FASB issues exposure drafts to improve accounting guidance, support convergence of global accounting standards.

• Position: Accounting & auditing news

The Financial Accounting Standards Board has issued four exposure drafts that would improve U.S. generally accepted accounting principles and converge U.S. accounting guidance to existing international accounting standards. You can obtain the documents from the FASB's Web site at www.fasb.org. Comments are due Apr. 13.

The exposure drafts reflect the progress that the FASB and International Accounting Standards Board have made on a first phase of a joint short-term convergence project that was initiated in 2002. This project involves both the FASB and IASB comparing existing standards and conforming the two sets of standards to the higher-quality solution.

The short-term convergence project is part of a comprehensive project to converge their respective accounting standards into a common set of high-quality accounting standards. In addition to this short-term project, the boards are jointly working on several projects on major accounting topics and are developing a coordinated agenda for continuing the convergence effort.

The exposure drafts propose the following accounting requirements:

* Voluntary changes in accounting policies would be required to be applied by retrospective application rather than by cumulative effect adjustment, as currently required.

* Three changes to the calculation of earnings per share.

* Asset exchanges that would require a gain or loss to be recognized on the exchange of similar productive assets based on the fair value of the exchange unless the exchange lacks commercial substance.

* Unusual ("abnormal") amounts of idle capacity and spoilage costs would be excluded from the cost of inventory and expensed as incurred.

FASB Issues Accounting Standard to Improve Disclosures about Pension and Other Postretirement Benefit Plans; Publishes Revised Interpretation to Clarify and Expand on Accounting Guidance for Variable Interest Entities

The Financial Accounting Standards Board has issued FASB Statement No. 132 (revised 2003), Employers' Disclosures about Pensions and Other Postretirement Benefits, that improves financial statement disclosures for defined benefit plans. The change replaces existing FASB disclosure requirements for pensions.

In an effort to provide the public with better and more complete information, the standard requires that companies provide more details about their plan assets, benefit obligations, cash flows, benefit costs and other relevant information. For the first time, companies are required...