Contingencies

In: Business and Management

Submitted By dandanmandy
Words 846
Pages 4
After reading the exposure draft and the first ten comment letters from the FASB website, I argued that the exposure draft should be adopted.
Before the exposure draft were issued, FASB received some respondents criticized the original dislosure requirements of loss contingencies: “a.The initial disclosure of specific information about a loss contingency often does not occur until a material accrual is recognized for that loss contingency, sometimes taking investors by surprise. b. The at least reasonably possible threshold for disclosing loss contingencies has not resulted in the disclosure of the full population of an entity’s existing loss contingencies that would be of interest to financial statement users. c. The amounts recognized in the financial statements related to loss contingencies are not transparent to users. In order to improve the disclosures about certain loss contingencies, such change of standards is necessary.” In response to this concern, the Board made two roundable discussions and got some feedback from respondents and finally issued an exposure draft stating that “An entity shall disclose qualitative and quantitative information about loss contingencies to enable financial statement users to understand all of the following: a. The nature of the loss contingencies. b.Their potential magnitude. c.Their potential timeing (if known).” It is reasonable the Board revised some proposal in insponse to the comment letters from respondents. For example, respondents argued that some unnecessry disclosure of certain remote loss contingencies would show fianancial statement users and mislead loss contingencies information. “ The Board agreed with this opinion that it is not clear whether changing the disclosure threshold from at least a resonable possibility to more than remote would have a significant effect on the population of loss contingencies…...

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