Academic journal article Journal of Accountancy

FASB Proposes Delay in Effective Date of Interpretation 40

Academic journal article Journal of Accountancy

FASB Proposes Delay in Effective Date of Interpretation 40

Article excerpt

In an exposure draft of an amendment to Interpretation no. 40, Applicability of Generally Accepted Accounting Principles to Mutual Life Insurance and Other Enterprises, the Financial Accounting Standards Board proposed to defer Interpretation No. 40's effective date for one year, to years beginning after December 15, 1995.

According to FASB Practice Fellow Kevin Mead, the draft, whose title is the same as that of Interpretation no. 40, clarifies that mutual life insurance and other companies cannot describe their statutory financial statements as GAAP.

The FASB issued Interpretation no. 40 in April 1993. "Earlier this year," Mead explained, "the American Institute of CPAs issued a proposal that would establish how mutual life insurance companies should report insurance in financial statements prepared according to GAAP. At the same time, the board proposed standards on related issues." These were to become effective concurrently with Interpretation no. 40.

"Many of those responding to the FASB and AICPA proposals asked for a delay of their effective dates, as well as Interpretation no. …

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