP No. 25.

• Interim Meeting Minutes

The Working Group approved interim minutes from March 26, April 7, and April 16, 2009.

The deadline for submission of comments and for new items is Aug. 7, 2009.

Action Items:

1. Finalized four interpretations.
2. Exposed two interpretations.
3. Moved one item off of the agenda.
4. Discussed ReRemic transactions.
5. Approved interim minutes.